SALT LAKE CITY – An explosion of new high-density homes in Salt Lake County in the past decade has not resulted in a decrease in the value of single-family home properties; in fact, it even resulted in a slight increase in value, according to a report released Monday.
The findings were the result of a study conducted by the University of Utah’s Kem C. Gardner Policy Institute, which sought to discover how large, high-density housing projects impacted house values during the 2010s. High-density development was seen as “a politically controversial topic” in city councils due to fear of how they may negatively impact the values of existing housing.
“Based on our analysis, what we found in particular is that apartments had a positive impact on single-family home values,” said Dejan Eskic, senior researcher at the Gardner Policy Institute and lead author of the study.
The development effect
Among the report’s main findings is that Salt Lake County homes located less than 800 meters from new apartment complexes experienced an average annual increase of 10% in average value compared to 8.6% of homes farthest from projects .
The report also states that homes less than 800 meters from new apartments also have an average value 8.8% higher per square meter. This is despite the fact that the houses in this category were, on average, 11.1% smaller and seven years older than those more than 800 meters away.
“This implies an additional 1.4 percentage point in the annual appreciation of house prices closer to new apartment buildings,” says the report. “Similar results are seen in most parts of the county, with the likely motivator being that building new apartments brings new demand and new dollars to a community and rebuilds an older piece of property, bringing more vibrancy and ‘excitement’ to the area . “
The researchers also found that the only real drop in homes near apartments built in the early 1990s; however, the researchers determined that the housing crisis that developed at the end of the previous decade was responsible for this.
Eskic explained that the project started by looking at price acceleration because house values across the county have continued to rise since about 2012. Since housing trends were similar across the county during this time, it allowed the research team to analyze which caused some rates to perform better than others.
The team compared the values of single-family homes in Salt Lake County from 2010 to 2019 with data on new apartments built between 2010 and 2018. This allowed an analysis of the short and long-term impacts. The data omitted downtown Salt Lake City and a strip of land near the University of Utah; Eskic said this was due to looking more at suburban parts of the county. This left the team with 9,600 apartments to analyze even when removing these sections.
They also divided the research into four quadrants. Of the four, the highest figure occurred in Salt Lake County “West”. This includes places like Rose Park, West Valley City, Kearns, Taylorsville and Magna. The researchers found that the figures increased 13.7% a year for houses less than a kilometer from new apartments in these communities, compared with 10.5% for more distant houses.
The largest discrepancy was reported in the northeastern part of the county, known as “First suburbs”. This is an area that includes Sugar House, South Salt Lake, Millcreek, Holladay and Murray. The newspaper said it was probably due to “some of the most expensive and largest homes are located in the Sugar House and Holladay areas.” Even so, homes in the region closest to new apartments experienced, on average, greater increases in value.
Southeast Salt Lake County – including places like Midvale, Cottonwood Heights, Sandy and Draper – was the only region where homes more than half a mile from apartments experienced higher annual increases in property values. The difference was 7.3% for homes more than half a mile away, compared with 6.8% for homes half a mile from a new high-density development.
Eskic explained a section of single-family homes near State Street and I-215 in the area that include some of the outliers in the data. He said it is not clear why this happened, although it is possibly due to its proximity to the main traffic.
“It’s the only thing that stands out,” he said, “whereas in the rest of the county there weren’t that many single-family houses located close to the main arterial roads.”
What the findings mean for future growth
The researchers wrote that their findings almost reflected previous academic literature on the subject in different parts of the country in recent decades. That is, there is no substantial adverse impact as a result of high-density housing projects.
“The public’s perception of high-density housing continues to be a point of conflict in growing communities in Utah and the country. While many stereotypes and generalizations about negative impacts are raised in public settings, high-density development does not seem to really depress domestic values ”, wrote the researchers.
In looking at development today, Salt Lake County Mayor Jenny Wilson described most of the county as almost “wall-to-wall” in development, with the exception of the canyons and the county’s west bank, the last of which is the location of current and future housing.
This left county officials looking for new ways to add housing, as the demand for people wishing to move to the county still far outstrips the supply of homes.
“I think we had to refine our practices and become more evidence-based,” she said, adding that this provides community leaders with more concrete evidence about an aspect of high-density housing that they can provide constituents.
“Again, times have changed. With so little land, we have to think about those choices,” she continued. “I am happy that the data helps us to eliminate – perhaps that is not a problem.”
“It does not end the discussion; it does not end the concern, but it is great information to help conduct the conversation in a very constructive way.”
–Dan Lofgren, the CEO of developer Cowboy Partners
Wilson spoke at a virtual roundtable organized by the Gardner Policy Institute after the report was released on Monday afternoon. It was a small event in which some of the county’s top leaders and leading housing and development experts discussed the report’s findings.
She said the results also show that people want a wider range of housing styles than the previous stereotyped house with a white fence. This does not mean that newer houses like this will not be built in the future, but even more high-density projects may be on the way.
Dan Lofgren, the CEO of developer Cowboy Partners, agreed with Wilson in this regard. He said the study could also move the needle for further development in the future.
“It does not end the discussion, it does not end the concern, but it is great information to help conduct the conversation in a very constructive way,” he said. “I am grateful to have this information as part of the conversation.”
He added that he believes that while it does not completely address affordable housing issues, it will “accommodate accessibility”. Since the lack of housing density can make housing less accessible.
Some experts say the study provides evidence for a concern, but does not fully address the problem.
Matt Dahl, assistant municipal manager for Midvale City, said there are still big conversations that need to happen when it comes to future development. This starts with the other impacts that residents near the new apartments can see.
“Our challenges are that it is difficult for residents to feel that the value of their home is appreciating 1.4 (percentage points) faster than people who live in a different neighborhood, but they feel it when there is more traffic or parking on the road, even if that, parking and traffic are well below the capacity of the affected road, “he said. “The experience of change in these neighborhoods is important and needs to be considered as we seek to develop our policy.”
That’s why he said it is important that cities and developers are able to show residents the benefits of new development from the start.
Meanwhile, some see the study as a watershed for future housing development, especially as the state’s population is expected to double in the coming decades. Michael Gallegos, the director of housing and community development for Salt Lake County, said the study potentially helps to end a discussion of higher-density housing; this could remove an obstacle in a monumental housing task.
“With the cost of housing, the deficiencies of 35,000 units across the state, it is too much for us to answer,” said Gallegos. “It will take some time, so I think (the study) gets the argument out of the table and we can start moving on.”
Correction: An earlier version of this story indicated that the Salt Lake City center was included in the study. The researchers later clarified that data from the Salt Lake City center were not included in the study.