Forecaster: Utah population spike over next 20 years will create demand for housing

Forecaster: Utah population spike over next 20 years will create demand for housing
Real estate » Realtors told that downturn might have bottomed out.

By John Keahey, The Salt Lake Tribune
Jan. 11, 2009

Chris Nelson is way out there when he lays out the future -- say 20 years out there.

And what the director of the University of Utah's Metropolitan Research Center forecasts for the state's housing market during the next two decades gave a Salt Lake City ballroom full of hundreds of Realtors a lot of hope Monday.

Though that is countered by some uncertainty in the year ahead, his bottom line was this: By 2030, the state will be the fastest growing in the nation, pulling in another 1.5 million residents on top of the 2.7 million already here, and 700,000 new jobs will be created.

"We are -- you are -- big time," he told the audience.

That means more houses need to be built, along with more commercial square footage. And he state, particularly the Wasatch Front, is behind in what is needed.

"This pent-up demand, combined with growth, needs to be dealt with," he told the Realtors during their annual Housing Forecast breakfast at Little America Hotel.

While Nelson had the podium and was describing a world still two decades away, those in the audience also were perusing a handout from James Wood, director of the University of Utah's Bureau of Economic and Business Research. Wood dealt with more immediate issues.

He predicted that Salt Lake County can expect a 3 percent growth in home sales during 2010, or 9,100 units. But there are some big caveats tied to lending.

"Could this slight up-tick signal that 2008 was the bottom of the downturn and the rebound is under way?" he asked in the report. Then he answered his own question. If so, "the contraction was short-lived, only two years but vicious in its magnitude."

As far as housing prices are concerned, they will continue to fall another 3 percent to 5 percent this year, bringing the overall price decline in Salt Lake County during the past two years to 15 percent. But there is a bright spot. Prices should be "stable to slightly improving" in 2011.

For Realtor Lavar Campbell, the prognostications were all good news.

"You don't usually see a lot of that optimism elsewhere," he said. "It's nice to see that things are looking up."

Realtor Colleen Howcroft said the forecasts "gave us a lot of hope. It looks like we're going to build back up this year, and 2011 will be better."

The big question real estate agent Ben Goodwin had after the session was, "Are banks going to be willing to lend," given tighter restrictions now in place?

That question also occurred to the U.'s Nelson.

"The demand will be there. Will the banks be there to help?" he said in an interview following his talk.

Nelson's numbers are staggering. If you push his time frame another 10 years, to 2040, he predicts the entire United States will need to add 287 billion square feet of residential and commercial real estate between now and then. Dropping back to a 2030 scenario, he estimates that along the Wasatch Range -- from Logan to Provo -- 450,000 units will need to be built, a 50 percent increase over what is available today.

And for commercial space, 1.1 billion square feet will have to be added. That's 120 percent more than the 750 million square feet that exist now.

He asked his breakfast audience, where the additional square feet will go in a region that already is filling up. It will have to come in multi-family housing and involve a new way of looking at creating neighborhoods.

Not only that, he pointed to demographics that show that Utah's non-Anglo population in Ogden, Salt Lake City and Provo will grow by 600,000 by 2030.

Because a lower percentage of this demographic is comprised of home buyers, he said, "more than half of all new houses built will have to be in rental mode."

jkeahey@sltrib.com


By the numbers A growing demand

Utah's housing industry will grow with heightened demand from a growing population, according to a University of Utah forecast. Some forecasted numbers:

3.6 - million people along the Wasatch Front by 2030.

1.35 - million housing units needed by 2030.

42 - percent rate of growth in next 20 years in Salt Lake City.

3rd - National rank of Wasatch Front's growth rate among metropolitan areas.

Adding another 1.1 million people over the next 20 years along the Wasatch Front will mean an additional 450,000 new or rebuilt housing units.