Housing
Housing Policy Factors
- Illegal Immigration
- Inflation
- Stabilizing Supply Chains
- Property Taxes
Housing Policy
Utah's Housing Market is Failing. Government isn’t Helping...
I’ve been meeting with Utah voters and Republican delegates non-stop, and in every meeting I hold I am inevitably asked about our failing housing market. While Utah’s housing market had become more competitive prior to the COVID lockdowns, the national COVID lockdowns were the trigger that sent Utah’s housing market spiraling out of control. PPP loans, stimulus payments, near-zero interest rates, remote-work relocations from expensive housing markets, and supply chain failures that sent raw materials skyrocketing gave Utahns a front-row seat to one of the worst market failures in our state’s history.
Now Utahns are feeling the pain of being priced out of our state’s housing market. If you don’t already own a home with a COVID-era interest rate, you are shut out. Ironically, this was a market failure that was created by the government, but government can’t fix it.
This is why Governor Cox’s plan for the government to build 35,000 starter homes sounds like a scheme that would be proposed by one of the bad guys in an Ayn Rand novel.
As the leader of the Coronavirus Task Force who led Utah’s response to COVID, the failure of our state’s housing market is Governor Cox’s failure. Instead of protecting Utahns with foresight and principle, he wholeheartedly embraced the federal COVID response. Now Utahns are paying the price.
While the diagnosis of what went wrong with our housing market is straightforward, it will take a leader who stands on principle to fix this. I don’t believe the government can fix our housing market, but we do need to enact some serious reforms to get the government out of the way. Here are the government-caused market distortions that I will focus on:
Illegal Immigration
Utah’s sanctuary state policies have resulted in 88,000 illegal immigrants recently moving to our state. We are currently 37,000 housing units short to meet the demands of our population. This additional surge of 88,000 illegal immigrants creates a surge in demand for housing that is driving up the cost. If Utah’s governor was leading an effort to stop this invasion instead of drinking champagne with President Biden, this would stabilize our housing market. A secure border, followed by a rational, legal immigration process is the only way we can ensure that our infrastructure, housing supply, and labor markets put the needs of American families first. Our negligent immigration policy is robbing our children of their future and forcing us to export our children to states with lower housing costs. The Constitution gives substantial power to governors to stop an invasion that the federal government fails to stop, and we need to be doing more than send 10 highway patrol officers to the border.
Inflation
Utah gets 30% of its state budget from federal dollars. Our state government is therefore fueling the inflation that is destroying our purchasing power, raising prices for everything, and forcing the Federal Reserve to keep interest rates high. It is no accomplishment to balance our state budget. Our State Constitution requires it. Unchecked government spending paid for with printed dollars is fueling the inflation that is making homes unaffordable. We shouldn’t be focused on finding billion dollar homes for baseball and hockey teams until we find affordable starter homes for Utah families.
Utilize our Natural Resources to Stabilize Supply Chains
The timber industry in Oregon estimates that 15 billion board feet of timber was burned in the 2020 Labor Day fire, which burned over 1 million acres of forest. It takes 26,700 board feet to build a 2,000 foot starter home. This means the Labor Day fire destroyed the raw materials needed to build 561,797 starter homes. We allowed radical welfare lawyers from environmental groups to completely destroy the timber industry in the West. One of the first businesses to shut down after the Grand Staircase Escalante National Monument was a sawmill in Panguitch.
Concrete, copper, glass, drywall, insulation, petroleum-based materials, and transportation costs have all soared since 2020. Some of this is likely due to inflation. It’s also a result of the Biden Administration’s assault on coal, oil, gas, mining, and common sense.
It’s also worth noting that of the top ten least affordable states to buy a home, nine are Western states where the federal government owns significant amounts of land. We are headed down a path where our communities will turn into enclaves for billionaires surrounded by wilderness preserves.
Utah needs to be a sanctuary state for utilization of its own natural resources and vacant lands.
Property Taxes
Even if you have a COVID era interest rate on your mortgage, you will likely notice that the share of your mortgage going towards property taxes has crept stubbornly upwards in recent years.
No one is benefiting more from the rise in home prices than the government, because property taxes are assessed against unrealized gains in real estate value. The one mine we can’t trust government to shut down is the endless gold mine of increased property tax receipts that results from increases in home values.
Utah should only tax property based on its assessed value at the time of purchase or refinance. You don’t pay capital gains taxes on unrealized gains in your stock portfolio, and you shouldn’t have to pay for unrealized gains for the property that you own. If local governments need more funds to operate, they shouldn’t rely on autopilot tax increases. They should have to vote to increase taxes, then face the voters to learn if the tax increase was acceptable. The power to tax should be constantly subject to the scrutiny of voters.
Reigning in autopilot property tax increases would immediately make home-ownership more affordable.
We can have affordable homes in Utah again, but it will require leadership rooted in commitment to the principles of free markets, limited regulation, and low taxes. I will stand for these principles.
Phil Lyman