Utah’s business landscape is rich with professionals who have le...Read More
Social Media and Employers: Friends or Enemies?
The Case for HSAs
Time to Show Up
Make a Move
In the Lab
Rent to Own
Back from the Dead
A Breath of Fresh Air
Travel & Tourism
The country is headed toward a big shift to rentals and downsizing that will not reverse any time soon, and Utah will see the trend to a somewhat lesser degree, said Arthur Nelson, executive director of the Metropolitan Research Center and director of the Master of Real Estate Development program at the University of Utah. Nelson spoke at a meeting of NAIOP, the commercial real estate development association, Thursday morning about Utah growth trends and projections.
The state is following national demographic trends, but has a few differences that will keep the housing market better than the national market, he said.
From 2010 to 2040, Nelson said about half of the state’s population growth will be minorities, and almost all of Salt Lake County’s growth will be minority groups. This will drive down homeownership unless schools begin to focus more on bringing up minority educational attainment levels, Nelson said. Utah is 46th in Latino high school graduation rates.
Since programs to help minorities stagnated in the 1990s, he said minority groups have plateaued in educational attainment. The gap in educational attainment ends up being very significant, Nelson said, because even a 10 percent difference in grades can eliminate some career choices. Lower-paying careers mean minorities are less able to afford a home.
“I worry about our ability as a society, a state and other states—we’re not alone in the state—to bring the education level up of the next generation of new majority children to be a part of our new economy in terms of skill sets and educational attainment,” he said, using the term “new majority” to describe minority groups.
Black and Hispanic homeownership rates are 30 percent lower than white homeownership, while Asian and other groups are about 15 percent lower. As more of the U.S. population becomes minority, homeownership will decline, Nelson said.
“[W]e need to come to grips with the future, because the future is decidedly more into the minority, the new majority, population growth,” he said. “And so we have a challenge to sustain our economic competitiveness around the world.”
Between the increasing minority population and the aging Baby Boomer generation, renters will account for almost half of all net new housing needs between 2010 and 2040, Nelson said.
Housing on the urban fringe is declining as Boomers have begun to downsize and move into smaller homes, assisted living communities and rentals, he said. The country’s elderly population will increase from 20 million to 80 million between 1970 and 2040.
“By the end of this decade, 2016 and after, we’re going to see more Boomers beginning to sell their homes than buy their homes,” Nelson said.
Amplifying the move into smaller homes in more urban areas is the rising price of gas. Gas prices are going up 10 percent a year, compounded, and for the first time people are beginning to make housing choices internalizing gas prices.
While Utah will see these changes to a lesser degree because of a young population, and strong family and community ties keeping people in homes, the state will still see a shift, Nelson said.
In addition to helping increase minority educational attainment, city planners and homeowners can help older people stay in the neighborhood and keep property values higher by offering mixed residential developments, he said. If people have a variety of housing choices in one area, such as attached units, rentals, and larger and smaller lots, they will be more likely to stay in the area instead of moving.