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Alternative housing could mitigate decreasing affordability, advocates say

With housing costs rising rapidly in the Salt Lake Valley, some advocates believe affordable solutions may lie in dow...

Posted: May 7, 2018 8:25 AM
Updated: May 7, 2018 8:25 AM

With housing costs rising rapidly in the Salt Lake Valley, some advocates believe affordable solutions may lie in downsizing the way people live.

A few community advocates have introduced less expensive housing that could mitigate the growing affordability concern. Salt Lake resident Jeffrey White has spent decades in the real estate business as a broker and more recently as a non-traditional homebuilder.

A few years ago, he designed and constructed Sara House, located in the Glendale neighborhood in Salt Lake City, as a model for a possible alternative housing option. The dwelling was built using a discarded shipping container. The containers used are typically 20 feet or 40 feet in length and just over 8 feet high, White said, and can be constructed using a "kit" process that would allow almost anyone to build their own home.

The 20-foot, one-bedroom, one-bathroom model would cost about $36,000, while the larger model, which has an additional bedroom, would cost about $70,000, he said. He built a 432-square-foot model in a workspace located in the Granary District near downtown Salt Lake.

While not familiar to many in Utah, container homes have been used in other cities and abroad for decades, he said.

"We have built with containers before and those are the two models that somebody (with lower skills) that knows their way around a hammer would look at this and say, 'Yeah, with a couple of friends, we could put either of these homes together.'"

The construction time would generally take a few days to a couple of weeks, he noted.

A somewhat similar designed was developed in Summit County with the development of Park City Base Camp, an answer to the call for affordable, functional, and flexible housing for seasonal workers, the homeless, emergency shelters, and special event spaces, explained project developer Blake Christian.

The unique design was developed as an 'ultra-green,' sustainable housing solution, said project designer Roi Maufas with Salt Lake City-based Gorilla Design.

Beginning with a used 45-foot shipping container, the unit can be made into an ultra-efficient, fully functional living space that sleeps four, uses recycled materials such as bamboo cabinetry and flooring, generates solar power and offers a minimal physical and carbon footprint, he said. It boasts the same 'bones' as White's design, along with amenities such as 320 square feet of living space, optional shore-supplied or plug-in power, solar power that generates 5.9 kilowatts of power even in moonlight, on-site sewage treatment via bioremediating toilet, full insulation, a full kitchen and bathroom with shower, heat recovery ventilation system for efficient fresh air supply and low-voltage LED lighting.

He said the model would cost between $80,000 and $150,000 depending upon customization. He added the goal of his project is to develop a manufacturing facility and create jobs "in new, emerging green technologies" that pay a "living wage" in the $15 per hour to $26 per hour range, depending upon skill set.

"This model was developed for the worker population of Park City," Maufas said. "But it's become more about starting a genuine conversation about affordable housing and sustainable economic development."

That idea is exactly what other advocates say can help mitigate the complicated matter of housing affordability, said June Hiatt, Director of Policy and Advocacy at the Utah Housing Coalition. Bring various stakeholders, including state and local civic leaders, together to address the issue of how to tackle the affordability issue facing the Wasatch Front today, she said.

The Salt Lake Board of Realtors reported that the median single-family home price in the first quarter climbed to $340,000 - 13.3 percent above the median price of $300,000 in last year's first quarter. The county's median home price reached its highest point ever recorded, up 11 percent over the previous peak in the summer of 2007 when the median single-family home price was an inflation-adjusted $306,624, the report stated.

Additionally, the Kem C. Gardner Policy Institute recently released a study on the rapid appreciation of housing prices in Utah and the increasing threat to affordability, especially along the Wasatch Front. Researchers discovered that significant employment and demographic growth has fueled exceptionally strong demand for housing - both rental and single-family, which has put upward pressure on housing costs.

Data from Irvine, California-based ATTOM Data Solutions showed the affordability gap in the Salt Lake metro area growing as the demand for housing rises. For the eighth straight year, vacancy rates for rental apartments in the Salt Lake valley declined - down to the lowest rates ever. A Sept. 2017 report by Cushman & Wakefield indicated the apartment market is currently at historic levels with mid-year figures showing the vacancy rate of just 2.6 percent - the lowest ever reported and that trend is continuing.

However, developers are responding by building scores of new units in an attempt to meet demand. Last year marked the sixth consecutive year with an overall vacancy rate below 4 percent, the report stated. While the optimal vacancy rate is considered to be around 5 percent, said Kip Paul, executive director of investment sales at Cushman & Wakefield's Salt Lake office.

One local developer saw the trend for smaller urban living space becoming a growing trend nationwide a couple of years ago. Prompted by the "tiny house" or small-house movement - an architectural and social drive advocating simple living in spaces typically under 500 square feet - developer Steve Ruf of Ruf and Associates in Orem built 60 units of micro-apartment housing in the Central Ninth neighborhood of Salt Lake City directly across from the 900 South TRAX station.

The Greenprint Apartments include two four-story buildings that house 30 units each with 250 square feet to 350 square feet of living space, a bathroom and a kitchenette. Rents range between $700 and $800, Ruf said.

"It's affordable (for new housing) because of the price point," he said.

He said the idea for the micro-units was born after a visit to Seattle and Portland in the Pacific Northwest where such housing options have worked well, particularly in cities where housing costs are higher than average. He also saw similar units in Des Moines, Iowa, he added.

"We thought, 'Wow, this could work really well in Salt Lake, especially with what is going on with the housing market here,'" Ruf said, noting the increasing demand for affordable apartments by the younger demographic.

"We're trying to attract professionals, millennials, people who want to have a small (environmental) footprint and who don't necessarily want or have cars," he said. These are people who want a more urban lifestyle, he added.

Meanwhile, among the main hurdles to climb for container homes or even alternative rental units would be state and local ordinances that have yet to consider non-traditional building materials and structures, as well as density levels, Hiatt said. It's an issue legislators and municipalities would have to take on sooner than later if the problem isn't to become too big to handle, she said.

In Utah, we have 68,762 extremely low-income households with earnings less than the poverty guideline or 30 percent of area median income, Hiatt explained. Across the state, there is a deficit of 47,180 rental homes both affordable and available to extremely low-income households, she noted, 68 percent of such households pay more than half of their income on housing.

"In the short run, the state of Utah and cities need to put money into housing. They need to 'put money where their mouth is,'" she said. "The state can allocate funding to the development of affordable housing to supplement the skyrocketing cost of building (new units)."

Addressing affordability in Utah's costliest county

According to Zillow.com, the median home value in Park City is $679,189, with a median list price per square foot in the Summit Park metro area above $600 - making it the most expensive residential real estate in Utah. Because of that expense, affordability has been a long-standing concern, particularly for the scores of employees that work at area ski resorts as well as local municipal workers and people in fields like public education.

A recently proposed residential housing plan could offer a possible solution to the issue of affordability. Discovery Ridge, scheduled to break ground this spring, will be a 70-acre mountain residential development that will include 97 lots, 30 of which will be set aside as "affordable" units, explained Mitch Beckstead, managing partner with Salt Lake City-based American Landmark Group.

"It's 50, 60 and 70 percent of average median income (for Summit County)," he said. The plan is for 10 units for each income segment, he noted.

The need for increased affordability came from a 100-home community the company built in North Dakota during the energy boom. It was then he realized how expensive housing was becoming and that something needed to be done to allow "average" wage earners to be able to live in the communities they were working in, he said.

"I got to know the state police, border patrol, sheriff's office and they had no place to live," Beckstead said. "Rents were $4,000 a month and they couldn't find houses (they could afford)."

Fast forward to today, he noted that when Summit County required affordable units to be included in the Discovery Ridge development, he asked civic leaders to designate the lots for public safety and teachers.

"The reason why is because when we have (an emergency) situation, 65 percent of the public safety people live in the Salt Lake Valley because they can't afford to live up there," he explained. Upon hearing his suggestion, local civic leaders concurred and the plan was approved, he said.

With real estate prices escalating rapidly, solutions like this are critical to future development, Beckstead said. Governmental entities also should consider streamlining the approval process to help developers keep up with increasing demand, he added.

Lastly, he noted, municipalities will have to reconsider density restrictions rather than continuing to demand large lots as land prices rise and demographic changes shift demand away from traditional, stand-alone single-family properties.

"The market is not going to support it (going forward)," he said. "(Conversely) there is not one city in the state that wants (high-density housing). Condo flats and townhomes - cities do not want them."

He said with the younger generation moving away from large homes to smaller (and even tiny) dwellings, cities will have to shift their priorities in order to accommodate the new breed of buyer and renter.

"Millennials don't stay in the same house for (decades)," Beckstead said. "They stay for 10 (years) and leave."

Municipalities will need to learn that lesson sooner rather than later in order to mitigate the growing affordability issue in Utah, he said.

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