The affordability gap in Grand County is in large part due to low wages, which limit or prevent homeownership and payment of market rate rent by many households. Most housing plans, policies, and programs focus on housing supply and housing prices, but it is equally important to evaluate and increase wages and income. Housing affordability depends on a balance between housing prices and income.
The affordability gap refers to the large and growing difference between wages and housing costs. Similar to other isolated, amenities-based, rural gateway communities surrounded by public lands, housing costs in Grand County have risen much faster than wages. Because demand continues to rise faster than supply, prices continue to increase.
In May 2015, the median list price for all housing types within Grand County was $290,000 whereas the average list price was $351,700. Several high-priced properties in the area push the average higher than the median. These numbers offer just a momentary snapshot of houses listed for sale.
When considering only houses that actually sold during the year 2015, the median list price was $269,000 whereas the average list price was $277,549. The significant differences are likely associated with sellers attempting to capture the highest equity possible and overshooting what the market will bear. Additionally, higher-end homes tend to list for longer time periods and not all property listings sell at their asking price.
In 2013, the most recent year in which standardized data exists, median rental costs (rent + utilities) were $1,000 per month. In August 2016, a survey of local property management companies revealed only 19 rental units were available at prices that would be affordable to households earning less than 100% of AMI. However, fewer than five such units would accommodate households with more than two adults and a child. Current sales and rental prices place most market rate housing units out of reach for Grand County residents, and limits upward housing mobility.
External market demand continues to increase housing prices and limit or reduce the inventory of affordable housing. Like many other rural gateway, tourism-based communities, Grand County is a desirable housing market for individuals and investment firms located around the world.
Grand County’s beautiful landscape and moderate climate make it very appealing to out-of-area investors. Consequently, the local housing market has experienced increased external market demand for second/seasonal homes, short-term rentals, retirement homes, and general investment properties. External market real estate purchasers have the ability to and typically do bid at higher home purchase prices than those supported by prevailing wages in the local market. Each home sold at an increased price reduces the quantity of housing that otherwise could be sold to the local market at its particular need and price point, and increases the sales price of all housing in the inventory.
In addition to the construction of new housing units to meet the external market demand, local housing professionals report that:
The result is a reduction of “affordable” housing units and upward pressure on housing prices. While more recent (2008-2009) economic influences may ultimately contribute to a temporary decrease in external demand for housing, and ultimately housing prices, these external influences on the Grand County housing market are still very real. Almost all new housing built since 1998 would have to drop more than 50 percent in price to reach affordability for the median income Grand County household.
Although existing housing tends to be more affordable than new housing, older units in declining condition require more maintenance, which increases overall housing costs, and may even be in dilapidated or unacceptable conditions. Neither the Southeastern Utah Association of Local Governments (SEU-ALG) nor Grand County has performed a housing inventory since 2005, when 1,507 or 35% of all housing units were considered to be in either dilapidated or unacceptable conditions.
According to the 2013 American Community Survey, 69% of all Grand County housing units were single family detached dwellings and 19% were mobile homes. Mobile homes were built to very poor construction standards and today would not be considered acceptable. Banks will not provide loans for mobile home units, which makes an entire class of housing units almost non-transferable. As a result the number of households living in “extended stay” spaces in commercial RV parks and campgrounds has increased. A Grand County survey of all commercial facilities suggested that 117 spaces are now used for periods of 30 or more days (Zacharia Levine, 2015).
In 2013, 61% of all owner-occupied housing units in Grand County were constructed prior to 1980. Of all renter-occupied housing units in Grand County, 51% were constructed prior to 1980. Aging housing units with higher maintenance costs represent the majority of affordable units in Grand County, but they also require the highest levels of maintenance.
Due to the condition of all types of homes in need of repair in the housing inventory:
Hotels, commercial campgrounds, recreational outfitters, restaurants, and retail stores create the largest block of demand for seasonal workforce housing. Indeed, businesses in these industries have experienced the greatest challenges in employee recruitment and retention due to the lack of affordable housing. In summer 2016, the Interlocal Housing Task Force conducted a survey of hotels/motels, commercial campgrounds, and recreational outfitters to better understand employer-provided housing for seasonal employees. The survey also provided information regarding needs and opportunities for employer-provided housing and highlighted the link between workforce housing and economic development.
A total of 16 surveys were administered to commercial campgrounds and RV parks. Nine campgrounds provided at total of 15 employee housing units on-site to resident managers. Of the eleven hotels/motels responding to the survey and accounting for 285 employees, 77 employees received employer-provided housing. Information was not collected as to the number, type, or quality of the housing units.
A total of 35 surveys were administered to recreational outfitters across the following activities: cycling related, canyoneering/climbing related, water sports related, retail recreation, air sports related, and miscellaneous. Respondents represented outfitters that, in total, accounted for 548 employees. Part-time or seasonal employees accounted for 72 percent (72%), or 392 employees. Respondents reported approximately 225 part-time or seasonal employees needed housing. Seven outfitters provided on-site or nearby housing to such employees, eight reported a desire to provide on-site housing in the form of camper vans and RVs, and nine did not know if on-site housing was permitted in their zoning district. Employers identified four types of housing utilized by part-time and seasonal employees: shared rooms or dwelling units, camper vans, tents, and “couch-surfing” with friends. Five respondents supported the creation of managed housing for seasonal staff in the community, eight opposed, and ten were unsure of such a system.
The vast majority of responding recreational outfitters (19) cited the lack of housing as one of the most important and impactful challenges affecting their employee recruitment and retention. Fifteen suggested the lack of affordable housing limited their abilities to grow their businesses. Although many employers created unofficial policies to hire local residents only because, presumably, they would already have housing, the majority felt that local residents could not fill all the job openings across the community.
Clearly, there is an undeniable link between housing and economic development. In a tourism-based community, workforce housing becomes an integral input into business development. The gap between wages and housing costs and the shortage of housing supply have the potential to hinder economic expansion in Grand County.
Currently, at least 1,000 households earning less than 80 percent (80%) of AMI in Grand County are cost-burdened, which means they spend more than 30 percent (30%) of household income on total housing costs including mortgage or rent, taxes, insurance, utilities, and HOA fees where applicable. At least 400 households earning less than 80 percent (80%) of AMI are severely cost-burdened, which means they spend more than 50 percent (50%) of household income on total housing costs. Cost-burdened and severely cost-burdened households already have housing, but some may feel it is appropriate to consider 1,000 units the baseline need. However, this figure is not included in the future demand projections presented below.
The charts on this page present the results of a specified model used to project future housing needs in Grand County. It should be noted that models used to forecast future housing demand are only as good as the data and assumptions used to create them. Forecasts also become less reliable as the forecasting period increases. For instance, the model uses recent population trends to forecast future population trends. However, any given year may result in atypical population growth, either lower than estimated or higher than estimated. The model also assumes the share of owner-occupied versus renter-occupied housing units remains the same over time. While this assumption has been included to simplify the modeling exercise, national and regional trends suggest the share of renter-occupied housing units is very likely to rise further in the coming decades.
Additional assumptions used to specify the model are noted below:
Housing affordability is based on the following parameters:
Each of these assumptions can be manipulated to reflect different expectations for Grand County’s future. If Grand County continues to mirror the trajectories of similar tourism based economies in the American West, vacancy rates may climb to 40, 50, or even 60 percent, if not higher. Models are inherently limited in predicting the future due to the necessity of making assumptions. In recent years, planning has shifted more towards scenario planning, where decision-makers select a set of policies based on a range of possible future states. Nevertheless, the model provides a useful exercise in understanding future housing demand. The forecasts should be used as a guide for policymaking, and not considered hard predictions.
With the abovementioned assumptions in mind, the housing model suggests,
Housing costs and economic development are inextricably linked in all communities. In Grand County, housing is economic development. In recent years, employers across all industries have struggled to attract and retain qualified candidates to fill position vacancies. This trend is especially true for essential employment positions such as teachers, nurses, law enforcement officers, public officials, and others. Job candidates considering a job offer within Grand County are increasingly unwilling to relocate to Grand County to accept a local job offer. Candidates have articulated a strong desire to live and work in the community, but cite the large gap between wages and housing costs as the primary impediment. Individuals currently employed within Grand County are also leaving the community to seek jobs in other communities. In order to sustain the positive economic growth Grand County has witnessed in recent years, the construction of housing units for long-term occupancy must keep pace with the growth in demand.
Increasing wages will also reduce the affordability gap for working households. In 2015, the ownership affordability gap for a single worker earning the average payroll wage across all industries was $185,851. The renter affordability gap for a single worker earning the average payroll wage across all industries was $380/mo. However, for a single worker employed in a tourism related industry, where the average annual wage was $24,750, the ownership affordability gap was $223,110 and the renter affordability gap was $531/mo. Public officials and community leaders have stated that diversifying the local economy represents a primary goal. Supporting business expansion, retention, and recruitment in industries that pay higher than average wages will enable employees of such industries to better compete for available market rate housing.
low household income
high housing costs
External market demands
condition of housing inventory
housing needs projections
wages & housing affordability