With a new bill before the Legislature, Utah can take one small step toward ensuring the American Dream.<\/p>\n\n\n\n
The housing crisis<\/a> facing the United States is not just about housing stock, zoning, mortgage rates or government regulations. The ability of Americans to buy their own home is at the foundation of family formation and wealth accumulation sufficient to create a middle class. It also provides the material foundation of the American conception of freedom. As President Franklin D. Roosevelt put it, \u201cA nation of homeowners, of people who own a real share in their land, is unconquerable.\u201d Dispersed property ownership is one key hallmark of democracy.<\/p>\n\n\n\n But we\u2019ve seen that foundation eroded by what some have called the \u201cnew feudalism<\/a>.\u201d Young families have been forced to become a type of serf, where they will stand very little chance of getting on the property ladder, and where the wealth they might otherwise have built for their family\u2019s future goes to high rents instead. Neighborhoods and communities are weakened in the new feudalism, for property-holding is associated with greater emotional and economic investment by families. Fertility rates are also affected by the ability to own housing, as young families prefer less dense housing, cost stability and the ability to build equity to help meet the family\u2019s needs.<\/p>\n\n\n\n In addition, to whom a young family\u2019s rent is paid has also changed dramatically. Investment firms have robustly moved into the single-family housing market, in addition to their traditional interest in multiple-family dwellings. Approximately 1 in 5<\/a> homes is bought by an investment firm now (in some areas, it\u2019s 1 in 3<\/a>), and homeownership rates are dropping<\/a>. In the 1970s, homeownership stood at about 63%; among young adults, it\u2019s now down to 37%, and that\u2019s not necessarily by choice. Investment bidding on housing has driven up prices dramatically. <\/p>\n\n\n\n These powerful landlords have raised rents by an average<\/a> of 23% nationwide in the past year, and up to 40%<\/a> in some locales, as well as tacked on numerous new fees<\/a> (some patently extortionate<\/a>), not to mention the euphemistically called practice of \u201cre-tenanting<\/a>.\u201d Repairs are now typically made the responsibility of tenants. One renter described<\/a> her Wall Street landlord as \u201ca huge, billion-dollar slumlord.\u201d<\/p>\n\n\n\n In short, there are profound costs not only to families, but also to our entire society, from this shift in the housing market.\u00a0Many counties and municipalities are taking action to limit the worst excesses.\u00a0In an earlier article, I\u00a0survey<\/a>\u00a0many different approaches, which center around coming up with ways to restrict sales of housing to corporations and investment firms, and also devising ways to incentivize corporations and investment firms to sell housing stock they already own to ordinary buyers.<\/p>\n\n\n\n How to take the first step? I have been heartened to learn there is a bill being proposed in the Utah Legislature at this time that endeavors to do just that: HB0511<\/a>. This bill would mandate that owners of single-family rental units, not to include apartments, must identify themselves and also how many such units they own. It is important to be able to know whether the owner is a corporation, an individual or a \u201cpass through entity\u201d (an intermediary for another entity). <\/p>\n\n\n\n It\u2019s also important to know whether such an owner owns 10-50 such units, or more than 50 such units. Without this knowledge, to what degree the Utah housing market has been bought up by investment firms or foreign-owned firms cannot be known. Knowledge is power, and this knowledge is the first step for Utah to tackle the situation.<\/p>\n\n\n\n This same logic is echoed in another bill proposed in this legislative session, HB516<\/a>, that would prohibit sales of Utah land to foreign entities. The bill mandates county recorders report any such proposed to the Utah Department of Public Safety. Land is very important, but equally important are the single-family residences that Utah\u2019s families must live in as renters. We need to know ownership of both. <\/p>\n\n\n\n But it\u2019s also important for the Utah Legislature to begin to disincentivize build-to-rent schemes, and incentivize instead build-to-rent-to-own<\/em>. In Utah, many new build-to-rent developments are cropping up on what was once farmland. While we may applaud the addition to Utah\u2019s housing stock, it\u2019s important for all the reasons outlined here to enable renters to eventually become owners of this housing over time. Indeed, rent-to-own is one of the most promising avenues<\/a> to enable young families to get on the property ladder in a time of high interest rates and high housing prices. Not just the Legislature, then, but municipalities, developers and those who sell land to developers should consider how they can add their efforts to this worthy goal.<\/p>\n\n\n\n