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The state of Moab’s housing in 2023 [1]
['Editor Moabtimes', 'Sophia Fisher']
Date: 2023-11-21 22:13:53+00:00
County Government
The local housing market has cooled since the pandemic. But by some measures, it’s even less affordable.
This article is the third in a four-part series covering the intersection of housing policy and the relationship between local and state governments. The final installment, published in December, will examine solutions and paths forward.
Snapshots of Moab’s current housing scene. From left, infrastructure sits at the forthcoming Abbey Subdivision on Mill Creek Drive; a condo development rises on 100 North; Community Rebuilds apprentice Emily works on the Arroyo Crossing workforce housing development; and heavy equipment tears apart old mobile homes along 300 East.
Photos by Doug McMurdo
For Kaitlin Myers, the developments were at opposite ends of the Moab Valley but signaled the same trend.
One was a small subdivision just a mile from the San Juan County border in Spanish Valley. The other, ensconced in downtown Moab, was a block of condominiums next to the Center Street Ballpark.
Miles apart, one in unincorporated Grand County and the other in the heart of Moab, the two luxury developments connoted to Myers the crisis that would — had already begun — subsuming or intensifying all other crises: housing.
“We’ve always kind of seen luxury subdivisions come in, but for me … those were two big indicators that that is firmly the direction we’re heading now,” said Myers, the executive director of the Moab Area Community Land Trust.
Those developments took shape in 2020 and 2021 amidst the COVID-19 pandemic when real estate values in Moab and throughout the West soared.
Two years later, local housing experts agree that the sizzling market has fizzled somewhat: prices have plateaued and inventory is rising, partly due to an influx of construction projects.
But that doesn’t mean housing in Moab is any more affordable. Data demonstrate that home prices still exceed pre-pandemic levels and far outstrip local wages. One-third of residential units are second homes. Experts agree that there’s still plenty to be done to address the affordability crisis, and a new Moab-area housing plan is calling on local governments to keep tackling the challenge — full steam ahead.
“I think the last two years have just really gone to show that housing is so out of reach for the majority of residents,” Myers said. “… We’re just seeing [that] housing is so unattainable for people, even if you are making a decent wage now.”
‘A shotgun market’
That’s not to say that housing was particularly affordable in 2020 or 2021. At that time, Moab — alongside many other Western communities and rural resort towns — was experiencing a booming real estate market.
“2021 was just a shotgun market,” said Rachel Moody, an associate broker with Berkshire Hathaway. “Everything was just moving so fast you couldn’t keep up with it.”
Moody said properties were metaphorically flying off the shelves, even in farther-flung areas such as Pack Creek and Flat Iron Mesa. She remembers receiving 23 offers for a Rim Village condo, 13 for a house in Castle Valley.
That’s also when Moab’s housing values, already on an upward trend, started to spike.
According to data from the Utah Realtors Association and Zillow Home Value Index, housing values and sales prices both skyrocketed about $100,000 from 2020 to 2021 alone. Previously, it had taken four years for values to rise that much.
“For a short time, people were paying cash sight unseen at aspirational prices,” said Moab City Planning and Zoning Director Cory Shurtleff. Having grown up in Utah, Shurtleff said he saw “means that I have not seen in the West before.”
The demand in turn fueled development. Shurtleff previously told The Times-Independent that the conversion of downtown parcels into luxury condominium developments, a trend that started around 2019, increased “exponentially” during the pandemic.
But much of that behavior changed abruptly in spring 2022. That’s when the Federal Reserve started a roughly yearlong hike of its interest rates from near zero to higher than 5%, according to the Federal Reserve Bank of St. Louis. The resultingly high mortgage costs stifled buying.
“You’ve gone from a complete seller’s market to pretty much a buyer’s market,” Moody said. “…Everything just changed. It was a total whiplash.”
From sizzle to fizzle
Since that boomerang moment, local housing experts agree that Moab’s home prices have plateaued as the real estate market cooled.
“A lot of people put brakes on,” Moody said. She estimated that much of the Moab market has dipped about 10% in price.
But that doesn’t necessarily mean affordability has increased. Higher federal interest rates translate to more expensive mortgage payments.
“Even if costs are coming down, when you’re looking at a 7% interest rate it might as well be a $700,000 house [with the lower rates],” Myers said.
Plus, local officials agreed that the housing prices retain a higher baseline than pre-pandemic years.
“People are building what maybe would have been a 2010-15 attainable home, same product, same quality, but it … is now being priced at a luxury pricing,” Shurtleff said.
He and Moody agreed that $400,000 to $500,000 is now the base price for almost any Moab home. In 2015, however, average home values lay below $300,000.
“You’ve got a higher price you’re working with now in 2023 just across the board,” Moody said.
But local wages don’t seem to have kept up. According to the Moab Area Affordable Housing Plan, a household in 2021 needed to earn nearly $150,000 to afford an average-priced home. But the same year, average Grand County incomes were only $40,000.
“We weren’t seeing that [gap] before 2021,” Myers said. “I think when we were looking at workforce housing in the 2018-2021 window … we were still thinking of potential workforce families as those making in the less-than-$100,000 range … now we’re just seeing [that] housing is so unattainable for people even if you are making a decent wage.”
Moody also predicted that housing prices could simply spike again the next time interest rates fall.
“If you have enough inventory, it could keep your prices stable,” she said. “If interest rates go back down and everybody buys everything up, you’re going to get back to a position of supply and demand issues.”
Construction, but what kind?
At the same time, Moab is certainly gaining real estate inventory, local experts and officials agreed — partly from a cooled-off market and partly from a flood of construction.
Bill Hulse, Grand County’s building official and floodplain administrator, told the Grand County Commission in October that his office saw about the same number of construction permits this year as last, but a larger proportion was earmarked for residences rather than hotels or big commercial projects.
Data from the county building department demonstrates that in 2021 and 2022, the last year full data was available, unincorporated Grand County and Moab together saw 121 and 91 new units, respectively. Those values exceed almost any years ranging back to 2014.
“We have a lot of new construction right now and the new construction is from pent-up demand,” Moody said. She said her brokerage now has 133 residential units for sale, compared to 12 to 15 in early 2022.
“2023 is definitely the year of inventory,” she added.
And there’s likely more coming. Elissa Martin, the director of Planning and Zoning for Grand County, said there’s an “astonishing” number of approved but unbuilt units in the Moab Valley. Shurtleff said he’s fielding more and more calls from developers offering affordable projects, and that accessory dwelling units are seeing steady interest.
“We’re starting to see more and more creativity that way within the housing realm,” he said.
But in many cases, it can be hard to tell what kind of housing is coming online. While multiple large developments providing workforce or income-restricted housing are in the works — Arroyo Crossing and several High Density Housing Overlay projects, for example — there’s no system to track small subdivisions and one-off projects from building permit to sale price and beyond.
Noelle Gignoux, a former Grand County planning technician, noted at an Oct. 30 Grand County Planning Commission meeting that the county is exceeding the construction goals in its 2017 housing plan, but “there’s no really great way to track the value of houses that are being built and who’s living in them.”
“We know just anecdotally,” Gignoux said, “… a lot of [the units developed] were high-end developments and were also second homes.”
The road ahead
As the housing market quiets local housing experts are honing their recommendations to local governments on how to address the affordability crisis.
The Moab Area Housing Task Force, which created the affordable housing plan, was clear in its directive: deed restrictions, deed restrictions, deed restrictions.
“We lean heavily in favor of deed restrictions in this plan,” said Laura Harris, a development specialist for the Housing Authority of Southeastern Utah and chair of the task force, at the Oct. 30 planning commission meeting.
Currently, nearly 600 units throughout the county are deed-restricted for local occupancy or income. The plan calls for an increase to 1,500 by 2030 through a community-wide program that ideally offers incentives to participating homeowners.
Myers, who’s also the vice-chair of the housing task force, said deed restrictions are the only way to ensure that new construction serves locals, not second homeowners.
“Short-term rentals, you can use a business license or something to regulate that,” she said. “You can regulate where that use can go. But you can’t regulate against second homes in a land use code.”
Currently, one-third of Grand County’s housing stock is taxed as a second home, according to data from the Grand County Assessor’s Office.
Several experts said there’s also a need for more direct forms of subsidy.
That’s the take of Wilf Sommerkorn, the deputy executive director of nonprofit Utah Land Use Institute.
“To really address the affordable housing crisis, there’s got to be something done on the finance side of it,” he said.
Moody agreed. She said she wishes the Federal Reserve could offer lower interest rates for first-time homebuyers and low-income households.
Myers said she thinks subsidies — federal, state or local — are specifically needed in Moab to offset the relatively high cost of materials and labor.
“We can’t change interest rates, we can’t change construction prices, so the cost to build is going to stay the same,” she said. “The only way to bring that price down is to put subsidy in.”
Myers said the community needs to “proactively and aggressively” pursue more affordable housing policies, such as subsidies and deed-restricted developments. Otherwise, she said, the market will continue to provide luxury second homes such as the two developments that set off her internal alarm bells in 2021.
“Something that someone from Park City told me within my first few weeks of moving to Moab is that you need to start working on addressing these things yesterday, because when you start losing the soul of your community, you’ll never get it back,” Myers said. “I feel like that’s what we’ve actively watched happen. I think Moab’s doing a lot more than people think to more proactively solve our housing crisis, but there’s still a lot of work to do.”
This reporting project is made possible due to a grant from the Center for Rural Strategies and Grist.
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