BUILD OUT: Population growth will reshape Utah's housing landscape.

• Author: Madison, Rachel
• Position: Build Out

Utah's residential real estate market has had a similar story over the past few years: dwindling inventory leading to increasing prices, along with continued growth in the multi-family sector. But Utah is projected to double its population by 2065. That unprecedented growth is expected to have an even larger impact on housing in communities--and those trends of the future are already starting to show up today.

A challenging environment

Jed Stewart, vice president of land acquisition at EDGE Homes, says one of the biggest challenges builders are facing right now is the ability to deliver homes on demand. That's directly related to the lingering labor shortage from the Great Recession, when many construction workers left the field and pursued careers in other trades.

And while the lack of inventory and labor is not a new concern, it's a lingering one, Stewart says. However, he believes it will get better over the next couple of years. "Those of us who are in the industry still feel the pain of 2008," he says. "People are nervous to add staff and build companies back up and grow again because they're worried it'll all fall down again. With more years of solid growth, that fear will go away--that's my hope anyway."

Ari Bruening, chief operating officer at Envision Utah, says while the labor shortage is a current challenge, the even bigger challenge Utahns will face in the near future is a lack of land supply.

"We can't just keep growing outward because we hit mountains and lakes and federal land," he says. "Increasing prices are just going to get worse. Are we going to create the opportunity for more housing within the existing valleys along the Wasatch Front or are we going to eventually require our growth to happen in the next valley over? I think what we're seeing right now is the tip of the iceberg. The lack of land is going to be an issue for a long time, and I think that raises the question: Are we going to find ways to accommodate limited land or not? Will people pay a lot for housing close to their job or pay less and live farther away?"

Because land is becoming less and less available, builders are choosing smaller and smaller lots to keep homes affordable, adds Stewart. "Land rates are around $300,000 an acre now and can go to a price point over $400,000. Unless we do multifamily, it eliminates so many buyers," he says. "Our business model is building about 1,200 units a year. Three years ago we were exclusively single-family [home]...