“One of the reasons you buy a home is for stability, but also it’s a way to invest in your future,” said Derek Whitworth, manager of Moonflower Community Co-op.
Whitworth has lived in Moab for seven years and loves his job, and he would like to settle permanently in Moab. He looked into available homes and loan options, but all the Moab homes he saw in his price range looked like money pits rather than investments.
For years, local governments and nonprofits have known that the lack of affordable housing is a growing problem in the region. While federal programs exist to help individuals and families who earn less than the median income, home prices in Moab are daunting—sometimes inaccessible—even for those who earn the median income or more.
The Housing Authority of Southeastern Utah (HASU), Community Rebuilds, the Moab Area Community Land Trust, the City of Moab and Grand County have all devised strategies to make housing more available to Moab-area residents. Some of those strategies are directed at low or very-low-income households, thresholds defined by the federal Department of Housing and Urban Development at 80% and 50% of the median income for the county respectively. In Grand County, the median annual income is $39,300 for a household of one.
HASU offers five different assistance programs to help people rent or buy homes. Eligibility for most of the programs requires applicants to be low- or very-low-income earners. Community Rebuilds also requires applicants to be at or below the low-income threshold.
That leaves a gap between people who qualify for federal assistance and even the lowest prices of homes on the local market.
“I was in this zone where there wasn’t any kind of assistance,” said Whitworth, who has been the manager of Moonflower Community Co-op for five years.
“Any of the houses that I’ve seen that would be in my price range—they’re going to need a lot of work,” he explained.
Making the necessary repairs and improvements would bring up the cost of the home, but seems risky to Whitworth, when it’s not certain that he could recoup the costs if he were to sell the home.
“There’s this ceiling, where no one’s going to pay that much,” Whitworth said.
Activists and elected officials have attempted to target that “zone” in which potential buyers make too much money to qualify for federal programs, but not enough to invest in the Moab real estate market.
Grand County's High Density Housing Overlay
Last year, Grand County passed the High Density Housing Overlay ordinance, which allowed developers in certain zones to apply to build at a higher density than otherwise allowed. In exchange, the developer must agree to deed-restrict 80% of the housing units in their development to primary residents of Grand County who are actively employed, with some exceptions to include retirees and people with disabilities.
“This is really more of a ‘workforce housing’ incentive than an ‘affordable housing’ incentive,” said Zacharia Levine, director of the County Department of Community and Economic Development.
Home prices in Moab are high in part due to second-home buyers and overnight rental developers willing to spend more capital than the average Grand County earner can afford.
“We anticipate these units to be more affordable than unrestricted market-rate units. Buyers and renters of restricted HDHO lots or units will not have to compete with the spending power of non-residents,” said Levine, meaning that, at least in theory, the selling prices of those units will be limited by the incomes of Grand County residents.
There is not, however, Levine noted, an explicit income-based component to the deed restriction required in the HDHO.
The overlay is currently capped at 300 deed-restricted units. So far, 270 units have been approved by the county. The largest of these proposed developments will be Peak View, located on Spanish Valley Drive, which will have 127 units total and 102 deed-restricted units. Almost as large is Viewgate Terrace, which has been approved at 122 total units and 98 deed-restricted units, followed by Villamayor, with 78 total and 62 deed-restricted units. Plans for a total of 337 units have been submitted, meaning some will have to be denied under the cap, unless some of the approved projects reduce their intended density further along in the process.
“While we suspect the restricted HDHO units will be cheaper than unrestricted market-rate units, due to the elimination of competition with second homeowners and non-residents and overnight lodging units, we don't know for certain if, or how much, cheaper they will be,” Levine noted.
One consequence of increasing the amount of housing available by hundreds of units may be a slow-down in the rapid rise of home prices in Moab, but Levine said that no one really knows for sure what the effect will be on the broader housing market.
The Land Trust Option
The health of the market is a concern for Audrey Graham, one of the founders and board chair of the Moab Area Community Land Trust. The land trust recently broke ground on the Arroyo Crossing development, a 300-unit subdivision which will reserve half the homes for people earning 100% or 120% of the area median income, and half the units for earners at 80% of the area median income. The subdivision will be completed over the next five to seven years.
“We want to phase it in,” said Graham. “We do not want to affect the market negatively; we don’t want people’s private home prices to drop.”
Graham believes housing prices will remain unaffected by the addition of deed-restricted homes, as it will not deter second-home and non-resident home buyers from wielding their higher spending power on the open market.
The MACLT was founded in 2008, gaining nonprofit status in 2012. Graham is the last of the original founders still on the board.
Graham reminisced about Lance Christy, a member who has since passed away and was “the godfather” of the group.
“He said you need a three-legged stool for a resort community to have housing, and the three legs are government input, private developers, and a land trust,” Graham recalled.
She went on to explain that local governments must support and allow affordable housing projects, but they can’t be the primary funding source because the cost will be turned over to taxpayers—an unsustainable business model. Private developers are needed to build quality homes, and the land trust is needed to manage the project and keep it financially self-sufficient.
Community land trusts are nonprofits that hold land for the purpose of leasing the property at affordable rates and do so in perpetuity.
“A land trust is a mission-driven nonprofit: its mission is to provide affordable housing, and to keep it affordable. That’s the whole mission, so that’s what we will do,” explained Graham.
“I’m very excited about the whole thing,” she said, looking out across the 42-acre parcel busy with front-end loaders and skid steers.
The development will eventually comprise a mix of apartments, cottages, duplexes and single-family homes. There will be three community buildings including a daycare center.
Housing units on the property will be available to buy or rent to individuals and families who meet the eligibility requirements, while the land itself will remain the property of the MACLT. It’s a type of “shared-equity” agreement which allows the land trust to maintain control over home prices in the subdivision.
Homeowners in Arroyo Crossing will have the right to sell their home at no higher than a 3% gain on the purchase price per year owned. Additions and improvements to homes will also have to be approved by the MACLT board to make sure homeowners don’t increase the value of their homes over the 3% per-year cap.
“That’s got its positives and its negatives,” said Graham. “If you want to make more than 3% per year [on your property], you’re welcome to—just don’t buy a house here.”
The limits are designed to encourage residents in the Arroyo Crossing development to move on to other housing once they have the financial stability to afford a market-rate home.
“You can stay here for the rest of your life and pass it down to your kids, but they will live with the same ceiling that everybody else does,” Graham said of the development.
That ceiling “is a reason to move and open up this home for the next person who needs it,” Graham explained.
The cap will also keep the new housing units from impacting the general housing market. According to the Grounded Solutions Network, a national association of community land trusts, seven out of 10 shared-equity home-buyers are first-time home buyers, and six in 10 shared-equity homeowners go on to later purchase a market-rate home.
As these new home-buying opportunities become available, community members like Whitworth might consider reassessing their options for putting down permanent roots in Moab.
Whitworth said he’s found a good rental arrangement and isn’t in a hurry to get back into the local housing market. While he’d like the stability of a home, he still has doubts about whether a home in Moab is a wise place to invest for his future, worrying that the housing bubble might collapse and take his money with it.
“My big question is just how high can the prices go?” Whitworth said.