By Mark Knold, Supervising Economist
Shelter is one of humanity’s basic needs. That is why housing is everywhere. Since housing is so ubiquitous, it becomes an important component in an economy’s foundation, and as such becomes an economic indicator.
In this issue of Local Insights, we look at the demand for housing structures, the amount of housing permits and their history, and how this history shows that housing demand follows the ups and downs of a region’s economic performance. In evaluating the volume of housing permits, we also parallel the health and vitality of the local economy.
People need jobs that supply them income in order to afford housing. Jobs are not the only factor, as things like affordability and the ability to obtain lending also play their part in housing demand. But the foundation of housing demand is the health of the job market.
The graph shows Utah statewide housing permits. A trend of normal permitting activity is evident from 1996 through 2004. Permits rose during the pre-Great Recession boom, then became lethargic for the seven years following. It is just recently that the volume of permit activity is again approaching something normal. That in itself is an economic indicator of an improved Utah economy.
To read more, see the latest issues of Local Insights. To receive a printed copy, please call 801-526-9785.