Real Estate

Utah Gov’t. Looks to Go Rural – How Will It Impact Real Estate?

Utah’s state government responded to coronavirus in much the same way most other states responded. They encouraged as many state workers as possible to work from home. They also relocated some of their urban offices to more rural locations where business could be conducted under less crowded conditions. Now it looks like the state wants to make some of the changes permanent.

There is a move on to spread state agencies and workers more evenly across the state. In addition, the primary focus is to put more government in rural areas, rather than concentrating in Salt Lake City and Provo. Among the many questions, the plan has created is one of how the government going more rural will impact local real estate.

Concentrated in the Cities

The majority of Utah’s population resides in the Salt Lake City, Provo, and St. George metropolitan areas. And in Salt Lake City and Provo, real estate is quickly becoming prohibitively expensive for new residents. Much of that is due to Salt Lake City’s booming business environment. However, the state seems to think that concentrating its activities primarily on the Wasatch front is adding to the problem.

Wherever there is a concentration of government agencies and workforces, there is also a disproportionate concentration of residences and those tertiary businesses that support the government. By spreading state government around, and especially into rural areas, Utah Governor Spencer Cox believes they can relieve the pressure on Salt Lake City and Provo.

If he is correct, the two cities could see a leveling of property prices in the coming years. But then again, the government moving out would offer more space for companies moving in. The state could go through the time and expense of spreading out only to realize their actions have had no impact on easing congestion and stabilizing the real estate market.

A Supply and Demand Business

CityHome Collective, a Salt Lake City real estate broker that also offers interior design services, confirms that local home prices continue going up. But they also acknowledge that real estate is very much a supply and demand business. Prices are being driven primarily by demand that continues to outpace supply.

Builders are putting up everything from single-family dwellings to expensive luxury homes as fast as they can. Existing condos and lofts sell as fast as they can be put on the market. Some of the market frenzy could be due to the concentration of government agencies in the region. But most of it is the result of a strong economy that is attracting all sorts of new business.

The Impact on Rural Areas

State government spreading out will probably have little impact on the cities that now house most government operations. However, the impact should be felt in rural areas. As government agencies relocate to those areas, they will bring jobs with them. They will also need tertiary businesses to support what they do. Rural property prices will rise as demand for these properties increases.

The one thing that could derail the plan is remote work. According to the state, some 40% of its workers do not need to come to the office; they can work remotely. If this is the case, some of the agencies that relocate to rural areas might not necessarily bring jobs with them. Small office staff might relocate while the majority of workers stay where they are and work from home.

Utah government is looking to go more rural. If their plan is realized, will it have an impact on real estate prices? Only time will tell.

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