WEST JORDAN, Utah — In his "State of the State" address last month, Gov. Spencer Cox called for the construction of 35,000 new starter homes over the next five years.
It's part of an effort to make it easier for first-time home buyers to break into the housing market.
"I believe the single largest threat to our future prosperity is the price of housing — period," Cox said. "For more than a century, homeownership has been the cornerstone of the American dream. It is the key to financial independence and the ability to break away from government support. While we need more of everything, my focus is on affordable, attainable, single-family, owner-occupied, detached housing."
Cameron Diehl is the executive director of the Utah League of Cities and Towns.
“We're responsible to provide public safety in perpetuity, we're responsible to take the dirty water away and bring the clean water to the house and handle all of the services that come with housing units," Diehl said.
That takes money — and lots of it.
"Before I even dig the hole and start putting in the foundation and framing, I have to spend $158,000 to buy the land to pay all the permits and impact fees, and then to improve that ground, which has become so expensive. So before I even start, I’ve spent $158,000,” said Clark Ivory, the CEO of Ivory Homes.
That was at a big luncheon in December with many of Utah’s power brokers.
FOX 13 News spoke with Ivory this week at his company's headquarters.
"So in 2019, January, the price was $322,000. For a single-family home, that was the median price. And today, it's 535,000, so that's [an increase of] 66%," he said.
That puts newly constructed starter homes out of reach for most first-time buyers.
Ivory Homes has partnered with the city of West Jordan on two major projects. They say they're trying to keep the price of starter homes down. Ten percent of the homes being built as part of the "Dry Creeks" project are deemed "affordable."
"Affordable means something different, I think, to everyone," said Tauni Barker, the legislative liaison for the City of West Jordan. "Governor Cox has defined that as a starter home somewhere around $350,000. It's almost impossible to find a starter home for $350,000 here in the Salt Lake Valley."
"Can you build it for 300? No. How about 400? Maybe. But if we can do more to get rid of some of the costs ... that are impact fees or taxes or regulation, that'll help," said Clark Ivory.
Impact fees for a single-family home in West Jordan are:
- $269 for fire
- $371 for police
- $3,495 for sewer infrastructure
- $4,423 for parks
- $6,600 for water infrastructure
The total: $15,166 per lot.
“Infrastructure costs have gone up with inflation, just like everything else. The cost of building a road or a bridge or even a water tank is significantly higher than it was even five years ago," Barker said.
Barker says a water tank that cost $12 million to build four or five years ago now costs $25 million. Ivory says the longer it takes to get land developed, the more it costs developers.
“So everyone says yes, it's a big deal. Everyone says yes, we have to do more. But when it comes time to really do a lot, we're making baby steps," Ivory said. "What we really need is to see regulatory reform in a big way, where cities allow much better density. If it were just even one unit more per acre, it would make a huge difference."
But for numerous reasons, cities worry about increasing density.
“Now, I don't know what it's like in your neighborhood, but I know some of our residents would get pretty upset if grandma and grandpa's acre down the street turned into 8-10 homes overnight, right?" Barker said. "And so that's where we get a little concern. That's where we say, 'Whoa, hey... let's keep these decisions local.'"
Ivory also points to how, in every city, residential development takes longer than commercial development.
"I think it's because they see that they're going to get a lot of tax revenue immediately, and that's something that they're really hungry for," he said.
Barker disagrees, in that the larger the residential development the longer it takes.
"So you can see. When you start comparing, I would still wouldn't say that's apples to apples. But when you start comparing at least apples to oranges, we've got two fruits. They're both round, then they do seem to take about the same amount of time," said Tauni Barker.
In the Dry Creeks development currently underway by Ivory Homes, there are about 2,600 housing units.
"That's going to bring about 9-10,000 new residents into our city, conservatively. That's the size of Alpine. That's like building a new city of Alpine on the west side of our city. It is absolutely crucial that we get these things right," Barker said.
"What is it that they're most concerned about is just change, and change for some people is scary," Ivory said. "At the end of the day, Utah is changing, and the more we do to embrace the change and the growth, and to make sure that it's done in a responsible and smart way, the better off we are."
Diehl with the Utah League of Cities and Towns says one of the biggest challenges for both developers and cities is having enough money for the infrastructure to support these projects. House Bill 13, which has passed in the Utah House and is in committee in the Senate, would address that. Rep. Jim Dunnigan’s bill would create a special district to pay for infrastructure with private funds, making it easier for developers and cities to move forward with all kinds of projects — especially residential. He is optimistic it will pass the Senate and be signed by the governor. He says it will ultimately lower the cost for first-time home buyers to enter the market.
