Nationwide, real estate and construction took a large hit during the Great Recession, but the industry in Utah has bounced back quicker than most states.
“Pre 2008, it was a loose credit time — just about anybody could get a loan. That caused a lot of real estate speculation in the country, and it wasn’t a ‘real’ housing market, because they were just purchasing to flip homes,” said Mike Stewart, president of the Utah division of Oakwood Homes, who has been in real estate development for more than 35 years. “But in Utah, there was less speculation, and there was a more modest price increase, compared to other states, in property values. Thus there was a more modest decline.”
Because of this, Stewart said, Utah recovered faster. Add in the current strength of the Utah economy, and the real estate business is stronger in Utah than many well-known areas of the U.S. But that doesn’t mean finding housing in Utah County is easy. Construction is only at half the levels it was in 2007, so while housing has increased, there is still more demand than supply.
“It is still very hard to get financing for builders, and a lot of subcontractors left the business during the recession. That base doesn’t exist like it did years ago. And there are just not as many homes to choose from – buyers have less to choose from,” Stewart said.
Stewart also has noticed a shift in the sentiment on housing. The Millennial generation, he said, are more mobile, more willing to go where the job is, and less likely to purchase larger homes.
“People are more lifestyle conscious. Homeownership is not the biggest thing you can do like it was years ago. Millennials don’t want to be tied down and house rich and money poor. They have a lot of other things they want to do,” Stewart said.
Other developers have noticed this shift as well, and are responding to it — thus the prevalence of more multi-unit housing options all over Utah Valley. Mixed-use development, where residential is paired with commercial, is popping up all over, from Midtown 360 and University Place in Orem, to the master-planned development in Vineyard, to the transit-oriented development planned for the northwest section of American Fork.
Additionally, where developers used to eye an area for large lot development, they are now using the same types of land for small-lot single family residents and town homes. But many developers are cognizant of the discriminating tastes of today’s buyers, and they don’t just develop apartment-style cookie-cutter homes. Instead, they include walking, biking, parks and open areas throughout their development.
At the annual housing summit of the Utah Central Association of Realtors June 10, this type of development trend was the prime topic. The association heard from Stephen James, master planner of Daybreak in South Jordan — a mixed-use community in all senses of the word. Not only did Daybreak planners design specifically for the walker and the cyclists, but they also intermingled their townhome options with larger single-family residences.
“We didn’t design for a certain age or income demographic, we targeted shared values,” James said, referencing areas of Daybreak that have $700,000 homes nestled around a common area with $150,000 townhomes. “We wanted it to be a place where a family could live and grow old there, and all want to still live in the same neighborhood.”
The trend of higher density residential uses will not taper off any time soon, experts suggest. Usable land in Utah is limited, and land prices are somewhat higher than in other areas because the land was historically owned and farmed by many generations of the same family. When those larger parcels of urban land become available, developers are building more homes on them than would have been seen there just 10 years ago. It has also partly driven the explosion of development in farther parts of Utah County like Eagle Mountain.
The key seems to be developing an average of eight units per acre. James said that their studies when planning Daybreak, suggested that this magic number made development areas more “sustainable.”
“When you develop more compactly, there is less need for road infrastructure per house,” James said. This presents a huge savings and future upkeep price for cities.
Stewart agreed. Oakwood Homes recently announced a plan to build roughly eight single home detached units per acre in their new American Fork Southpoint development. It will be part of a larger master-planned community that has walkable off-street trail systems and open space.
“We usually do larger lots at higher price points, and this is a unique project for American Fork, where there are homes are usually on three quarter acre lots,” Stewart said. “But this project will offer detached single-family homes at a lower price point — in the $200,000s. It’s hard to find that in American Fork. It’s a product they’ve never seen, but this product type speaks to that type of younger tech buyer.”
Fieldstone Homes, based out of Draper, is also targeting the same type of buyer with its 200 unit Eagle Mountain Silverlake development of single-family homes.
“Though the site is only 8 to 10 minutes from I-15, the cost of the land in Eagle Mountain is more affordable, and the impact fees are affordable as well. We’re tailoring it to that first- or second-time buyer, the one that is tired of renting and moving from apartment to townhouse. One that values homeownership,” said Matthew Walbruch, broker at Fieldstone Homes.
It is important, Stewart said, to reach the first- and second-time home buyer. Though many of these buyers don’t necessarily want and can’t afford a larger lot today, they do expect customization and amenities. All of the homes Oakwood offers are fully customizable — buyers can choose everything from their exterior siding and lighting to the cupboards, countertops and faucets inside. Even at lower price points, they can even choose high-end spa-like master baths historically only offered at higher-end price points. Most developers have moved to this trend, offering varying levels of customization.
Rental rates are slowly on the rise, as stated in an April report from Apartment List. As these increases get closer and closer to mortgage rates each day, for many, homeownership makes sense. According to Taylor Oldroyd, CEO of the Utah Central Association of Realtors, statistics show that Utah County couldn’t be poised for a better housing market this summer. Year to date sales have hit 2,351, which is up 19 percent over 2014, he said, and prices have climbed to a median price of $225,000.
“Homeownership offers immediate benefits and long-term value,” Oldroyd said. “Homeowners accumulate wealth for the future while enjoying the benefits of a shelter that they can use, improve and sell. Their home is a safe haven for their families as well as for investment.”
[“source – heraldextra.com”]