A rendering for a starter home being constructed sits on display during a groundbreaking ceremony for The Orchards at JDC Ranch, a housing development with 275 homes capped at $400,000 located in Plain City, Utah on Oct. 31, 2024. (Katie McKellar / Utah News Dispatch)
Dark storm clouds rolled in from the north, but they stayed away long enough to keep the dusty construction site dry Thursday while a crowd of shivering onlookers listened to Utah Gov. Spencer Cox, who stood beneath an arch formed by two excavators supporting the U.S. flag.
Behind him, the South Ogden-based housing development company Nilson Homes had already begun building the first of 275 starter homes priced below $400,000 as part of a larger, 1,000-home project approved in Weber County named The Orchards at JDC Ranch. But the governor, along with Weber County officials, local leaders and others, came to celebrate the project during a groundbreaking ceremony.
Cox lauded Nilson Homes as the first developer in the state to take advantage of one of the financing tools the 2024 Utah Legislature approved as part of an effort to encourage cities and developers to build more owner-occupied “attainable” starter homes as the state wrestles with a growing housing shortage and a median housing price that’s been hovering well above half a million dollars.
Cox pointed to U.S News & World Report ranking Utah as the No. 1 best overall state while saying a friend of his recently asked him to contemplate a scenario. If Utah were to ever lose its high ranking, what could possibly cause that to happen?
“No one had ever asked me that question before, and so I started thinking … and then it just hit me like a lightning bolt,” Cox said. “If 20 years from now we’re (ranked) in the mid-30s, it’s because our kids and grandkids couldn’t afford to live here.”
Utah’s affordable housing crisis — which sharpened especially after the COVID-19 housing frenzy sent prices skyrocketing amid a yearslong housing shortage that has only gotten worse — is an “existential crisis,” the governor said.
“It is the crisis of our time,” he said. “And we have to do something.”
The first fruits of a yearslong effort — with a daunting road ahead
The Republican governor and the GOP-controlled Utah Legislature have been trying for years to address Utah’s housing crisis — in their own, gentle way. Largely favoring a free-market approach, lawmakers have passed a slate of bills meant to increase opportunities for homeownership. Last year, they put $50 million toward a new first-time homebuyers program for Utahns buying newly-built homes under $450,000.
They’ve also passed legislation that chews around the edges of housing policy, trying to break down regulatory barriers and offer more financing tools to make affordable housing projects more feasible while also not upsetting city councils and mayors by taking away their local planning powers.
Next year, the 2025 Legislature is set to do more. It remains to be seen exactly what, but it’s possible they’ll take more aggressive steps in the face of a legislative audit’s recommendation to allow an increase of zoning density, in some way, on a wide scale throughout the state.
Cox has also set an ambitious goal. At the onset of 2024, he asked developers and cities to help build 35,000 new starter homes across the state by 2028. He said he’s had “people very close to me say, ‘Don’t take this on. It’s too complicated. … No one has figured it out. Canada, the U.K., it’s not just a U.S. problem, it’s a global problem. Nobody’s figured it out, and you’re not going to be able to solve it and you’re just going to look bad four years four years from now when you’re done.’”
“That’s probably good advice,” Cox said, but he argued “we can’t look away.”
Utah governor doubles down on goal to build 35K homes in 5 years
Directing his comments to planning commissioners, city councils and mayors, the governor urged them to look at The Orchards starter home project and allow more projects like it.
“This is an example. You can do it. It will work. It absolutely can be done in a way that makes your community better stronger and doesn’t decrease the quality of life,” Cox said. “To every builder in this state, you can do this too. You may be able to make more money doing something else, and that’s OK, but … We’re working to make sure that you can make money doing this.”
Then Cox issued a challenge to Utahns — addressing one of the biggest challenges that cause more affordable, higher-density housing projects to stall, when residents show up to city council meetings up in arms, fearful that a new housing development will change their neighborhoods’ character, roil traffic and increase crime.
The governor urged Utahns to think not just about themselves, but where future generations will live in the next five, 10 or 20 years.
“We have to ask ourselves a question right now. Are we going to be the first generation in the history of Utah that makes life worse for our kids and grandkids?” Cox said, repeating the question for emphasis. “Are we going to be the selfish generation? Or — or — are we going to be the problem solvers? Are we going to be the only state, the first state, to figure this out, to show the rest of the country that we can do this?”
What it took to build 275 starter homes
A new law passed by the 2024 Utah Legislature made the 275-affordable home piece of The Orchards project possible. HB527 uses $300 million from the state’s existing Transportation Investment Fund to offer low-interest loans to developers building certain owner-occupied affordable housing projects. To qualify for those low-interest loans, a development must have at least 60% of its units that are owner-occupied and cost no more than $450,000.
While The Orchard’s 275 units are part of a larger project that totals 1,000 units, Steve Waldrip (Cox’s adviser on housing strategy and innovation), told Utah News Dispatch that Nilson Homes qualified for HB527’s low-interest loans because they financed specific “packages” or portions of the project that included an at least 60% mix of affordable units, and the financing only applied to those portions that include more affordable homes rather than all 1,000 units.
“So it gives the developers and builders flexibility to focus on specific areas where these are appropriate,” Waldrip said.
Cox: There are ‘broken incentive structures’ worsening Utah’s housing crisis
In the face of a goal of 35,000 starter homes, Waldrip acknowledged that 275 homes seems small, and that there’s so many more needed to achieve that goal. However, he said the project is still significant because it opened the door to home ownership to that many more families, allowing them the chance to start creating wealth.
When multiplying 275 by the median wealth of a homeowners in the U.S. (about $396,000), “that’s (roughly) $110 million of value that was created by a stroke of a pen” by Weber County’s planning commission. “I mean, that’s an astounding number.”
Jed Nilson, owner and president of Nilson homes, told Utah News Dispatch he decided to take advantage of the low-interest loans more from a moral standpoint rather than a business standpoint. He said he could have made more money if he built and sold all of these homes at market-rate prices.
“They’d sell for probably $50,000 more, and we could make way more,” he said. “But that doesn’t accomplish the vision.”
Nilson said he grew up in Ogden, “and I love Utah.” He said he’s been involved in conversations with Cox’s administration and others while “trying to figure out what to do to fix the housing crisis.”
“I finally looked at it and said, everybody’s going to have to give a little bit,” he said. “The state’s making less money on their interest. The banks are making less money on interest. I’m making less money on houses. The county agreed to a higher number of homes being built. Everybody had to give.”
Nilson said everyone has to be involved in the effort to bring home prices down. “If nobody starts, it’s never going to happen.”
With The Orchards, he said he hopes it will set an example for other developers as well as other cities and counties, which he hopes will allow him to build similar projects in their communities as well.
“It will open up doors for me to build all across the state of Utah,” he said. “So, you know, we’ll be fine financially. But we don’t have to make a killing; we don’t have to make the most (profit) on every single (project).”
The Orchards’ more affordably-priced homes are all priced under $400,000. The cheapest, starting at about $370,000, are small — 1,000 to 1,500 square feet, with two or three bedrooms and two bathrooms with one-car garages.
Nilson also said when the homes go on presale for two weeks, they’ll first be available for purchase by first-time homebuyers, first responders, active-duty military members, and teachers. “We’ve already got a waiting list in those categories,” he said, adding that if they qualify for financing, they can purchase the homes when they’re finished.
The first 12 homes of the 275 will first be put up for sale in December, Nilson said. All 1,000 homes, however, are slated to be constructed over the next eight years, and the rest of the 275 homes are scattered throughout the entire project alongside other larger homes. So it will take years for all of them to become available to buyers.
It’s a start, though, Nilson said, and he hopes more developers will see starter homes as not only possible, but also profitable in a state where Utahns are hungry for them.
“As this gains momentum and we can build these communities faster, so it doesn’t take five years to get it off the ground, then it can become more profitable,” he said.
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