A new Nilson Homes development in Plain City, Utah, includes smaller starter homes side by side with larger market-rate ones.
Jennifer Ludden/NPR
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Jennifer Ludden/NPR
PLAIN CITY, Utah — Miranda and Cole Potokar, who are 23 and 24, have talked a lot with friends about their terrible timing in the housing market.
“We would make jokes like, ‘What was I doing in third grade? I should have been buying a house instead of learning, you know, multiplication!’ ” says Miranda.
The young couple came of age in northern Utah as housing prices across much of the country marched upward steadily, then sharply. Utah is now one of the priciest markets. That’s fueled by growing demand from family sizes that are bigger than those elsewhere in the U.S., plus more people moving to the state.
Miranda and Cole Potokar lived in her grandparents’ basement for two years to avoid high rents and save up for a down payment.
Marisa Peñaloza/NPR
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After getting married two years ago, the Potokars decided to live in Miranda’s grandparents’ basement to save up for a down payment. But when they started looking around a year or so ago, they were shocked. Even older places had sky-high prices, and things sold so fast.
“Wake up the next morning, it was gone,” Cole says, snapping his fingers. “The market would just be so aggressive.”
So they decided to give up for a while.
The median age of first-time U.S. homebuyers is now 38, a record high
People like the Potokars are exactly who Utah Gov. Spencer Cox had in mind when he set out an ambitious goal about a year and half ago: building 35,000 lower-cost starter homes in five years.
“The American dream of homeownership is slowly but surely slipping away from far too many, out of reach of our children and grandchildren,” the Republican governor told dozens of mayors at a housing summit in May.
Median U.S. home prices are at a record high, up nearly 50% over the past five years. In Utah, they’re even more than the national average, over half a million dollars.
The underlying driver is a massive shortage of homes. Add to that high inflation and interest rates, and mortgages are out of reach for many. The median age of U.S. homebuyers has hit a record high of 38, up from 31 a decade before.
To encourage developers to build more places that people can afford, Utah lawmakers last year approved low-interest construction loans for starter homes. This year, they expanded the program to include starter condos. Those incentives follow a string of other laws in recent years meant to encourage all kinds of denser, less expensive housing.
But so far, builders have been slow to sign on. At the May summit, Gov. Cox told mayors that only about 5,100 starter homes had been built or begun.
“We’re on our way, but we desperately need to do more. And we need to move faster,” he said.
Utah has not made bolder changes housing experts say are needed
Utah Gov. Spencer Cox speaks to reporters March 7 in Salt Lake City. He has made affordable housing a signature issue, saying the state’s skyrocketing prices are “the single greatest threat to the prosperity of our state.”
Hannah Schoenbaum/AP
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Cox has made affordable housing a signature issue and brings it up repeatedly at appearances around the state.
He’s appealed to builders to help fill this important gap in the market, even if, he says, “you may be able to make more money doing something else.” He’s implored local leaders to approve starter home projects, despite heated pushback they might face from residents worried about changes in their neighborhood. And to Utahns generally, Cox has urged them to think about where future generations will be able to live, asking, “Are we going to be the selfish generation?”
“He’s sort of saying, ‘We all need to chip in here.’ But I haven’t seen concrete steps that would really move the needle right now,” says Andra Ghent, a finance professor at the University of Utah.
She and other housing experts say the best way to create smaller, affordable homes is to change zoning laws and allow smaller lot sizes. A growing number of states – including Texas, most recently – have stepped in and done that, making the controversial decision to preempt local laws. Utah’s governor proposed it, but lawmakers said no.
“A lot of municipalities throughout the state have minimum lot sizes of a quarter-acre,” Ghent says. “That’s enormous as a lot size. … If developers are stuck with that minimum lot size, they’re going to build luxury homes.”
Giving first-time homebuyers a chance in Utah
Jed Nilson stands in front of a starter home at his company’s new development in Plain City, Utah.
Marisa Peñaloza/NPR
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The lack of sweeping zoning change hasn’t stopped one developer north of Salt Lake City from taking up the governor’s challenge.
Jed Nilson sits on the porch of a brand new house while construction trucks rumble by his latest project in Plain City. He heads Nilson Homes, founded by his dad in 1977. But he started out as a realtor 26 years ago when he was in college.
“And other kids going to college would come buy brand new homes from me,” he says, laughing. “Cause they had a job and they went to college and they could afford a home.”
Today, Nilson finds it troubling that even couples who both have a college degree and careers can’t afford to buy one. “That’s not sustainable,” he says.
Nilson has long been on a mission to find different products or methods that cut costs but not quality. In fact, his ultimate mission is eventually to create a home that’s once again affordable on a single income.
When the governor announced his starter-home target, Nilson says, many developers were skeptical. But he saw an opportunity. With the state’s help, he cut a deal with Weber County that let him add more houses to this Plain City development and put them on smaller plots that normally would be left open.
Nilson walks down the street to show off the first 12 starter homes that are finished. They sit right next to larger market-rate ones, a colorful mix of farmhouse, craftsman and mountain modern.
There’s a long waitlist for starter homes in Nilson’s development, which he says is “outrageously unusual.”
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“We intentionally wanted to show that we could put these starter homes in the entrance of a thousand-home community because they’re beautiful architecture,” he says.
And how much are they in this pricey market? Gov. Cox talks about wanting starter homes for less than $400,000. Nilson sells his three bedroom model for just under that, and a smaller two-bedroom for about $370,000.
Nilson knows that still might not sound affordable to some, but a different state program to help first-time buyers sets a cap of $450,000. “I mean, five years ago $450,000 was a high-priced home in this area, and now we’re calling that a starter home,” he says.
For his Plain City homes, priority is given to first time buyers, teachers, first responders and active military service members. The homes also must be owner-occupied for a decade. The company has a long waitlist that Nilson says is “outrageously unusual.”
Miranda and Cole Potokar in the living room of their new house. Home prices were so out of reach that the couple had stopped looking until they heard about starter homes being built nearby.
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This past spring, first-time buyers Miranda and Cole Potokar were among the first to move in.
“This is our little dining nook, which is massive,” Miranda says, as the couple gives a tour of their two-story 1,400 square foot home.
“One thing that really attracted us to this house was, like, the windows,” Cole says. There are big ones that let in lots of light. There’s also space for him to work at home, and a third bedroom so they can start having children here.
They love to go on morning walks and say they’ve met some neighbors their own age. The Potokars say they feel extremely lucky.
“This is like a base not only for like our family, but also … to set us up for the future,” Cole says. “And in so many ways that, like, we don’t even know.”
Nilson has 260 more starter homes in the pipeline here and hopes his experience will spur more developers to step up.
“Maybe I’ll make less money per home, but I get to build more homes. And I’m going to fix a societal problem,” he says. “I mean, a society can’t function when there’s no room at the bottom for people to get started on their upward mobility.”
