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Davis Journal

Skyrocketing prices make it hard for first-time home buyers

Jun 03, 2021 02:39PM ● By Becky Ginos

BOUNTIFUL—In years past, buyers looking for a new home could take their pick and usually negotiate a good price. Now they’re lucky to find a home and in many cases they have to offer well over the asking price to win the bidding war. Sellers are delighted until they try to turn around and buy another house only to find themselves in the same situation.

“This is the most challenging market we’ve probably seen,” said Michael Parker, VP of Public Affairs and Senior Economist for Ivory Homes. “There’s a housing shortage and it’s amazing that during the pandemic it continued to grow. We can’t meet the demand.”

The cost of lumber has gone up 300 percent year over year, he said. “People are paying over $35,000 extra on average for a single family home.”

Parker said part of that is due to an increase in the cost of supplies. “If we find affordable lumber, getting it here is a challenge. Most materials from supply chains including appliances, if you can find them, are stuck on a beach at a port.”

 There are delays on stoves, fridges and so on and so forth, he said. “Because of capacity issues, dozens of boats are docked at port. It’s a nationwide problem on materials. Lumber in particular causes sticker shock. Big commercial contractors are having similar problems.”

Every day is a battle, Parker said. “Our CEO spends half a day figuring out how to get a semi trailer from here to Oregon to get wood. They can’t even get the transportation piece because they’re so stretched.” 

The great thing is Utah is doing well economically,” said Parker. “All the things we love about Utah people from California, Virginia, etc., are finding. Now they can work remotely and hike the Bonneville Trail.”

Parker said there was a housing shortage before the pandemic and that just exacerbated the situation reaching first-time home buyers and beyond. “We’ve had a housing shortage for several years. Now it’s just caught up with us.”

Although people point to out of state buyers for the housing shortage, he said they’re only partially to blame. “It’s predominantly Utahns not leaving the state that has caused shortage acceleration. Only about 20 percent have been out of state buyers over the last few years.”

Ivory Homes doesn’t release their houses until they are further along in the process. “It’s day to day because the cost is changing so quickly for us and the buyer we don’t know what the price tag will be,” said Parker. “We have a set number of lots we release a month so we don’t overextend ourselves. We want to make sure we can give someone a home in the time we promised.”

The company also has a program to build affordable housing for teachers, firefighters, police officers and healthcare workers. “I’m really proud of it,” he said. “These are the people who make our community work. They should be able to afford to live in the community where they serve. It’s special. It’s my favorite program.”

For those looking to buy a home, Parker said be prepared. “Get all your ducks in a row because it’s so competitive. Prequalify and get your finances in place so if you get into a bidding situation you’ll be able to stretch if you can.”

Be patient and persistent, he said. “There are opportunities out there. I know it’s hard. Making 10 to 20 offers to get somewhere can be really discouraging. It’s a unique period in the market. We’re keeping a lot of us here (in Utah) and welcoming new friends. We’re hoping it balances out.”