The new construction home market has been in decline for some time now, but it is starting to pickup in a few areas. One of those areas is the Salt Lake Metro area which was named the 6th most active metro area for new construction home permits (source Trulia).

In the third quarter there were 2.64 new home permits per 1,000 existing homes in the Salt Lake Metro area. The two best areas were both in Texas, Houston 3.68 permits and Dallas 3.41 permits.

Those areas are that are now recovering are ones that experienced a combination of a milder recession, and a growing population (both things found in Salt Lake).

Even with this recent recovery, home building levels are still only a fraction of those seen in the mid 2000’s.

Garbett Homes is preparing to break ground for its Terra Sol green housing development. This 59 unit single family home community is being billed as ‘the greenest community in the state’. The development is located at 3545 South 300 East on 6.5 acres. Homes will have 1600 to 3000 sq. ft, small yards, 2 car garages, 3 bedrooms, 2.5 baths and basements at prices starting at $200,000. They will have thermal solar systems similar to those found in their Daybreak Solaris Development. More information to follow…

You can read this Garbett Homes Terra Sol Green Housing Development article on my Salt Lake Real Estate Blog.

Typical Home in the Daybreak Community

The Daybreak Community received the 2010 Best in American Living Platinum Award for Suburban Smart Growth Community and Community of the Year.

The association recognizes developers, builders and architects from around the country who create communities that reduce environmental impact.

Part of Daybreak’s smart growth plan include placing schools, shops, restaurants, parks and transit options closer to homes, reducing dependence on cars.

The community also features several commercial buildings that are LEED-certified green buildings and every Daybreak home is Energy Star certified.

You can read this post about Daybreak Winning Award and other posts on my real estate blog.

The Ivory Homes active adult community located at Daybreak’s Garden Park is set to expand its range of homes to include estate homes, condos and town homes. Currently there are two types of home on offer, Garden Homes and Patio Homes. Both of these home types offer single floor living, with Garden Homes having a basement, and Patio Homes sharing a common courtyard between the homes.

New to the community is the introduction of estate homes. Aimed at people who want to live in the community, but wish to have their own garden, estate homes offer the same single level living, but have their own lots.

The condos also offer single level living, with access via elevator to the top floor of the two story buildings. There are a total of 6 different floor plans, ranging from 900 to 1,400 square feet. Each unit comes with two indoor parking spaces.
The Garden Park town homes come in both rambler and 2-story floor plans, ranging in size from 1,100 to 1,500 square feet.

Pricing for the new home types start in the $180’s for a condo.

Just a quick note to let you know that the Utah Governor recently announced they will use $8 million in federal stimulus funds to reintroduce the Home Run Grant.

The official statement said that the state will offer $4,000 grants to the first 2,000 new home buyers.

The program comes on the heels of one started by former Gov. Jon Huntsman, who used $10 million in stimulus funds offer $6,000 grants. These grants were used in less than 12 weeks, so if you are interested in taking advantage of this offer you had better hurry.

There is one major difference between the original grant and this one (apart from the amount). The original grant could only be issued for homes that were ready for occupancy, while the new one can issued for homes which have been contracted for construction, or partially finished and contracted for completion. This changes the focus of the grant from getting rid of new home inventory to building new homes.

Ivory homes are building a new over 55’s community located in South Jordan’s Daybreak development. The community just like Daybreak itself will be big, in fact when finished it will be the largest Active Adult Community in Utah. Garden Park will feature approximately 200 single level living homes, and will have its own facilities including a lap pool, fitness facilities, and park. The development is located just to the north of the Kennecott office building, on the southwest corner of Oquirrh Lake. The development is conveniently located close to the currently under construction SoDa Row Village Center (due to be completed in Sep 2009), and soon to be constructed TRAX light rail.

The initial phase of Garden Park will feature two styles of home. Garden Homes are rambler style homes that feature single level living, and a basement. While Cottages are slab-on-grade rambler homes (no basement), with a shared common grass area. Home prices start in the mid $200’s.

There is now a new Utah State incentive of $6000 dollars for home buyers, but it comes with limitations and in my opinion a major drawback. Unlike other incentives introduced at the federal level, the State incentive is limited to new construction homes. Now this is great if you are looking to buy a new home, but does nothing if you are currently trying to sell your own home. In fact I believe this will have a detrimental effect on the current housing market and here is why.

The reason the Utah housing market is currently suffering is because there are more sellers than buyers. This is a basic rule of economics, whenever there are more buyers than sellers then prices go up, and whenever there are more sellers than buyers, prices go down.

So what will the impact of the new incentive be? I believe it will make matters worse, instead of decreasing the inventory of homes for sale, it may well increase it. That is because when an existing home is sold it usually triggers a chain, person buys home A, whose owner buys home B, whose owner buys home C etc. So one sale, actually results in multiple sales. However, when someone buys a new home there is no chain. In fact it is worse than that, in the current climate builders are reluctant to build spec homes, so when someone buys a new home they have to build a home, which means a new home sale reduces the inventory by zero.

For those that are interested here are some details on the intentive:

The one thing I would say is that if you are interested, unless you close in the next couple of months you will miss out. There are only a limit number of grants available and they are running out fast.

We recently had an appraisal done on an existing home in a subdivision that still has new homes being constructed. When speaking to the appraiser, I mentioned that the builder had a recent sale of exactly the same model of home in the same subdivision that was not on the MLS. In the past, appraisers were often able to use HUD-1 Settlement Statements in their appraisals. However, according to this appraiser, they are no longer allowed to use HUD-1 Settlement Statements.

Now, in most places, this might not be an issue. But Utah is a non-disclosure state, which means comparable sales used by appraisers are either in the MLS, or the appraiser might be able to request HUD-1 Settlement Statements if a builder is not using the MLS. In some areas, there are many small builders (and some bigger ones) who do not use the MLS. I think this could become a real issue for appraisers trying to find recent sales in order to calculate a homes value.

Has anyone else heard this and what do you think?

The new model home village is up and running in Daybreak. The village called Daybreak North Shore, is Daybreak’s third, the first two being Founders Village and East Lake Village. There is a noticeable difference in this phase, there are far more homes in the starter home category. If you are looking for homes under $200,000, Daybreak offers far more opportunities in North Shore than in the previous phases.

Builders Garbett Homes offer two styles of homes under $200,000, the ultra modern Bay Town Homes and Bay Lofts and Flats (coming in 2009). This increase in high-density homes seems to signal a change in policy by Kennecott, who have said that there will now be 20,000 homes in Daybreak, compared to the 13,000 when they first started. Maybe this is the result of the slowdown in the Salt Lake Real Estate market, where the low end of the market is still moving, but higher end of the market has slowed substantially.

Having said that Daybreak is building more high-density homes, Rainey who build higher-end homes have increased the size of their homes. Their largest home now weights in at more than 6,300 square feet.

Kennecott have brought in two new builders, Ivory and Garbett (although Garbett is not entirely new, they took over the building of condominiums in phase 1). There are also a few builders’ names missing from North Shore. Richmond American, Bangerter, and Liberty homes are all missing. After asking around the reason these builders are missing is that they still have a large quantity of lots remaining in East Lake Village.

A new introduction to North Shore is the concept of neighborhood retail. A small number of lots have been set aside for small shops / boutiques. This is something that I previously found missing from Daybreak, if they truly wanted to mimic areas like the Avenues then they had to introduce neighborhood stores, which they have now done.

There are also a number of custom home lots available, starting in the $600,000 range. Not sure how successful these will be, my understanding is that they have only sold 1 custom lot so far in East Lake Village.

I have updated our Salt Lake new homes map to incorporate the latest developments and pricing information. This interactive map uses Google Maps functionality to show the location and prices for the major new home builders and developments in Salt Lake County, Davis County, and Utah County. New home prices across the Salt Lake Valley are coming under pressure from the slowdown in the local housing market. Very few builders/developments have increased their prices, with most builders keeping their prices the same or lowering them slightly. Ivory Homes seems to have cut their prices the most, with the majority of developments showing substantial price declines.