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OREM — "We wanted to do it our way, and we felt like we could save money, and we did."
That's what Brandon Merrill said about why he and his wife Karleigh chose to build, rather than buy, a new home.
In March 2021, the Merrills were living in an Orem townhouse they'd bought in 2018. They watched as their neighbors, who moved in a year after them, sold their townhouse for much higher than they'd bought it for. With interest rates being so low, the Merrills figured they could do the same and leverage themselves into a bigger property.
They looked at existing properties and decided they could build for cheaper, so they found an open lot in an Orem neighborhood about a mile south of their townhouse. They broke ground in August 2021 and moved in the following April.
The Merrills only expected to make around $100,000 on their townhouse. By the time they sold in early 2022, they made double that.
Experiences like the Merrills' are becoming more common in Utah, which is one of only 18 U.S. states where it is cheaper to build a house than buy one, according to a 2022 study from StorageCafe.
Utah comes in as the fourth most cost-effective state for homebuilding after Hawaii, California and Colorado. The average total building cost in Utah, including land and construction fees, is $538,000, the study shows. That is $97,000 less than the average single-family home listing price of $635,000.
Quinn Crowton's work as a realtor for Century 21 Everest takes him across Weber, Tooele, Salt Lake and Utah counties. He said homebuyers wanting to move to expanding areas like Herriman, Bluffdale and Riverton should definitely look at new builds, which are priced competitively with older homes.
The current housing market has made it much easier to get seller concessions, where the seller agrees to help pay part of the closing costs, Crowton said. Loans and discounts are also more prevalent, including the 2-1 buydown loan, a mortgage where the first two years of the loan are set at a reduced price.
"Since (interest) rates hiked, lots of builders are wanting to get rid of their inventory, so they're willing to take lower bids and willing to give those incentives back to the buyers to get rid of their inventory," he said.
Crowton sees a lot of opportunity in the changing market, especially for new builds.
"I am a lot more aggressive now with my buyers and my offers," Crowton said. "It's fun to see people get into something that they love, combined with something that they can afford, and to be put in a good situation."
Crowton said he is concerned not enough people realize there is still a housing shortage, which is why rent prices are still rising as home prices have gone down even further.
"We still have a supply issue," Crowton said. "Prices may continue to go down gradually, but it's not going to be a huge drop, in my opinion, like it was in 2008."
Southern Utah
In his work as a realtor for Century 21 Everest in St. George, Bryan Burnett said he's seen a recent influx of people from California and the Salt Lake area moving to southern Utah.
Around half of Burnett's clients are paying cash to avoid the high-interest rates, he said. He also sees many people building not just because of the potential for a lower price, but also because of a lack of existing options.
"People like to build because there just hasn't been that much inventory to choose from to purchase," said Burnett, who has worked in realty for 21 years. "The cost is probably the same as buying a house that's five years old, so you basically can get what you want out of a property."
That's what Reagen and Cade Gardner did. The Gardners were outgrowing their downtown St. George townhouse, especially with their son Brandt on the way, who was born in June 2022.
The Gardners started building a new house in Washington, Washington County, in March 2022. They moved in that December.
"When we were looking at buying, it was the same cost to buy and remodel versus just building, so that ultimately was the deciding factor," Reagen Gardner said.
As Burnett continues to watch the market, he said it's important for realtors to stay ahead of the game.
"It's the agents that know how to provide a great service in any kind of market and know the fundamentals that will do great," Burnett said. "You're going to see a lot of agents struggle because they don't know how to deal with change."
Utah's growth rate
The last U.S. census confirmed that Utah was the fastest-growing state in America over the past 10 years, with a large influx coming from coastal states like California.
Meghan and Michael Caldwell and their four children are part of that migration. The Caldwells recently moved from Orange County, California, to Spanish Fork, buying a lot in May 2021 and moving into their new home the following June.
Their move was largely motivated by house prices and a need for more space. A similar single-family home in California would cost well over $2 million, Meghan Caldwell said, and wouldn't have the same kind of yard.
"It was mostly just needing space for our family and wanting a neighborhood with a backyard and a community," she said. "We just did not find that attainable in California."
In choosing to build, not buy, the Caldwells liked the idea of not having to make renovations to an existing property.
"We weren't in a rush, and we just liked the idea of starting fresh," Meghan said. "We saw this as our home we'd be in for a while."
Things didn't go exactly as planned: Meghan said finishing their basement and putting in landscaping ended up being bigger expenses than they'd gauged.
"You think when you build a house, 'I'm getting this beautiful, finished house,' and in some ways you do," Meghan said. "But along the way, there's just bumps that we didn't really anticipate, and you have to fix certain things, so it's not as smooth as we might have thought it was going to be."
