There’s a new batch of town homes, and they signal a shift in Utah housing

Millcreek • New eco-friendly town homes in Millcreek illustrate the shifting sands of trying to meet Utah’s housing demands these days.

The first phase of the Opus Green development is well underway in this suburban city’s rapidly growing Meadowbrook neighborhood and eventually will include 139 two- and three-bedroom town homes.

Clusters of the three-story attached dwellings are perched next to a new park along a stretch of Big Cottonwood Creek. They sport large windows and a deck adjoining each unit’s top-floor living room, merged with its kitchen, all with well-appointed interiors throughout.

Opus Green, at 4186 S. Main, is also in a central, transit-rich locale of Salt Lake County and emphasizes energy efficiency and low carbon emissions, under a sales moniker of “facing future.”

Salt Lake City-based homebuilder ClearWater Homes recently announced it will pursue a second phase of 80 similar town homes on an adjacent former industrial site facing Central Avenue, just to the north.

By city edict, at least half of Opus Green’s “climate-conscious” dwellings were originally required to be available for purchase. The others were to be what homebuilders call built to rent, or BTR, subject to the developer’s discretion.

Before the pandemic, by comparison, the entire 7.14-acre former light-industrial site near Millcreek’s emerging city center was to be used for a 400-unit rental apartment complex, but a prior developer behind that pulled out.

The past few years of market gyrations, a dire housing shortage and stepped-up in-migration to Utah have wrought significant changes. Real estate brokers say the Opus Green project has pivoted as of mid-February to being almost exclusively for sale, save for small handfuls of units bought by investors and offered as rentals.

Thirty-six of the dwellings have sold and 11 more are under contract, according to Latitude 40 Properties, which is spearheading marketing and sales. Three-bedroom units are going for between $630,000 and $677,000, with a premium on the 29 town homes facing the creek.

Two-bedroom dwellings currently run between $469,000 and $525,000, which falls below Millcreek’s median sales price last year for all home types of around $590,000.

Rents in the development, on the other hand, range from about $2,725 to $3,300 a month, not including utility fees.

Rapid growth in the ‘suburbs’

Throw a shoe in any direction around Opus Green, and you are likely to hit a multistory residential building that’s gone up since Millcreek incorporated as a city at the end of 2016.

Partly because of two nearby TRAX stations, the Meadowbrook and Fireclay neighborhoods, which reach into neighboring Murray and South Salt Lake, have both seen spurts in multifamily housing development, much of it on so-called brownfields formerly used by industry.

Similar patterns have sprung up around transit lines in South Salt Lake, Murray and Midvale. More will be coming as Millcreek and other cities finalize plans for adding density around the Murray North and Meadowbrook TRAX stops.

ClearWater CEO Micah Peters told Millcreek leaders that when the Opus Green site came up for sale and the extent of its 1,251-foot creekside frontage became obvious, “we just had to buy it.”

As part of a development agreement, ClearWater built and landscaped the linear park with a bridge over the creek and has donated it all to Millcreek.

The city also kept a provision in the site’s previous pact that at least half the units in Opus Green be for sale and owner-occupied.

That reflected what is now a growing sentiment among many of Utah’s municipal and state officials on the need to emphasize land use policies encouraging options for buying homes after years of record-breaking apartment construction.

“Homeownership is the American dream, and people build wealth through equity when they buy properties,” said Millcreek Mayor Jeff Silvestrini. “So if they’re renting long term and can’t afford to buy something, then they are going to be delayed in that ability to build wealth.”

Opus Green’s shift to for-sale, Silvestrini said, is encouraging, especially with three other major housing construction projects in the same vicinity.

“West Millcreek,” the mayor said, “is growing and that is exciting.”

New finance models for housing

ClearWater Homes has seen a shift, too. The company was known, among other traits, for several high-profile infill apartment projects in downtown Salt Lake City, including Broadway Lofts, Paragon Station and Paperbox Lofts.

After building upward of 3,000 rentals in more urban settings, Peters said ClearWater Homes changed course about five years ago amid a looming glut of so-called podium-style apartments, usually with a commercial ground floor and multiple stories of rentals above.

The company has since focused on building lower density, more environmentally oriented town homes, with some kept as rentals but most offered for sale to owners who intend to occupy them.

And from a developer’s view, Peters said, that mixed strategy amounts to a crucial hedge against escalating interest rates. In this case, rates happened to start shooting up just as Opus Green was taking shape.

“The dirty little secret in development that no one ever talks about is that build-to-rent is a zero-sum game,” the CEO said, “with massive negative cash flow for the foreseeable future.” And as interest rates have risen above 5%, he added, “you’re just kind of servicing debt and praying interest rates come down again.”

Town homes combined with green building

In terms of affordability, town homes consume less land per unit and are typically priced below comparable single-family homes.

Even so, rate hikes since March 2022 have boosted prospective mortgage payments dramatically compared to average income growth. The trends have pushed ownership of any kind out of reach for many Utahns — and turned constructing profitable for-sale housing without an eye-watering price tag into a major challenge.

A dramatic homebuilding slowdown in Utah after recent rate hikes has prompted state officials to launch a $300 million effort this year to subsidize construction of up to 35,0000 smaller starter homes, meant to be attainable for middle-income Utahns.

Silvestrini said Millcreek is considering a pitch to ClearWater about using funds through the city’s Community Reinvestment Agency to ensure some of the homes in Opus Green’s second phase are kept more affordable.

“What I’d like to do is see if we could buy at least some of those units down to a housing price of 80% of area median incomes,” the mayor said, “to enable cops, firefighters, teachers and folks in that kind of income bracket to be able to afford to live in Millcreek.”

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