Wages jack up building costs
As the real estate market heated up in Park City, so did construction costs, although for different reasons.
"The biggest challenge is a shortage of labor, whether it’s qualified or unqualified," said Jeff Peterson, president of Utah Home Builders.
With the shortage in labor, framers and construction workers are demanding more money.
"It’s much more expensive now than it was in the past," Peterson said. "Framers that used to make $18 an hour are making $35 to $50 an hour, you can’t find enough of them and the costs of homes are going up because of labor."
Peterson said good labor is "extremely hard to find." As a result, there has been competition among builders for their services.
"Last summer, if you had a framing crew, people would show up and say, ‘I will pay you $2 more an hour to work for me.’" Peterson said. "Framers are losing entire crews in a matter of minutes."
The short tenure of employees creates a myriad of problems for builders.
"It’s taking away people’s livelihood and creating instability in the market," Peterson continued. "You’re making $12 an hour and then you can go make $14, then someone says, ‘I’ll pay you $16.’ Then, when they can’t afford it, they lay them off. It creates a disparity."
According to Kasey Ring, the executive officer of the Park City Homebuilders Association, part of the problem of finding good help is the continued building of mostly large multi-million dollar homes.
"When the homes that we are building are so much more technologically advanced, they require an increased level of skill set," Ring said. "As the quality of the product continues to increase, so does the skill set required to match that."
Peterson said 60 to 70 percent of the labor force that builds homes in Park City comes from Salt Lake and Utah counties.
"People want more money to commute to Park City," he said.
Because of the skyrocketing housing costs and the lack of affordable housing, most of the potential laborers can’t afford to live in Park City.
"We’ve done a very good job of catering to the needs of our second homeowners but we also need to make sure we have the labor force to support it," Ring said.
Ring says to continue to support the tourism town and its way of life, there needs to be a way to bring laborers to Park City.
"We need to make sure we are supporting our industry by having affordable housing for our laborers. Affordable housing is the key," Ring said.
Peterson agrees but he’s noticed workers are also pressed because of the cost of fuel is higher in Park City.
"Affordable housing is huge," Peterson said, "and the cost of fuel is costing guys one-third more to get to work."
With further development inevitable in Park City, Ring said there should be more focus on building affordable housing.
"We also need to balance it and think of our labor force," Ring said. "As we are developing in the future for what our area is going to look like, we need to mindful of our labor force."
Lot prices have also risen high, which increases the cost of building. Ring said "dirt is king."
"The challenge you have with building in the past 6 months is land is so expensive, because there’ a lack of good inventory," Peterson said.
"By the time you buy a piece of land, you can buy existing (homes) cheaper than you can build them. That’s a national trend as demand has slowed down for housing and inventory on the shelves."
Peterson says people are starting to sell their property in Park City and going to Heber and Midway to purchase cheaper lots.
"That’s where you can start seeing a lot of the labor force," he said.
With these trends, Peterson believes it will balance out. He said the prices of land will start dropping soon and he’s received more calls from framers looking for work lately.
Ring said growth has been encouraged in Park City, and with that the city needs to continue its greening trend.
"We are trying to be mindful of our environment to enjoy the environment that we live in," Ring said. "How do we sustain it and keep it beautiful?"
Ring said 92 percent of the national homebuilders believe building green is the "right thing to do."
"They believe it’s the future," Ring said. "It’s moving forward on national guidelines, it’s the basis of what we want to do. Yes, this area has been booming, but we need to be aware of environmental factors."
The Park City Homebuilders Association is currently setting up voluntary environmental programs for builders.
"We’ve implemented these sets of guidelines where we can certify homes in being green," Ring said. "We’ve had a successful response. We started in October and we just certified our first house. There are many more to come, a local development is having all their homes, that would be 30-plus units, that are Energy Star rated and pass the Utah Green Building Initiative."
To accomplish all of these things, Ring said there needs to be smart planning and development.
"If it’s done correctly, it can be a win-win situation for the community and the building industry," Ring said. "We need to work closely so we are planning well for the future."
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Park City at the start of 2021 is preparing for the return of numerous special events, something that could help reignite Park City’s tourism-heavy economy and re-create some of the energy that was lacking in 2020.