In 2006, while Clark Ivory was serving as the CEO of Ivory Homes he was also sitting on the board of the Federal Reserve Bank of San Francisco, where he worked for former Federal Reserve chair Janet Yellen. During that time, he saw the beginnings of trouble for the U.S. economy and for housing in particular.
“I went down to Arizona and Nevada to check things out and I was shocked to go through all these subdivisions of 40 or 50 homes and not one was being lived in,” recalls Ivory, CEO Of Salt Lake City-based Ivory Homes. “They were all purchased by people that were going to flip them.” Ivory warned anyone who would listen, paid off his credit lines, and moved his company from building single-family dwellings to townhouses.
CALL FOR ENTRIES
Deadline for the Ivory Prize in Housing Affordability is Dec. 15. Click here for information.
After surviving the crash and using accumulated cash to improve his land position, Ivory checked out of Utah for a three-year mission with the Church of Jesus Christ Latter Day Saints (LDS) in Moldova, Romania, where he kept an eye on the U.S. housing market. He returned from Europe earlier this year, resumed his responsibilities as CEO, crunched some housing numbers, and decided that affordable housing in the U.S. needed an innovative shot in the arm.
“We started looking beyond our market for answers and got the idea of doing a national prize,” says Ivory. “We needed to survey the country for good ideas that are percolating out there. Let’s try to give them additional support, see what we can learn, and showcase them.”
The quest spurred him to create the Ivory Prize, a contest that aims to uncover, promote, and fund innovations in key areas of the affordability puzzle. The program focuses on three areas: design, finance and regulatory reform.
To build the framework of the contest, Ivory tapped his network which includes the David Eccles School of business at the University of Utah, the Terner Center for Housing Innovation at UC Berkley, and the Sorenson Impact Center, also at the University of Utah. In mid-September the team launched a call for entries in the first Ivory Prize in Housing Affordability, which will include a $200,000 award from the Ivory Foundation. Deadline for submissions is Dec. 15.
Finalists will be showcased in February at the 2019 Winter Innovation Summit happening at the University of Utah, where they will be seen by potential investors. A lack of affordability has spread from high growth areas in the country to become a widespread issue, Ivory says.
“Housing affordability in the U.S. is a longstanding problem that has worsened in recent years due to supply constraints and rising interest rates. Nearly a third of American households paid more than 30 percent of their income for housing in 2016,” says Chris Herbert, managing director of the Joint Center for Housing Studies of Harvard University, and Ivory Prize advisory board member. “The Ivory Prize is an admirable approach to finding innovative, scalable solutions to addressing this pressing challenge.”
According to Ivory, the biggest obstacle to putting people back into houses is convincing municipalities to embrace something denser than single-unit family dwellings. “The only way to get affordable is to get communities to agree to a healthy balance or mix of housing types,” he says “In the areas where people are saying, we only want big lots, we don’t want any density, it’s really tough. If we don’t figure out this affordable housing puzzle we’re going to be just like these markets that people are leaving from to come here.”
Ivory knows firsthand the negative impact that a lack of affordable housing can have on a market. The state of Utah has been experiencing high growth as builders are being hemmed in by lack of land along with zoning regulations that penalize smaller homes and multifamily units. Uncontrollable and rising land, labor, and material costs are another factor.
“In the last 10 years on our average size house of 2,000 square feet land is up 43%, municipal and improvement fees are up 61%, horizontal improvements are up 62%, aggregates have gone crazy,” says Ivory. “Everyone always talks about labor and labor is an issue – we’ve seen it more in the last three years than ever, but labor is only 29% up. Materials up are up 27%, a lot of those relate to tariffs.”
