Buying a home in Utah could get a bit easier soon, thanks to a little legislative boost

New homes only, capped at $450K, and other ways Senate President Stuart Adams proposes to help first-time homebuyers.

(Francisco Kjolseth | The Salt Lake Tribune) New development construction on the western edge of Magna on Monday, Feb. 20, 2023.

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It was a two bedroom, single bath home with a double carport. It cost $52,000.

Senate President Stuart Adams still clearly remembers the feeling of buying his first home in Layton, the city where he grew up.

“When you own your own home, something just happens,” Adams said. “It does something to you.”

Not too long ago, Utah served as a model for a type of stability other states strived for. In 2016, the think tank Brookings published an article declaring “The American middle-class is still thriving in Utah.”

Homeownership has long been thought of as a pillar of that thriving middle-class: the realization of the American dream.

“In America, we believe in homeownership,” Adams said. “And in Utah, we believe in homeownership.”

But for Utahns living on middle and lower incomes, homeownership is increasingly out of reach, Adams told members of the Senate Economic Development and Workforce Services Committee on Feb. 17. Adams worried Utah’s middle class might be disappearing.

And the numbers seem to back up Adams’ concerns — the Kem C. Gardner Policy Institute found more than 70% of Utah renters couldn’t afford the median price of a home in 2020. At the same time, Utah’s middle class is struggling just to afford rising rents in the state.

Adams wants to help people get out of their apartments and into homes to build wealth but also to “enjoy the pride of homeownership.”

Persistent questions when talk turns to Utah’s housing costs and availability revolve around the “how.” How can people afford that first home in this economy? How will costs ever come in line with average and lower incomes? How much can and should the government do to assist?

In his budget recommendation, Gov. Spencer Cox asked for continued funding of a first-time homebuyer program aimed at helping veterans and the creation of a new program specifically for educators and firefighters. Cox also called for a one time investment of $100 million for “deeply affordable housing.”

It may appear to be a tiny step, but SB 240, which Adams is sponsoring, aims to give first-time homebuyers a hand by providing a $20,000 loan to help with a down payment, closing costs, or buying down the interest rate. The loan could only be used for newly constructed homes, a move Adams hopes will incentivize the construction of more housing stock. Buyers would pay back the loan when they sell or refinance their home.

(Francisco Kjolseth | The Salt Lake Tribune) Hoping to build housing stock and to assist first-time homebuyers, the Legislature is considering aid for purchase of new homes like these being built on the western edge of Magna on Monday, Feb. 20, 2023.

A start for a starter home?

The proposal received support from a broad range of individuals and interest groups that testified in favor of the bill, with one private citizen speaking against it.

“The starter home in Utah is extinct,” said Mike Ostermiller with the Utah Association of Realtors. “They don’t exist anymore.”

Building more affordable homes is the only way to fix that problem, Ostermiller told lawmakers, and he believed SB 240 would help. “So this will not only help families in a profound way but also will trickle down and help the rest of the economy.”

Karson Eilers, senior analyst for the Utah League of Cities and Towns, spoke in favor of the bill. The Utah Home Builders Association also supported the measure.

“Mainly I’m here to say thank you,” said Kael Weston, a former U.S. senate candidate. “I’m a card-carrying Democrat and I love when we find solutions like this.”

However, Weston said, he also hoped the bill would be “just the first step,” and urged lawmakers to “not forget about all the renters in our state. There are a lot of renters who are looking at 20% rent increases, they’re not looking at mortgage rates.”

“All the housing we can get”

Tara Rollins, executive director of the Utah Housing Coalition, similarly expressed a desire for the Legislature to “fund the continuum of housing,” but was in favor of the bill.

“We need it,” Rollins told The Tribune in an interview. “We need all the housing we can get.”

“Housing is healthcare. Housing is education,” Rollins said. “A child can’t learn unless they have a bed to sleep in.”

“I think a statewide first-time homebuyer assistance program is great,” said Maria Garciaz, executive director of NeighborWorks. The nonprofit organization has been providing homebuyer assistance for years.

Rising construction costs have made building affordable homes more difficult, Garciaz explained. At the same time, she’s hearing from more families that are paying rents equivalent to a down payment.

“When we first started doing this, it was only $5,000,” [for a down payment] Garciaz said. “So $20,000 is great but if it were more, that’s always the ideal thing for families.”

The city of Murray, for example, provides $30,000 down payment assistance grants with extra support for teachers and firefighters.

“What I like about this bill is it’s going to help those families that are middle-lower income,” Garciaz said. “Because the cost of housing continues to increase, I think this is a good first step that will help Utah families.”

The option to buy down interest rates could also be helpful as rates rise.

(Francisco Kjolseth | The Salt Lake Tribune) A bill before the Legislature would provide assistance to first-time homebuyers for newly built houses, like these under construction on the western edge of Magna on Monday, Feb. 20, 2023.

So far, lawmakers have agreed. Adams’ bill breezed through its committee hearing and passed the Senate on Feb. 22. The next step is the same process through the House.

“I’m really happy to see that it’s a nonpartisan issue of simply trying to help individuals and families get equity,” Adams said. Plus, he’s eager for more Utahns to experience the “pride and self-esteem” that comes with getting the keys to your own abode.