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Utah homes are 46% more expensive than U.S. average. Is lending developers money a way to fix it?

A new fund would give developers access to lower interest rates in exchange for dedicating 60% of units to middle-income homebuyers.

(Bethany Baker | The Salt Lake Tribune) Town homes under construction along Redwood Road in Salt Lake City in December 2023. A new bill would create a $300 million fund that lends money to developers at a lower interest rate.

This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

The median price of a home in Utah is $501,652 compared to the national average of $342,941, Rep. Robert Spendlove, R-Sandy, told lawmakers on the House Revenue and Taxation Committee on Friday morning.

The only way to solve the state’s affordability crisis, according to Spendlove, is to build new homes.

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“Our production is dropping,” said Steve Waldrip, the governor’s senior advisor for housing strategy and innovation. “We were 8,000 units short last year from what our state needs to just hold water.”

HB 572 would create a $300 million fund that lends money to developers at a lower interest rate. In exchange, builders would have to sell 60% of the units at an attainable price, inform prospective buyers about the downpayment assistance available through First-Time Homebuyer Program, and impose a minimum 5-year owner occupancy requirement. The Utah Housing Corporation would determine what qualifies as attainable in each county, Waldrip told the committee.

The new program would be called the Utah Homebuyer Investment Program and funds would be available from Dec. 31, 2025, through June 30, 2027. Spendlove estimated it would result in the construction of roughly 10,000 new homes.

State Treasurer Marlo Oaks spoke in favor of the bill. “I’m a big advocate and defender of the free market system,” Oaks said, “However, when markets aren’t working, there’s a reason to address the problem and many large builders have no incentive to build lower margin starter homes.”

The Utah Home Builders Association and other developers were in favor of the bill.

“We know that there is huge demand for this type of housing,” said developer Jed Nilson. The funding just simply isn’t available to build starter homes.

“It would be a key component in our plan across the state to increase our housing production over the next few years,” said Shellie Barrus, executive director of the Summit and Wasatch Counties branch of Habitat for Humanity.

In his 2025 fiscal budget, Gov. Spencer Cox called on the state to build 35,000 starter homes over the next four years. HB 572 would not meet that goal.

“This is one tool in the tool belt,” Waldrip said, “this is addressing the supply issue, which is the critical issue that we have right now in our state and that supply constraint is what’s driving housing prices.”

The committee passed the bill with a favorable recommendation. It will have to make it through the House and Senate, with only five business days left of the Legislative session to go.