Lender: New Utah First-Time Homebuyers Assistance Program doesn’t go far enough

Jul 13, 2023, 10:31 PM | Updated: Jul 14, 2023, 7:50 am

UTAH COUNTY, Utah — A new Utah program designed to give first-time homebuyers a break on their new house purchases launched this week, but already it was drawing concerns from lenders and realtors over how many people the program will actually help.

The program, created by lawmakers and administered by the Utah Housing Corporation, provides up to $20,000 in loans to buyers that they can then use toward down payments, closing costs or buying down interest rates.

Under the program, the home must be newly constructed or never lived in and must be priced at $450,000 or less.

“As someone concerned we are losing our middle class, my goal is to help Utahns live the American dream and build equity in their future,” Utah Senate President Stuart Adams, R-Layton, said in a statement this week regarding the measure he sponsored that created the program. “It’s imperative that we make homeownership possible in our state. I am excited for Utahns to use the program to get out of apartments and into homes.”

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Rick Anderton, owner of Lindon-based Ridge Home Loans, said he didn’t believe the program went far enough and questioned how many people would truly benefit, especially within 45 minutes of Salt Lake City.

“You have to live in Utah for 12 months, you have to be under the area median income, and then you have to have almost no debt, or you’re not going to qualify because your income is so low,” Anderton told KSL TV. “The amount of people who qualify is just very few.”

According to data furnished by the Salt Lake Board of Realtors, the median sale price in June for a single-family home in Salt Lake County was roughly $600,000. Meanwhile, the median sale price of a multi-family home — a condo, townhouse, or twin home — was $413,000.

The board data showed there were currently only 578 listings of all kinds in Salt Lake County priced at $449,999 or lower. Realtors said new construction typically accounts for 15% to 20% of the total, meaning there were just over 100 new homes approximately in the county that might fit the new program.

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Other realtors told KSL TV there were new single-family homes that fit in the price range, but they were closer to the outer reaches of the Wasatch Front in places like Tooele County.

Utah Housing Corporation President and CEO David Damschen acknowledged the realities of the current market — particularly in Salt Lake City and Salt Lake County — and said an objective of the program and the $450,000 cap was to encourage builders to be more “creative” and “competitive” in constructing more housing units that are affordable to first-time buyers.

That, he said, was part of a long game in addressing inventory and affordability problems.

“We need to stoke supply,” Damschen told KSL TV early Friday.

Damschen said his agency anecdotally was already hearing about builders looking more into what is possible to fit under the existing cap.

He said his agency received 52 reservations from prospective buyers on the first day, though initial indications pointed to purchases leaning toward townhomes.

According to Damschen, a provision in SB240 allows for the $450,000 cap to be adjusted, but the plan was to see how the program performed first before making any changes.

Adams was unavailable for further comment Thursday, according to a spokesperson.

“Yeah, it’s a supply problem, right?” Anderton said. “It’s a bigger problem than a little incentive is going to fix.”

Anderton said until interest rates — which were hovering around 7% — went down and until inventories went up, it would likely continue to be a challenging housing market, incentives or not.

“Until the builders catch up, which could be years, we’re just going to kind of be in this mess,” Anderton said.

This story has been updated with additional information and quotes from the Utah Housing Corporation. 

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Lender: New Utah First-Time Homebuyers Assistance Program doesn’t go far enough