2023 President, Northern Wasatch Association of Realtors
A new initiative from Utah Gov. Spencer Cox could make homebuying a little easier for those looking to purchase their first house. The governor is proposing a state budget that includes $150 million to build 35,000 starter homes by 2028.
“The single greatest threat to our future prosperity, the American Dream and our strong communities is the price of housing,” said Gov. Cox in a press release announcing the proposed budget. “Our kids will never be able to call Utah home if we don’t start building starter homes again. With the goal to build 35,000 new starter homes, the Utah First Homes Program would provide new funds for infrastructure, help for homebuyers through grants and sweat equity programs, funding to incentivize innovation and more.”
The governor’s focus on starter homes comes at just the right moment as more affordable housing is desperately needed in Utah. Consider the following statistics from the Kem C. Gardner Policy Institute:
- Utah needs to build an additional 178,000 homes by 2030 just to keep up with housing demand and household growth.
- Utah has the 8th-highest median sales price compared to other states.
- As of August, a Utah mortgage payment based on prevailing home prices and interest rates hit a record high at $2,979.
- More than 92% of Utah renters can’t afford the median-priced home.
- Utah’s housing shortage is increasing. After falling to 28,415 units in 2022, the housing shortage is expected to grow to 37,255 units in 2024.
With such difficult conditions, homeownership is becoming more out of reach for first-time buyers. In fact, a Utah family making the median income only has 66% of what is needed to purchase the median-priced home, according to December data from the Utah Association of Realtors. Meanwhile, the median-priced home is close to half a million dollars, and the supply of available housing inventory remains historically low.
When Utahns can’t afford homes, it’s a situation that hurts all of us. In fact, studies show homeownership has positive benefits for community engagement, educational achievement, health outcomes, decreased crime and more.
Homeownership also helps families build financial stability. It acts as a forced savings plan and helps protect homeowners from inflation. Using data from the Federal Reserve, the National Association of Realtors estimates the net worth of a homeowner is $396,200 versus just $10,400 for a renter.
These benefits are just a few of the reasons why Realtors support the governor’s efforts to help Utah families get into their first home. Here’s how the governor would like funding for the Utah First Homes Program to be allocated and how it would help housing become more attainable:
- $50 million for the Legislature’s new First-time Homebuyer Assistance Program. This program provides a zero-interest loan to help first-time buyers have cash for upfront housing expenses such as a downpayment, closing costs and/or an interest rate buy-down. This program is for newly constructed homes under $450,000.
- $75 million to help fund water, sewer and road infrastructure that supports housing.
- $5 million to promote housing innovations to make starter homes more affordable.
- $15 million to expand and develop sweat equity programs that allow homebuyers to contribute physical labor to help with their downpayment.
- $5 million to expand community land trusts, which maintain affordability through deed restrictions.
- Recruitment of a manufacturer to expand the use of off-site building and help accelerate the production of starter homes.
- A new senior housing innovation advisor who will develop a statewide strategic housing plan.
Along with the governor’s efforts, we need to encourage cities and towns to allow the construction of starter homes, including condos, townhomes and small-lot, single-family homes. Without a concerted, statewide effort to thoughtfully plan for and allow a variety of housing types, we will price out future generations and jeopardize our quality of life. ANY housing type that falls in the entry level price range and is a ‘for ownership’ product needs to be the top priority for every city in Northern Utah!!!
To learn more about how you can support housing efforts in your community, contact a local Realtor. A directory of Northern Wasatch Realtors is available at NWAOR.com.