In Salt Lake City, Governor Spencer Cox’s recent proposal to the Utah Legislature has garnered attention for its ambitious goal of assisting residents in acquiring their own homes. From the proposed $150 million budget, $50 million is earmarked for the newly established first-time homebuyer program, a significant boost to this initiative.
Launched a few months ago, this innovative program offers first-time buyers up to $20,000 to cover various home purchasing costs, including down payments, closing costs, or reducing interest rates. Despite its recent implementation, Governor Cox, during a news conference earlier this week, expressed his desire to infuse an additional $50 million into the program as part of his fiscal year 2025 budget recommendations.
However, questions arise regarding the necessity of such a substantial increase in funding. As it stands, over 80% of the program’s resources remain untapped, accounting for tens of millions of dollars. Addressing these concerns, Governor Cox acknowledged the large sum still available but emphasized that, according to fund managers, these funds are expected to be fully utilized before the commencement of the next budget year.
Somewhat contradictory to Governor Cox’s assertions, David Damschen, CEO of Utah Housing Corporation which administers the program, had a different outlook in an October interview with KUTV 2News. He projected that at the current rate, the initial $50 million allocation would be completely disbursed within the next 18 months, suggesting the funds would last until around April 2025, almost at the end of the upcoming budget cycle.
As of November 30, records from the Utah Housing Corporation show that $9.4 million of the program’s funds have been allocated, leaving just over $40 million available. There has been a noted decrease in application numbers as winter approaches.
Senate President Stuart Adams (R-Layton), the originator of the first-time homebuyer program, while appreciative of the governor’s support, remained noncommittal about the necessity of an additional $50 million. He emphasized ongoing monitoring to evaluate the need for extra funding this session.
While the governor plays a crucial role in proposing the budget, the final decision rests with state lawmakers, who will convene next month for the legislative session.
Too Much or Not Enough?
The program, currently limited to new constructions valued at or below $450,000, has sparked debate. When questioned about the possibility of increasing this price limit, Governor Cox firmly opposed the idea, underscoring the intention of encouraging construction within this price range.
In the midst of a challenging housing market characterized by elevated prices and interest rates not seen for years, Salt Lake City residents like Aubrey Sanders (also interviewed by KUTV) are navigating the complexities of home buying. Sanders, a 25-year-old insurance specialist, is in the process of purchasing a townhome in Spanish Fork, despite the daunting market conditions.
The first-time homebuyer assistance program in Utah has been a crucial aid for Sanders and her husband. Established by the Legislature earlier this year and commencing in July, the program offers up to $20,000 to buyers, which can be applied towards a down payment, closing costs, or reducing the interest rate.
This program, however, comes with specific criteria. Eligible homes must be newly constructed and priced at or below $450,000. This pricing cap presents challenges in ten Utah counties where median home prices exceed this limit. Additionally, the program requires repayment upon the sale or refinancing of the home.
So far, the program has distributed $6 million to buyers, with additional millions already allocated. Data from the Utah Housing Corporation, the program’s administrator, reveals that the average recipient earns about $90,000 annually and purchases homes valued near $377,000.
For Buyer or Builders
By aiding the demand-side at a specific price point, the initiative aims to motivate builders to create more affordable housing options. Senate President Stuart Adams (R-Layton), who played a pivotal role in establishing the program, has noted positive responses from builders who are adapting their construction plans to align with the program’s goals.
Sego Homes, a Utah-based builder, is an example of this adaptation. Dallin Corbridge, a co-owner, sees the program as a dual benefit for both buyers and builders. Similarly, Edge Homes in Draper, as per Natalie Thomas, Vice President of Sales, is already constructing homes within the program’s price range, focusing on condos and townhomes.
To date, the program has supported over 400 families across the state. The majority of these buyers are in Utah County, followed by Salt Lake, Washington, and Tooele Counties. Other counties account for the remaining 29% of purchases.
However, there is still that debate on whether the program’s price limit needs adjustment. Thomas believes a higher limit could enhance the program’s effectiveness. Corbridge echoes this sentiment, suggesting a modest increase could encompass more potential homebuyers.
David Damschen, CEO of Utah Housing Corporation, acknowledged the complexity of the issue, emphasizing the program’s focus on aiding buyers, not builders, and maintaining pressure on builders to keep units within the price range.
President Adams, when asked about adjusting the price limit, expressed a desire to maintain affordability and was hesitant about any increase, believing the current cap is appropriate.
Currently, townhomes are the predominant type of home purchased through the program, followed by single-family homes and condos.