Adam Speth
2023 President, Northern Wasatch Association of Realtors
Since 2020, the median home price in Weber, Morgan and Davis counties has increased 43% to $438,000 — rising more than $100,000 in just three years. Although the housing market has slowed in recent months, moderately priced housing is still incredibly difficult to find. As of March 20, there were only 229 houses for sale priced less than $400,000 in the three-county area.
While Utah’s housing shortage situation has improved — lacking about 32,000 units currently compared to more than 50,000 in previous years — demand for moderately priced homes continues to exceed the number available, and it’s only getting worse.
Realtors worked with the Utah Legislature to address the shortage during the recently concluded legislative session. Lawmakers invested heavily in affordable housing programs and passed bills that make it easier to build starter homes.
Here’s a summary of several of the bills that aim to boost housing supply and affordability.
First-time homebuyer assistance program
The Legislature passed a bill allocating $50 million to a new homebuyer assistance program. It is exclusively for first-time buyers who purchase newly constructed homes priced $450,000 or less. Buyers receive up to $20,000 in assistance to be used for an interest-rate buydown, down payment or closing costs.
Buyers must pay the money back when they sell or refinance the home, but they get to keep any equity they may have earned. The money that is paid back is reinvested into the program to keep the fund going in perpetuity.
The program focuses on new construction rather than existing housing because the goal is to encourage builders to construct entry-level homes and help reduce Utah’s deficit of starter homes. New construction of starter-priced properties is critical to helping first-time buyers achieve homeownership.
Utah Housing Corporation will administer the program, which will go into effect July 1, 2023.
Shared equity program
The Legislature allocated $5 million to the Shared Equity Revolving Loan Fund to help low- and moderate-income buyers get into homeownership. This unique solution helps first-time homebuyers purchase a home through a shared equity program with an affordable monthly payment, below-market interest rate and no money down.
As buyers make payments, they reduce their principal as they would with a traditional mortgage. When they sell or refinance, they keep half of the equity gained through home price appreciation. The other half of the appreciation goes back to the program to investors and to help other families.
To learn more about this program, visit the Rocky Mountain Homes Fund website at RMHF.net.
Reductions in regulatory barriers
A trio of housing bills work together to standardize best practices to reduce the cost of housing development. They also help cities incorporate moderate-income housing into their city planning.
Together, House Bill 364, House Bill 406 and Senate Bill 174 provide consistent development standards, reduce delays and limit regulatory barriers in the new construction process. That means houses cost less and these savings can be passed on to the consumer.
Accessory dwelling units
Senate Bill 174 aims to create more internal accessory dwelling units, or ADUs, by allowing these units to be built in new construction projects. Examples of internal ADUs include basement or garage apartments.
These accessory units play an important role in increasing housing supply and help make housing affordable for both homeowners and renters. ADUs often offer affordable rates for renters while homeowners have the benefit of using ADU income to offset the cost of their mortgage payment.
Low-Income Housing Tax Credit program
The Utah Legislature appropriated more than $50 million to incentivize the creation of affordable housing units for low-income Utahns. Utah Housing Corporation will use the funds to provide tax credits to attract capital for the development of deeply affordable housing units.
The new funding could create 600-700 affordable housing units per year, which would be a big step in addressing the shortfall of affordable units. There is currently a need for 40,000 such homes, according to legislative testimony from Utah Housing Corporation. To learn more about housing options and programs in your city, contact a local Realtor. Find a Northern Wasatch Realtor who serves your area at NWAOR.com.