The Utah Legislature has given final legislative approval to a bill that would set aside $50 million to help first-time homebuyers buy new homes — but only if they’re newly constructed.

The aim of SB240 is to help Utahns afford homes while also encouraging homebuilders to continue adding to the state’s housing stock. For years, Utah has grappled with a housing shortage that sent home prices climbing even before the pandemic housing frenzy sent the West’s housing prices sky high.

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Now, even as the national housing market corrects and Utah’s home prices drop, experts don’t expect Utah’s housing affordability crisis to go away given its rapid growth and housing shortage. So lawmakers approved the bill, one of multiple housing-related bills making their way through the Utah Legislature’s 2023 session.

The Senate last week voted 28-1 to approve the bill, and on Tuesday the House voted 60-8 to give it final legislative approval. It now goes to Gov. Spencer Cox.

Senate President Stuart Adams, R-Layton, sponsored the bill because he said it’s high time Utah “reinvent” a first-time homebuyer program that the state first started back in the ’90s.

“We’re losing our middle class,” Adams told reporters in a media availability earlier this month, adding that Utah shouldn’t address affordable housing by only building multifamily rental units. “We need to get people out of their apartments (and) into homes.”

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The bill would use $50 million in state money to offer an up to $20,000 loan to eligible homebuyers to help them buy new homes, whether that’s for down payment assistance, closing costs or buying down their interest rates.

State officials estimate it would help about 2,500 buyers. The program would be administered through the Utah Housing Corporation.

The loan would be a lien on the house, Adams said, “So, if they happen to get a better rate or they want to refinance at some point in time it has to be paid back, or if they sell the home it needs to be returned.”

To qualify for the loan, the single-family home, condo or townhome must be newly constructed and cost no more than $450,000.

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In a Senate committee earlier this month, Mike Ostermiller, representing the Utah Association of Realtors, urged lawmakers to support the bill, saying it will help both homebuyers and the homebuilding industry.

“The starter home in Utah is extinct. They don’t exist anymore,” Ostermiller said. “Our families aren’t able to realize the American dream and be able to get into home ownership, and the only way to fix that is on the supply side. We have to create inventory.”

Ostermiller said Adams’ bill is designed to “actually solve the problem.” He noted Utah’s homebuilders — which were hard hit when interest rates began rising last year — have pulled back.

“With the number of new construction starts being down, driving construction drives the economy,” Ostermiller said. “So this will not only help families in a profound way, but also trickle down and help the rest of the economy.”

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If the program wasn’t limited to new construction, Ostermiller said, “that just helps buyers get into a home without creating more inventory. In a sense, we’re exacerbating the very problem that we have out there. Our problem is not a lack of buyers. Our problem is a lack of places to put them.”

House Minority Assistant Whip Sandra Hollins, D-Salt Lake City, spoke in favor of the bill on the House floor on Tuesday, saying she and her husband were able to become homeowners back in 1995 because of the state’s first-time homebuyer program back then.

“I can tell you it is one of the reasons why we have stayed in Utah in this state,” Hollins said. “Just giving a person an opportunity to be able to buy a home does stabilize (them) and in turn stabilizes that community.”

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