A bill intended to raise a “moral question” around investors snapping up houses for sale that otherwise might be purchased by first-time homebuyers has been held by the Utah Legislature’s House Political Subdivisions Committee.
HB151, sponsored by Rep. Gay Lynn Bennion, D-Cottonwood Heights, would require buyers of single-family homes in Salt Lake County to sign an affidavit saying they intend to live there for at least a year if the purchase is made within the first 30 days the property is on the market.
However, the requirement could be avoided if sellers have an exigent circumstance related to financial difficulty.
“This bill provides one way to increase home ownership,” Bennion told members of the committee Tuesday, describing the bill as a response to the impact investors are having on first-time homebuyers.
She said a recent study funded by Salt Lake County found that 10,600 homes within the county went from owner occupied to rentals between 2018 to 2023, while in South Jordan, there have only been build-for-rent developments proposed.
“Investors are cutting into home ownership in negative ways,” Bennion said. “Some investors use algorithms, some bring cash, but they all push out the individual who is coming into home ownership for the first time and doesn’t have those tools and experience.”
She said her bill wouldn’t stop an owner from accepting a better offer from an investor, but it should give them pause.
“That’s where it’s up to that owner. It says in this bill that at any point they can claim that they have an exigent circumstance. So it is just raising that moral question to the seller and to buyers,” Bennion said.
That question, she said, is whether a seller has the ability “to do the best thing, to allow someone to purchase the home for maybe a little bit less than another offer that they might see.”
Real estate agent Lisa Thompson joined Bennion in backing the bill before the committee, saying investors make it hard for first-time homebuyers to compete in the market by coming in with often lower offers in cash to purchase homes quickly.
But Rep. Neil Walter, R-St. George, pushed back against the bill, making it clear he didn’t want to disrupt the current real estate market, where houses typically are listed for around 60 days before selling.
“In 2010, it was too slow. In 2021, it was too hot. And I don’t want to call this the goldilocks market, because it’s not. There’s plenty of challenges but it’s a more balanced market,” Walter said, calling the bill the “wrong tool” to promote home ownership.
Today’s real estate market allows buyers plenty of time to negotiate with sellers, he said. “I’m concerned that we’re trying to use sellers as policy tool to make concessions to meet a public policy objective.”
That’s a cost they shouldn’t have to shoulder, Walter said, warning that what he characterized as “demanding” information about a buyer’s intent could lead to violations of fair housing laws prohibiting discrimination.
Others also spoke out against the bill that was held in committee on a voice vote.
Chris Sloan, a past president of the Utah Association of Realtors, told the committee the legislation doesn’t solve the problem it’s intended to address. He also said it is “not fair to put the onus” on sellers to declare exigent circumstances so they can get their homes sold and could cost them money.
Ivory Development President Chris Gamvroulas said “encouraging home ownership is great.” But, he added, “the solution to an undersupply is not to interfere with the exchange of real property between a willing buyer and a willing seller.”
There was support from the public for Bennion’s approach.
Cottonwood Heights realtor Jennifer Cottam said she works “with families that do everything right, they’re saving, they’re planning, they’re working hard. Then, especially when the market’s tough and in your lower price-point homes, they’re outbid by cash offers from investors.”
Cottam said the bill would help such families get into their first home. She urged the committee to advance the bill to the House, telling them “to really consider your families and your kids. Do you want them to live in Utah? I know I’d love mine to.”