$6,000 New Construction Grant Approved!

The Utah Senate has approved a proposal to give buyers of newly built homes a $6,000 down-payment grant using funds from the federal economic stimulus package. Senate Bill 260, sponsored by Sen. Scott Jenkins, R-Plain City, aims to stimulate sales from an excess inventory of new homes on the market left over from a building boom that came to a halt about two years ago. The funding would come from the $10 million Utah is slated to receive for housing assistance from the American Recovery and Reinvestment Act signed into law last month. Funds would be used to help more than 1,600 buyers on a first-come, first serve basis. Existing homeowners would be eligible as well as first-time buyers. "The goal is for people to buy the existing inventory out there," said Sen. Greg Bell, R-Fruit Heights. "We don't care if it's their first time, as long they're buying a new home that's already on the market." Grants would be awarded through the nonprofit Utah Housing Corp., the entity created by the state to administer housing assistance programs. The grants would only be available to buyers obtaining 30-year, fixed-rate mortgages. Individuals making more than $75,000 annually, or married couples making more than $150,000, would not be eligible. Sen. Jon Greiner, R-Ogden, said a recent tightening of lending standards has prompted lenders to raise their required down payments, and few houses can currently be purchased with a $6,000 down payment. But when combined with other incentives, the grants could be a powerful tool for reducing excess inventory, said Mike Ostermiller, chief executive of the Northern Wasatch Association of Realtors. "You can debate the effect of $6,000 by itself, but when you combine it with the $8,000 federal tax credit, record-low mortgage rates and ridiculously low prices, this could have a big impact," Ostermiller said. The University of Utah's Bureau of Economic and Business Research estimates that such a program would create 8,000 jobs in Utah's housing sector and add $27 million in income tax revenue to state coffers. While the proposal doesn't directly address the inventory of unsold, previously occupied homes on the market, Ostermiller said it will stimulate activity that will be good for the market in general. "The most important thing is getting some movement in the market," he said. "Your chances of selling your home are much better if this eats into the new inventory." The Senate voted 22-to-5 Monday in favor of SB 260, which Jenkins said could go a long way toward fixing the Utah housing market. "We hope it has a positive effect. We will see where it takes us."