“The housing market is making the American Dream feel more and more distant.”

This sentiment captures the frustration felt by many of the younger generation today. The dream of owning a home seems to be slipping further away from millennials and Gen Zers, as national news outlets paint a grim picture with reports of skyrocketing home prices. Here in Utah, the situation is compounded by a significant housing shortage. According to the University of Utah’s Kem C. Gardner Policy Institute, Utah faces a projected deficit of 37,000+ housing units this year. This lack of available homes intensifies competition, making it even harder for those just starting out to find properties within their budget.

Even more bleak statistics flood social media, where online voices offer conflicting advice. Some suggest waiting for lower interest rates; others urge you to buy now if you’re fortunate enough to find a home in your price range, then refinance it later; some even tell you to just give up, that homeownership is simply unrealistic in today’s world. The overwhelming stream of information can leave first-time homebuyers deeply discouraged.

But amidst the many current headlines, a promising message is getting lost: Efforts to address housing challenges are underway in the Beehive State. Utah Gov. Spencer Cox’s recognition of the housing crisis has spurred legislative action, and while the market remains complex, these efforts focus on creating a more accessible path to homeownership.

Let’s break down how these new housing policies can work in your favor.

Building Hope: A Collaborative Effort for Utah’s First-Time Homebuyers

Addressing the housing challenges is a collaborative effort in Utah. The state partnered with local developers, city and county planners, and others to develop a comprehensive housing agenda this year. Their ambitious plan aims to deliver 35,000 new starter homes by 2028 by tackling critical issues such as zoning regulations, infrastructure hurdles and building code modifications.

Recently passed legislation also allocates $300 million in public investment funds for affordable housing (over three years). This funding will be channeled through the state treasurer’s office to local banks, such as Bank of Utah, and credit unions. These institutions will then offer low-interest loans to developers specifically dedicated to building affordable housing, ideally priced around $350,000.

Building a Foundation for Young Utahns: Why Starter Homes Matter

Gov. Cox’s call to action during the 2024 legislative session hit a nerve: “Our children won’t be able to call Utah home unless we prioritize building starter homes again,” he said. Starter homes are a critical piece of the puzzle when it comes to solving Utah’s housing crisis. By making homeownership attainable for younger generations, these homes offer a wealth of advantages for both first-time buyers and the local economy:

  • Affordability: Starter homes offer smaller square footage, which translates to lower purchase prices and smaller down payments. Also, an increased availability of starter homes fosters a healthy housing ecosystem, stabilizing housing prices and preventing them from spiraling out of reach.
  • Equity: Starter homes are a stepping-stone to building equity. As your financial situation improves, you can potentially sell your starter home and move up to a larger property in the future.
  • Economic Growth: Increased homeownership leads to investment in communities, creating jobs in construction, retail and more.
  • Community Vibrancy: A balanced housing market with diverse options fosters vibrant communities. Starter homes attract young families and professionals, contributing to the area’s long-term vitality and stability.
  • Overall Well-being: Affordable housing is crucial for well-being. It promotes better physical and mental health, improves educational outcomes and fosters civic engagement.

Fostering Opportunity: Affordable Starter Homes in Innovative Communities

Fueled by the demand for affordable starter homes, Utah’s housing market is experiencing a wave of innovation. Recognizing the need for diverse housing options, builders are beginning to offer more master-planned communities (MPCs). These communities cater to a wider range of residents, including first-time homebuyers, by offering more than just traditional single-family homes. Townhomes, condos and other housing types provide attractive and attainable alternatives for those entering the housing market.

Gov. Cox’s press conference on the housing crisis, held at an MPC built by Nilson Homes (a Bank of Utah builder partner) highlighted the state’s focus on innovative, affordable housing solutions. These MPCs go beyond just housing; they foster a strong sense of community through shared spaces like community hubs, walking paths and play areas. These amenities offer residents cost-effective ways to enjoy features they might not be able to afford individually, such as a private gym or playground equipment.

Getting Started: Strategies for First-time Homebuyers in a Challenging Market

Homeownership is a powerful tool, especially for younger Utahns, to build wealth and stability, and the future for Utah’s first-time homebuyers is looking up. The new legislation and the continual focus on the market means more options at potentially lower prices.

At Bank of Utah, we understand the complexities of buying a home. Here are some tips to get you started:

  • Start Saving Early: The power of compound interest is real. Even small amounts saved consistently can add up significantly over time. Talk to one of our mortgage loan officers about our Super Saver Mortgage Program, which includes a Super Saver CD to help you grow your down payment.
  • Establish Good Credit: Responsible credit card use and on-time payments will help you build a strong credit score, which translates to better interest rates when you eventually get a mortgage.
  • Connect with a Loan Officer: Our experienced professionals can guide you through the entire process, explore all available options (including grants and programs for first-time buyers) and help you understand the current market landscape. They can also provide valuable insights into builders participating in the affordable home loan program and upcoming developments that might align with your budget and preferences.

Final Thoughts

We understand the initial discouragement you might feel right now, but don’t let all the challenges surrounding housing overshadow the good news. Utah is actively trying to create a brighter future for first-time homebuyers. Through collaborative action — the state, developers, lenders, communities and residents all working together — we can make achieving the dream of homeownership a more attainable goal for many Utahns. With the right guidance and preparation, you can navigate this evolving market and turn your dream of homeownership into reality.

If you have questions or just want to talk through your options, contact us today and speak to one of our friendly, experienced loan officers. They are local experts who know the Utah market inside and out, and are here to help you wherever you’re at in your home-buying journey.

Eric DeFriesEric DeFries is the Senior Vice President, Residential Lending, for Bank of Utah. Originally from Layton, he has been in the finance industry for close to 19 years years and with Bank of Utah for almost 15 years. He serves on the Board of Commissioners for the Ogden Housing Authority.