By Chris Sloan, president of the Utah Association of REALTORS®
14 March 2009 - As the Utah Legislature wrapped up this
week, there was some good news for Utah home buyers. On Monday, the Senate
passed a bill that would provide a $6,000 grant to qualified buyers of a
newly constructed home - funds in addition to the $8,000 federal tax credit
- for a potential of $14,000 in home-buying incentives.
This housing stimulus grant program is called "Home Run," and
it aims to stimulate home sales and eliminate a large portion of unsold
housing oversupply, which would help stabilize home prices and create jobs.
At the time this article was written, the Utah House had not voted on Senate
Bill 260 but was expected to by late Thursday. If passed and signed by the
governor, there would be 1,666 grants available to buyers on a first-come,
first-served basis - grants which would not have to be repaid. For more
updated information on the bill's final status, visit www.le.utah.gov.
"The idea behind this is we're trying to get existing homes bought
and off the market so they can start building new homes," said the
bill's sponsor Sen. Scott Jenkins.
While the proposed grant program would be similar to the $8,000 federal
tax credit for home buying, there are some notable differences. The first
is that the Home Run grants can only be used for newly constructed, never-occupied
residences in Utah. Dissimilarly, the federal tax credit applies to both
new and existing homes. Utah buyers who purchase a new home could potentially
qualify for both incentives.
Second, unlike the federal program which only applies to first-time home
buyers, Home Run is available to any Utah buyer who meets the other qualifications,
including existing homeowners. The intent is to clear the excess housing
inventory in the low- and mid-range price categories. In order to do this,
analysts felt the program could not be limited to first-time buyers.
The Home Run grant is $6,000 regardless of the home's purchase price, while
the federal housing tax credit is 10 percent of the home's purchase price
up to $8,000. The federal tax credit is available to anyone who purchases
a home before Dec. 1, 2009, while Home Run grants are only available until
they are gone, which could be much quicker. Some experts familiar with the
bill are predicting all the grants could be given out in just a few months,
which makes it imperative for anyone interested in the program to act quickly.
While both the Home Run grant and the federal home-buying tax credit have
income limits (a single buyer's income cannot exceed $75,000 and a married
couple's cannot exceed $150,000 to qualify for the full amounts), the federal
program offers a partial tax credit that may be available to those who make
more. A partial Home Run grant is not available to individuals and couples
making more than $75,000 and $150,000, respectively.
The way in which the money is given varies as well. A Home Run applicant
will make a reservation request through their mortgage lender who will contact
Utah Housing Corporation, the program administrator. Buyers will then have
90 days to close the deal, with the money being credited to the buyer's
down payment or transaction costs at closing. In contrast, those seeking
the federal home-buying tax credit will claim the credit on their federal
income tax return.
A final difference is that Home Run applicants must buy their home using
a 30-year fixed-rate mortgage. Buyers can use any number of loan programs,
including conventional, FHA, VA or USDA to name a few. Buyers can also use
a Utah Housing loan, but this is not a requirement; any traditional 30-year
fixed mortgage will qualify. Any lender authorized to make loans in Utah
can help buyers apply for the grant.
Combined with the market's other buying incentives, the Home Run program
is expected to have a significant impact. The University of Utah's Bureau
of Economic and Business Research estimates Home Run will eliminate a large
number of the 2,903 complete, unoccupied homes along the Wasatch Front,
thereby creating 8,823 jobs and $27.7 million in projected tax revenue.
The money for the grants comes from funding Utah is slated to receive under
the American Recovery and Reinvestment Act of 2009, which President Barack
Obama signed into law last month. Utah Housing Corporation is expected to
provide more information on their Web site, www.UtahHousingCorp.org, as
details are finalized.