Early Indicators Show Housing Stimulus is a Home Run

Utah is only one month into our economic stimulus for housing, and house sales are hopping.  Nearly 250 people have already purchased homes with $6,000 Home Run Housing Grants. With 1,600 grants available, they could be gone in a matter of months. 

March activity in the Salt Lake housing market scored among the highest in the country, according to Zelman & Associates, a leading national real estate research firm that measures activity in 55 markets around the country.  The Home Run grant program is cited as a key factor. 

Why is housing so important to our economic turnaround? It's this simple: the housing crisis led us into the recession and housing can lead us out.   An oversupply of new unsold homes and a slow rate of sales led to unstable housing prices, major job losses in the residential construction industry and a decline in consumer confidence.  Some 18,000 construction related workers lost jobs over the last two years, triple the loss of any other sector.  The Home Run housing grant is pulling qualified buyers back into the market, thus generating jobs, removing excess industry, stabilizing home values and restoring consumer confidence.  

Jim Wood, director of the University of Utah Bureau of Economic and Business Research, projects that nearly 9,000 jobs will be created by the 1,600 Home Run grants.  He projects some $182 million in construction earnings and $324 million in total earnings.   Putting construction workers back to work puts our economy back to work. That's why the Salt Lake Chamber put this as one of its key policy priorities in its Can-Do economic stimulus plan. 

At Utah Housing Corporation, our mission is to create affordable housing solutions for Utahns. Usually, our key strategies are to provide competitive mortgages and down payment assistance to first time home buyers, and to finance construction of affordable rental units.  But difficult times require innovative solutions. We are pleased that Governor Huntsman and the Utah State Legislature allocated $10 million in federal stimulus funding for the Home Run grant program and assigned Utah Housing Corporation to administer it.  To qualify for a Home Run grant, single buyers must earn $75,000 or less, and married couples $150,000 or less.  More information on how to obtain a grant is available on our website: www.Utahhousingcorp.org

From the first weekend Home Run grants were available in late March, marketplace activity multiplied.  One major developer went from zero sales the weekend before Home Run was launched to 20 the following weekend. Not all buyers got Home Run grants, but that wasn't the point. The point was to draw people into the marketplace with a serious financial incentive and a deadline for action.   Consumers reacted quickly and enthusiastically just as we expected.

Utah Housing Corporation has six people working full time to distribute Home Run grants.  We coordinate with mortgage lenders to provide the grant to qualified home buyers at their house closing. They receive their grant from their title company, not directly from Utah Housing Corporation.  We average a dozen or more applications a day, some days more than 20 and the pace is picking up.  In most cases, we can turn around applications within 24 hours.

Home buyers come from all over Utah as well as other states, and represent every demographic group.   Home buyers are using the $6,000 grant in a variety of ways. For some, it's the final $6,000 that enables them to qualify for their home purchase.  For others, it's $6,000 they can spend to furnish, landscape or decorate their homes. Some examples from Veritas Funding, LLC , a Utah mortgage lender that is participating in the program:

• Rebecca and Derek Cramer had outgrown their Lehi condominium now that they have two children. They were among the first recipients of the Home Run grant, and the first to buy on their Riverton street.  The street, which had been a long row of vacant newly constructed houses, has since filled up with other Home Run grant buyers. Rebecca and Derek are using the $6,000 to buy a refrigerator, furniture, drapes and other furnishings. "We're helping the economy and it helps us too," Rebecca said.  
• Echo Hall, 51 years old, was able to buy her first home, a South Jordan townhouse, with a beautiful wetlands view.  "I'm lucky I got the right thing for me in a good location at the right price range," she said. "I had been looking for a long time, and all the pieces came together with the Home Run grant." 

The program isn't limited to borrowers.  More than a dozen cash buyers, many from out of state, have made cash purchases through the program.  In many cases, grandparents and children are using Home Run grants to return to Utah to live near their families. Home buyers are required to demonstrate that they will be full-time occupants of the home. Cash buyers work directly with Utah Housing Corporation to receive their grant.  

A number of home buyers are using both the $8,000 federal tax credit, available to first time home buyers, and the $6,000 Home Run grant, generating a $14,000 discount on a home purchase.  When combined with historically low interest rates, this is an unparalleled opportunity for home buyers. 

The sale of the excess inventory of new homes will have a positive effect of stabilizing the entire market of homes for sale, including existing homes.  Whenever supply exceeds demand, home prices tumble.  Clearly the sale of 1,600 new homes through Home Run will not completely restore the market, but it will help.

We are pleased to be a part of this Home Run economic stimulus program. We believe the benefits will play out in a big way as Jim Wood as projected, helping home buyers into a home, putting nearly 9,000 construction workers back to work, and generating $324 million in total earnings.