- The Utah Foundation's report highlights shared-equity programs aiding homebuyers in Utah.
- Buyers and investors share ownership and appreciation, easing entry into high-cost markets.
- The Utah Dream Fund and others are offering innovative solutions to boost homeownership amid rising prices.
SALT LAKE CITY — Government programs can go only so far in helping Utahns buy homes in one of the country's most expensive housing markets, but there are other options available that involve private investors, according to a new report.
"Appraising Utah's Homeownership Approaches," written by the nonpartisan, nonprofit Utah Foundation, highlights "shared-equity" programs where buyers and investors share both ownership of a home and its future appreciation.
"Basically, it's allowing you to get into a market that doesn't exist in the state anymore," Utah Foundation President Shawn Teigen said Thursday during a virtual presentation on the newly released report.
"You're buying a portion of the home, and you don't see quite as big of an upside as if you purchased the whole home in terms of that appreciation, but there's a significant benefit there," he said.
Buyers are able to get into a home they couldn't otherwise afford because investors are providing part of the purchase price or picking up other costs in exchange for a share in the ownership in the home or the land beneath it.
In high-priced housing markets like Utah, the report says "it is unlikely that educational programs, broader access to financing, or downpayment assistance will alone be enough to help prospective buyers realize the dream of ownership. Shared equity might help fill this need."
The report cites a study showing 94% of first-time buyers could purchase a median-priced home with less than $25,000 in up-front assistance in a low-cost housing market, while just 7% could do the same if housing costs are high.
Lower mortgage rates are not the answer, the report says, because even if they took an unlikely tumble from above 6% to 3%, the monthly payment on a $580,000 home would still be around $3,000 a month. Lower rates also would be expected to boost demand and drive up prices.
"In high-priced markets, you have to help people with a lot of money, or help people in new and innovative ways," Teigen said. "Government money can only go so far. You also have to use the market, and you can do that with public-private partnerships."
In high-priced housing markets like Utah, the report says "it is unlikely that educational programs, broader access to financing, or down payment assistance will alone be enough to help prospective buyers realize the dream of ownership. Shared equity might help fill this need."
But with a "fair share" home appreciation mortgage, Teigen said the price of a home could be split with investors and then, when it is sold or refinanced, the owner-occupant would get the same percentage of the appreciated value.
Here, he said the Utah Dream Fund offers shared appreciation mortgages through Homium, a national lender, and is also partnered with the United Way of Salt Lake, the Sorenson Impact Foundation and other Utah organizations.
There are also similar shared-equity programs that begin with rental housing, aimed at health care, education and public service professionals.
Yet another option, community land trusts, have gained "only a little bit of traction" in Utah, Teigen said. Those involve homes developed on land owned by a nonprofit or government entity but leased to buyers, who end up paying less because they're only purchasing a home.
Still, he said, the programs need to grow.
"Utah has been at the lowest level of homeownership that we've had in a very, very long time," Tiegen said. "These models that directly reduce purchase prices ... are better aligned with the market we are currently in, in Utah, and are helping people already get into homes."
