Consider Senate Bill 240, the “First-time Homebuyer Assistance Program,” a bipartisan bill that passed with overwhelming support (uh-oh). Described as a first-time homebuyer assistance program, it offers up to $20,000 in generously subsidized loans to low-income buyers. But there’s a big catch: the subsidy applies only to new construction or homes that have never been lived in. Backers of SB 240 frame it as a supply-side strategy to incentivize new building, but in practice, SB 240 is more like welfare to developers and builders than a helping hand to first-time homebuyers.

Economically, the supply of new homes — in Utah locales where people actually want to live — is likely “inelastic” due to labor shortages, land-use constraints or water scarcity, so subsidizing demand mostly leads to increased home prices. Builders and landowners capture the benefit because the primary impact of the subsidy is bidding up prices rather than new construction. Worse, the restriction to new homes discourages investment in older housing stock. In places like downtown Ogden, where older homes could be renovated by first-time buyers, the law nudges demand away and toward fringe developments on the Wasatch Front. Over time, that will contribute to urban decline and higher infrastructure costs.

Subsidizing new construction also reshapes resource allocation in the housing sector. Labor and capital flow toward new builds instead of renovations. Industries like HVAC, landscaping and plumbing evolve around large-volume suburban developments. The result? Brand new homes with pristine lawns and new heat pumps sit vacant in far-flung areas that meet SB 240 subsidy price caps, while HVAC repair prices spike and lawmakers complain about labor shortages in the construction industry: shortages their policies helped create.

There’s also growing evidence that buyers aren’t biting. Some recent news reports indicate that first-time buyers are avoiding the subsidy, in part because many newly built homes are located far from jobs, transit, and established communities. The very logic of the program — affordable housing — undermines itself when long, expensive commutes and limited amenities make those homes less livable.

This state-level policy appears to conflict with local housing initiatives. Many city governments along the Wasatch Front are offering their own subsidies to promote infill development and rehab of existing homes. Instead of reinforcing those efforts, the state is encouraging a geographic and economic horse race, pushing wealth and activity outward while cities try to keep it anchored. The long-run effects could resemble what happened in places like Detroit: middle-class flight, disinvestment in urban cores and rising segregation by income.

At the same time, some Utah lawmakers have proposed selling off public lands to private developers under the banner of increasing supply. For example, Sen. Mike Lee recently pushed legislation to dispose of federal land for housing. But where will that land be? Not in central Salt Lake or Ogden. Almost certainly on the outskirts — again reinforcing sprawl and again enriching developers who gain early access to the sale.

It’s worth asking: who benefits most from these policies? According to a 2023 KUTV story, the Utah Legislature has a disproportionately high number of lawmakers from real estate, construction, and closely related industries. This alignment doesn’t just raise the possibility of conflict of interest. It may explain why housing policy so often drifts toward supply-side interventions that happen to benefit the very people writing the laws.

Some current representatives of the wider Ogden area campaigned on housing affordability. They mentioned potentially good ideas, like removing unnecessary regulations and not pushing people further from the communities they love. It’s time to put those words into action.

To correct course, Utah should start by eliminating restrictions that prevent first-time buyers from applying subsidies to existing homes. There are currently more than 100 houses for sale that meet the $450,000 price maximum for sale in Ogden, but fewer than five of these listings are new homes. The focus should shift from subsidizing specific builders to easing regulatory barriers — especially zoning — that slow all kinds of new construction. And instead of selling off public land piecemeal, the state could work with local governments to integrate land-use planning with affordability and infrastructure goals. These changes would align more closely with state legislators’ conservative, free-market rhetoric and would help a lot more families in Utah.

Gavin Roberts is an associate professor of economics and chair of the economics department at Weber State University. He is a recipient of the Gordon Tullock Prize from the Public Choice Society and regularly shares his research locally, nationally and internationally. This commentary is provided through a partnership with Weber State. The views expressed by the author do not necessarily represent the institutional values or positions of the university.