There is now a new Utah State incentive of $6000 dollars for home buyers, but it comes with limitations and in my opinion a major drawback. Unlike other incentives introduced at the federal level, the State incentive is limited to new construction homes. Now this is great if you are looking to buy a new home, but does nothing if you are currently trying to sell your own home. In fact I believe this will have a detrimental effect on the current housing market and here is why.

The reason the Utah housing market is currently suffering is because there are more sellers than buyers. This is a basic rule of economics, whenever there are more buyers than sellers then prices go up, and whenever there are more sellers than buyers, prices go down.

So what will the impact of the new incentive be? I believe it will make matters worse, instead of decreasing the inventory of homes for sale, it may well increase it. That is because when an existing home is sold it usually triggers a chain, person buys home A, whose owner buys home B, whose owner buys home C etc. So one sale, actually results in multiple sales. However, when someone buys a new home there is no chain. In fact it is worse than that, in the current climate builders are reluctant to build spec homes, so when someone buys a new home they have to build a home, which means a new home sale reduces the inventory by zero.

For those that are interested here are some details on the intentive:

The one thing I would say is that if you are interested, unless you close in the next couple of months you will miss out. There are only a limit number of grants available and they are running out fast.