The city of Spencer, IA, is offering to pay $15,000 to anyone buying or building a new home there appraised between $110,000 and $199,500, according to The Daily Reporter.
The new home must be within Spencer city limits and have had no prior residents.
The money is awarded when escrow closes. The buyer may put the check toward the down payment or use it for something else. So far, 76 grants have been awarded.
Programs like Spencer, IA’s are helping to solve one of the biggest issues in housing today: a shortage of entry-level homes. While not every area can bolster its inventory numbers so directly, state and local governments are taking steps to help residents save for their first home.
New Jersey is weighing a bill that would create a savings account program to help first-time homebuyers save for a down payment. Like a 529 education or health savings plan, the account would be funded by participants’ pre-tax income. Virginia allows first-time homebuyers to put away $50,000 tax-free for closing costs through the state’s First-Time Homebuyer Savings Program. And the Federal Home Loan Bank of New York’s First Home Club matches money saved at a rate of 80% toward the purchase of a home for new buyers earning at or under 80% of the area median income.
Helping would-be homeowners save up for a down payment is just one part of the battle, however. The challenge of finding an affordable home in a desirable location across income brackets still needs to be addressed.
Rhode Island is one state that appears to have a winning formula, according to a study by GoBankingRates.
The Ocean State was ranked as the best state for first-time buyers based on that group’s market share, median home prices, foreclosure rates and access to home loan programs. West Virginia, Mississippi, Michigan and New York rounded out the study’s five best markets for first-time buyers.
However, as down payment saving plans and lender-based mortgage rewards programs become more readily available, a solution for bringing more affordable inventory online is needed. First-time homebuyers comprise 42% of the market in 2017, according to The Wall Street Journal, and their share is only expected to grow.