Estimating the Impacts of Utah's Down Payment Assistance Program (SB240): A Framework for Analyzing State and Regional DPA Policies

I examine the impact of Utah's Senate Bill 240, a targeted down payment assistance program for new homes priced under $450,000, on housing affordability and developer behavior. Using Synthetic Difference-in-Differences, Bayesian Structural Time-Series, Fixed Effects Difference-in-Differences, and Event Study Analysis, I assess whether SB240 influenced the construction of more affordable homes and led to reduced lot sizes, thereby fueling affordability. My empirical analysis reveals that SB240 significantly reduced the transaction price of entry-level new homes in Utah, with an estimated average reduction of approximately $23,000. This effect is robust across various econometric models and data pools, indicating that the policy led to the construction of more affordable housing. The Event Study analysis shows that the policy's impact was immediate and not merely a continuation of pre-existing trends. Despite the subsidy targeting only new construction, adding a supply-side aspect, the findings show no significant increase in overall housing development. This counter-intuitive result of constant supply and decreased transaction prices is explained by developers adjusting their builds. I contribute to the literature by providing empirical evidence on how a targeted down payment assistance program influences developer behavior and housing market composition. This study offers a framework for analyzing state-specific down payment assistance programs and demonstrates the importance of policy design in shaping housing outcomes. The findings emphasize how program requirements can influence developer decisions, leading to adjustments in housing characteristics like lot sizes.