New Bill Aims to Address Homebuyer Disparities
Surging Home Prices Shut Buyers Out
Earlier this week, Democrats introduced new legislation aimed at making it easier for first-time homebuyers to contend with soaring house prices. Many people have moved out of cities and purchased homes during the pandemic, which has contributed to home prices hitting record levels.
Price wars are breaking out around the country and all-cash offers are commonplace. That is pushing many middle and low-income buyers out of the market.
The First Time Homebuyer Act attempts to address these issues by incentivizing first-time buyers with a tax credit of up to $15,000. The credit was part of President Joe Biden’s original housing plan and will now make the rounds on Capitol Hill.
First-Time Buyers to Get $15,000 Tax Credit
If passed, the legislation will create a refundable tax credit equal to 10% of the home’s purchase price or $15,000. If taxpayers need the credit sooner, they can treat the purchase of the home as if it occurred in the prior year.
Borrowers are only eligible for the tax credit if they have not purchased a home during the past three years. Participants cannot make more than 160% of the area’s median income and the purchase price cannot exceed 110% of the median purchase price for the area. The tax credit is eligible for homes purchased after Dec. 31, 2020, and borrowers are required to use the home as their primary residency.
Housing Reform Is Coming
It is not clear if the First Time Homebuyer Act will be included in President Joe Biden’s infrastructure bill, although Biden has said the bill will address housing infrastructure. It will likely have a greater chance of passing if it does make it into Biden’s infrastructure bill.
The piece of legislation is different from another bill introduced last week by Democrat lawmakers. That legislation helps first-time, first-generation homebuyers with down payments by providing a grant at closing.
Both bills are aimed at addressing the disparities in the housing market, as surging home prices push certain buyers out. It is not clear if either bill will pass, but with President Biden keen on making the housing market more equitable, change could be coming.
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