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President Biden’s new housing initiatives which include $5000 each for two years, receive comments from housing experts. It’s said to be “the most ambitious housing supply agenda in recent history”. Another commented that the “President will lay out the boldest plan to lower housing access in decades.”
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High mortgage rates for first-time home buyers are to be offset with the tax credit
In the State of the Union address on Thursday, President Biden proposed a set of new housing initiatives that would give a $5000 per year for two years tax credit for first-time buyers. According to the White House, the proposed tax credit is just the same as a more than 1.5 percentage points decrease in a buyer’s mortgage rate for two years on the median home.
For families who will sell their starter homes given that it’s below their county’s median price, Biden wants Congress to give a one-year credit of a maximum of $10,000. As reported by the Union Leader, this should free up a portion of the market that has been frozen. Thousands of families hung onto 2 or 3-percent mortgages and avoided purchasing new houses at higher rates.
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The “most consequential” and “The boldest plan in decades” according to experts
According to David Dworkin, president and chief executive of the National Housing Conference, Biden’s plan is the “most consequential set of housing recommendations in a State of a Union in over 50 years” due to its commitment to build and preserve 2 million homes. He said, “This is the most ambitious housing supply agenda in recent history.” Director of the National Economic Council, Lael Brainard, in a statement, said that “President Biden will lay out the boldest plan to lower housing costs and expand housing access in decades”.
On the other hand, some experts have concerns about the new tax credits because they will cause more demand in the market and might result in even higher prices. American Enterprise Institute, Kyle Pomerleau, said that the proposed bill will have limited effect on housing prices. According to him, increasing the number of buyers will increase home prices.
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