Last week President Biden and Maxine Waters released the “Down payment Toward Equity Act of 2021”. This bill if it becomes law as written would give first-time home buyers $20k to $25k in a grant at closing to help them buy their first home. Borrowers must not have owned a home in the last 3 years AND their parents must never have owned a home either. Second, the borrowers must meet income requirements of 120% of the area median income which is $80k here in metro Denver. Thus, a FTHB (First Time Home Buyers) would have to make < $96k to qualify for $20k in grant money. Borrowers can receive an extra $5k if they are “social disadvantaged, because they are in a group that has been subjected to racial or ethnic prejudice.”
State housing finance agencies like CHFA would be tasked to administer the program and distribute the funds. I wonder then if the borrowers have to also get a CHFA loan? Next, how the heck are we, the borrowers, or CHFA going to document that each borrower’s parents have never owned a home? How do you prove a negative item? It’s like asking someone to prove when they quite beating their spouse.
And as I have written before the last thing our real estate market needs is more demand. We need more supply.
“How to Fix the Housing Market Inventory Crisis”
This column appeared in Housing Wire on April 6th and was written national housing economist Ralph McLaughlin. Ralph acknowledges that the $15k FTHB tax credit would only make housing inventory scarcer and prices rise even more. Instead he says D.C. needs to use a carrot-based approach to homeowners, such as capital gains tax exemptions for investors who sell homes to owner occupants, ideally FTHBs. Second, doing the same for owner occupants who have capital gains exceeding the $250k or $500k limits.
Ralph also mentions the idea of offering similar tax incentives to home builders who sell homes to FTHBs.
