It’s no secret the housing market impacts the economy and vice versa. But how exactly does a presidency impact homebuyers?
The election of President Joe Biden could soon change the course of people’s home shopping plans. From the proposed $15,000 tax credit to Biden’s promise to bridge the race gap in home appraisal, here’s how this presidency will impact you:
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1. A $15,000 first-time homebuyer tax credit
A 2020 report from the Joint Center for Housing Studies of Harvard University, found that most Americans are spending over half of their income on housing. Unfortunately, this makes it difficult to afford other necessities like groceries and medical bills.
President Joe Biden has proposed a $15,000 first-time homebuyer tax credit. This would not only help homebuyers purchase their first home but it could also make it easier to afford the monthly mortgage. According to President Biden’s website, the goal of the proposal is to “help families and build wealth by creating a new refundable, advanced focus on making owning a home affordable.”
If passed, homebuyers will receive the tax credit at the closing table, instead of having to wait the following year.
“There are thousands of dollars in savings that people have to come up with to get into their first home,” Greg McBride, chief financial analyst of Bankrate.com said, as previously reported by HousingWire. “This could help jumpstart this, and put them on much more stable ground as new homeowners if they don’t have to deplete all their resources.”
2. Bringing back the AFHA rule
A study by the Metropolitan Policy Program found a huge gap between home appraisals based on race. Homes of matching quality and amenities in predominantly Black neighborhoods were valued at 23% less than in neighborhoods with fewer Black residents.
President Biden’s been vocal about his plans to address today’s housing market inequalities. He’s even pledged to reinstate Obama’s Affirmatively Furthering Fair Housing (AFFH) rule, which aims to restore fair housing.
Trump terminated the AFFH rule during his presidency. The rule requires communities to find ways to decrease housing discrimination caused by systemic racism.
3. Biden’s Legislation for HOME Act
For decades, exclusionary zoning has been used to keep affordable housing out of certain housing markets across the country. More specifically, wealthy and middle-class neighborhoods.
This legal practice has been known to perpetuate discrimination and make it difficult for lower-income individuals to live in nice communities.
Biden plans on creating legislation to develop a strategy for inclusionary zoning, as proposed in Senator Cory Booker’s 2019 HOME Act. The HOME Act proposal targets inclusionary zoning. The plan requires developers to set aside a percentage of units to be rented or sold at reduced prices.
Some homeowners believe his plan will make homes more affordable and eliminate housing discrimination based on income. While others are worried it will lower their home’s property value and make it difficult to sell.