When former Vice President Joe Biden first proposed his $15,000 first-time homebuyer tax credit in February, there were no U.S. deaths from COVID-19.
Now that the pandemic has plunged the U.S. economy into a recession and killed more than 208,000 Americans, the plan from the frontrunner in the presidential election is well-aimed to assist the only weak link in an otherwise booming housing market: First-time buyers trying to scrape together a down payment.
“When it was proposed in February, we didn’t know what would happen with COVID-19,” said Joel Naroff, president of Naroff Economic Advisors, who is not affiliated with the Biden campaign. “What’s fascinating to me is: It’s targeted at the people most hurt by recent events – the lower- and middle-income people who lost their down payments because of the economic reversals.”
Biden now leads President Donald Trump by 14 points among registered voters – 53% to 39% – in a survey taken after last week’s presidential debate and before Trump announced he had contracted COVID-19, according to a new NBC News/Wall Street Journal poll. That’s up from his 8-point lead in the prior survey before the debate.
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Both the $7,500 first-time homebuyer tax credit in 2008 (in a bill signed by President George W. Bush) and the $8,000 credit in 2009 (signed by President Barack Obama), were aimed at stimulating sales in a depressed housing market.
“At the time the last credit was implemented, people weren’t buying,” said Naroff. “Now, they are buying houses like crazy, except for the ones most hurt by the pandemic. It’s targeted to the right group of people.”
If Biden wins the election a month from now, he couldn’t implement his plan without the support of Congress, which holds the authority to set tax policy.
Biden’s proposal, outlined as part of a $640 billion housing plan, is:
Help families buy their first homes and build wealth by creating a new refundable, advanceable tax credit of up to $15,000. Biden’s new First Down Payment Tax Credit will help families offset the costs of homebuying and help millions of families lay down roots for the first time. Building off of a temporary tax credit expanded as part of the Recovery Act, this tax credit will be permanent and advanceable, meaning that homebuyers receive the tax credit when they make the purchase instead of waiting to receive the assistance when they file taxes the following year.