Ed Pinto on alternatives to down payment assistance

This week, HousingWire’s Editor in Chief Sarah Wheeler interviews AEI Housing Center Director Ed Pinto. In this episode, the pair launch season 6 of the Housing News Podcast by discussing several bills in Congress that target first-time homebuyers and alternatives to down payment assistance that might do a better job helping those buyers.

Here is a small preview of the interview, which has been lightly edited for length and clarity:

Sarah Wheeler: There have been several bills proposed in Congress that address first-time homebuyers. One of these bills targets first-generation homebuyers with a grant given at closing for down payment assistance. I would love for you to catch us up on that bill and whether or not you think it could be effective.

Edward Pinto: Based on my research, I believe the supply today, which is down in the one to two months’ range nationwide, is the lowest it’s ever been in the history of the United States. When demand is out of whack so much, you get these rapid increases in house prices. So, if you go back to the idea that you’re going to provide down payment assistance, even if it’s limited to first-generation homebuyers, which is a much smaller group than first-time homebuyers, it’s still a fair number of households. And if they take advantage of it, you’ve brought more people and demand to the table which can do nothing but drive prices even higher. So, we’ve been saying that any attempt to provide down payment assistance, either to first-time buyers or to first-generation buyers in the form of a down payment would end up being counterproductive. In fact, there’s been a fair amount of pushback by industry leaders that believe that could be the result. So, AEI has taken that position, and we’ve tried to figure out an alternative that could be provided to first-generation homebuyers, so the housing market would not suffer from the defect of driving prices higher.

The Housing News podcast explores the most important topics happening in mortgage, real estate, and fintech. Each week a new mortgage or real estate executive joins the show to add perspective to the top stories crossing HousingWire’s news desk. Hosted by Sarah Wheeler and produced by Alcynna Lloyd.