Says $15,000 Credit Will Assist Those Who Wish to Buy a House, Despite Rising Prices and Interest Rates
When Joe Biden ran for president, one of his promises was to make homeownership less burdensome for first-time buyers by proposing a $15,000 tax credit. Since then, it has made its way into Congress, but it hasn’t become law yet. Joe Moshé, Broker/Owner, Charles Rutenberg Realty Inc., says the passage of the bill should be expedited so that homeownership can be within reach.
On April 28, 2021, U.S. Representatives Earl Blumenauer of Oregon and Jimmy Panetta of California introduced the “First-Time Homebuyer Act.” Under the bill (H.R.2863), first-time homebuyers would receive a tax credit of up to $15,000, or 10% of the purchase price. However, the bill is not without conditions: the buyer’s income cannot be greater than 160% of the area median income and the sales price cannot exceed 110% of the median price in the area. Further, the buyer could not have owned a home or co-signed a mortgage in the past three years.
The tax credit would also be applied retroactively to first-time homebuyers who met the requirements starting January 1, 2021. In addition, it would increase over the next five years. For homes bought in 2022, the credit would be $15,300, followed by $15,606 for 2023; $15,918 for homes bought in 2024 and $16,236 for 2025.
Mr. Moshé says this form of relief would benefit those looking to buy a house for the first time, given that home prices and mortgage rates have risen exponentially and the Federal Reserve announced that it is raising interest rates another 0.75%. Since the bill’s introduction, home prices in Nassau went up 14.3% from $630,000 in April 2021 to $720,000 in June 2022, and Suffolk home prices soared from $479,450 in April 2021 to $560,000 in June 2022, according to OneKey MLS. Based on data from Freddie Mac, 30-year fixed-rate mortgage rates nearly doubled from 2.92% for the week ending April 29, 2021, to 5.3% for the week ending July 28, 2022.
“Thanks to rising home prices and mortgage rates, the dream of homeownership has been out of reach for those looking to move out of their parents’ houses or their apartments,” Mr. Moshé says. “That is why it is important for Congress to pass this bill and get it to the president’s desk as soon as possible. In these very unstable financial times, we need to encourage homeownership as a way of creating long-lasting generational wealth.”