Love him or hate him, President-elect Biden has plans for the housing market, and those plans seem poised to benefit the first-time home buyer. The landscape for first-time buyers is not pretty right now; between bidding wars on every house available and record low inventories, buying your first home right now can be a challenge. Luckily, President-elect Joe Biden has announced some actions he will take that will benefit first time home buyers; many of these were explained in the housing plan he outlined during his campaign.
The first item on the list is a large tax credit for first time buyers; up to $15,000 in credit based on your down payment. A down payment is one of the hardest parts of buying a home, and it’s only gotten harder with the 12.7% year-over-year increase in home prices; receiving a tax credit will reduce the financial impact of surging home prices on the backend. Historically, tax credits provide strength in stalling markets.
Second, student loan forgiveness will go a long way towards freeing up millennial incomes. While it is unclear how much President- elect Biden is thinking in terms of student loan debt forgiveness, the end result is the same; people are forking over less money to the government, which means that money is available to pay for a mortgage.
Third, Biden touched on the possibility of creating a credit agency that would help more people qualify for mortgages; it would accomplish this by taking into account payments that most people make, but most credit agencies don’t consider when determining someone’s credit-worthiness (it’s pretty ludicrous when you think about the things they don’t consider). This theoretical credit agency would look to on time rental payments, utility payments, car payments, etc., In the lower income community, many individuals don’t have a real credit profile, despite years of demonstrated dedication to paying off their debts – a credit agency that takes their efforts into account would go a long way to making a home attainable for more people.
Finally, Biden has encouraged state and local governments to remove vestiges of racial segregation; these echoes of segregation have made it difficult to build new homes. The net effect would be to make it easier to build new housing. More importantly, Biden wants to put $100 billion into affordable housing projects.
At the Chernov Team we understand that knowledge is power, and knowledge of how an incoming president’s policies will impact the market is powerful knowledge indeed. At the Chernov team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.