Are you looking to buy a home this year? President Joe Biden wants to help make the process easier.
It may be earnings season on Wall Street but last night, someone crushed expectations who does not work in finance. Biden delivered the 2024 State of the Union address, drawing a strong contrast between himself and Donald Trump. While he discussed many important factors, including taxation for the wealthy, strategy for the shifting geopolitical landscape and the necessity of climate change action, Biden also proposed something that could directly benefit most Americans. He wants to provide tax credits for new homebuyers that will enable more people to invest in real estate.
That isn’t the only significant economic policy proposal that Biden noted in the State of the Union Address. However, for many Americans, it could be among the most impactful. Let’s take a closer look at what it would mean.
Biden’s Tax Credits for New Homebuyers
It’s no secret that buying real estate isn’t easy in 2024, especially for young people. No, it’s not the trend of buying avocado toast, no matter what some older conservatives might say. Millennial and Generation Z members are continuously faced with higher debt, particularly from student loans, and higher costs of living than their Boomer parents. The combination of these elements has made it almost impossible for many young Americans to purchase real estate assets. For that reason, the tax credits for new homebuyers that Biden is proposing could be precisely what young people need.
During the State of the Union address, Biden acknowledged the problem with the current economy that prevents many people from moving up. As he stated:
“I know the cost of housing is so important to you.
If inflation keeps coming down mortgage rates will come down as well.
But I’m not waiting.
I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put toward their mortgage when they buy a first home or trade up for a little more space.”
Biden’s proposal comes at a time when many Americans have concerns about the housing market. While it’s true that mortgage rates will likely fall as inflation gradually subsides, experts remain divided as to what exactly that will mean for home prices. Given that, it makes sense that Biden would prioritize action on this front as a means of spurring economic growth through increased home ownership.
But what exactly is in this policy proposal?
The Finer Points
Kiplinger took an in-depth look at Biden’s plan for providing tax credits for new homebuyers. The outlet reports that “the credit would reduce the mortgage rate on the median home by more than 1.5 percentage points for two years” as home buyers received an annual $5,000 tax credit for two years. According to the White House, the policy could benefit more than 3.5 million middle-class families throughout the U.S. if passed.
Ultimately, it is clear that Biden’s home buyers tax credit proposal could be an excellent boost for an already strong economy. Biden may not be receiving proper credit for it, but under his leadership, U.S. economic growth has soared. Now, he could be on the verge of helping boost the real estate market by making it easier for many people to afford new homes.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
