Will a $15K first-time homebuyer tax credit even help?
Housing prices are at an all time high
"Annual house price growth achieved a new record high in February" said Dr. Lynn Fisher, FHFA's Deputy Director of the Division of Research and Statistics. "The 12.2 percent gain represents an increase of $35,000 for a median-priced home that sold a year ago at $290,000 in the Enterprises' data."
“A nationwide lack of inventory and low mortgage rates continues to create a situation in which many people want to buy and prices continue to rise, potentially pushing out many first-time buyers unable to compete amid bidding wars and all-cash offers.” -Inman
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President Joe Biden’s $15,000 tax credit
United States Rep. Earl Blumenauer (D-OR) and Rep. Jimmy Panetta (D-CA) today introduced the new legislation “First-Time Homebuyer Act.” The bill would provide a tax credit for first-time homebuyers of up to 10% of the purchase price, or $15,000.
“As housing prices and demand continue to rise to historic levels, we need to do more to create opportunities for those who’ve been locked out of homeownership by creating incentives for first-time homebuyers,” Earl B Blumenauer
The program would be targeted to low- and middle-income earners. Participants must also make no more than 160% of the area median income, and the home’s purchase price must be no more than 110% of the area median purchase price. - Housing Wire
The good news is that housing starts were up in March
US Housing Starts Highest since 2006
Housing starts in the US soared 19.4 percent month-over-month to an annualized rate of 1.739 million in March of 2021. It is the highest reading since June of 2006, easily beating market expectations of 1.613 million, after harsh winter weather dented activity in February. Single-family housing starts jumped 15.3 percent to 1.238 million and the rate for units in buildings with five units or more increased 30 percent to 477,000. Strong gains were reported in the Northeast (64 percent), Midwest (122.8 percent) and the South (13.5 percent) but starts in the West were down 13.6 percent. The housing market has been supported by low interest rates and increasing demand from people moving away from big cities due to the coronavirus crisis, while rising lumber prices amid supply constraints could limit production and ease a shortage of homes that is threatening the momentum. - Trading Economics