How First Time Homeowner Tax Credit May Affect Housing

Q: What do you think about the first time homeowner tax credit that is being discussed? Melissa, Rahway, NJ

A: The housing industry is keeping a close eye on the Biden administration’s proposal of a $15,000 first-time home buyer tax credit. If the proposal is successfully passed, the $15,000 first-time homebuyer tax credit could be immediately available to homebuyers. Biden’s tax credit is more likely to pass now that democrats control all 3 branches of government. The first-time homebuyer tax credit proposal would obviously be beneficial to first time home buyers who may be struggling during the pandemic to save a sufficient down payment to buy, however, it may also make homes less affordable by pushing home prices higher. Increasing home supply is key to making homes more affordable. In the short term, the proposal if passed would likely increase housing demand. Thanks for your question, Melissa.

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