President Biden took on a host of hot button issues in Thursday night’s State of the Union address, including the burden of homeownership costs on millions of Americans. Hoping to cement his re-election bid, Biden called on Congress to enact legislation to enable more Americans to purchase a home.
The President urged Congress to pass a mortgage relief credit that would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years. The White House noted this would be the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home, and will help more than 3.5 million middle-class families purchase their first home over the next two years.
The President’s plan also calls for a new credit to unlock inventory of affordable starter homes. A proposed one-year tax credit up to $10,000 would be available to middle-class families who sell their starter home, defined as homes below the area median home price in the county, to another owner-occupant. This proposal is estimated to help nearly 3 million families.
Biden also noted that the Federal Housing Finance Agency has approved policies and pilots to reduce closing costs for homeowners, including a pilot to waive the requirement for lender’s title insurance on certain refinances. The White House said the Consumer Financial Protection Bureau will also pursue rulemaking and guidance to address anticompetitive closing costs imposed by lenders on homebuyers and homeowners.
President Biden is also calling for an expansion of the Low-Income Housing Tax Credit to build or preserve 1.2 million more affordable rental units. A new $20 billion competitive grant—included as part of the President’s budget—would support the construction of affordable multifamily rental units; incentivize local actions to remove unnecessary barriers to housing development; pilot innovative models to increase the production of affordable and workforce rental housing; and spur the construction of new starter homes.