The current housing affordability crisis in the U.S. has been years in the making and fixing it will not be easy. But in Thursday’s State of the Union address, President Joe Biden indicated the government has a plan to solve the problem, CNN reports.
While affordable housing advocates praised Biden’s proposals to help would-be homeowners afford to buy, critics believe Biden’s plan will only serve to exacerbate the problem by creating even more demand for homes without adequately addressing the issue of housing supply.
Biden says his plan would address the two primary factors behind the affordability crisis: decades of under-building and surging mortgage rates.
He announced a pair of new tax credits, which would require congressional action before they go into effect. The first is a $10,000 refundable credit for middle-class homebuyers – essentially an interest rate buy-down. The administration estimates this program would help more than 3.5 million buyers close a deal on their first home over the next two years.
For homeowners, there is a $10,000 tax credit aimed at getting people to put their starter homes on the market. This would be a one-year tax credit to middle-class families who sell a home priced below the area’s median home price to someone who will live in the home. It is estimated to serve about 3 million sellers.
Additionally, the president is calling on Congress to pass legislation that he says could result in the building and renovation of more than 2 million homes to close the housing supply gap and lower housing costs.
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