A New Path to Homeownership with Tax Credits & Benefits

In his recent State of the Union address on March 7th, President Biden unveiled a groundbreaking proposal aimed at addressing the pressing issue of housing affordability and inventory shortage. This proposal, specifically tailored to assist first-time home buyers, promises to offer incentives through tax credits, ultimately making the dream of homeownership more attainable.

The housing market in 2023 experienced its lowest number of home sales since 1995, indicative of the significant challenges facing prospective buyers with limited inventory options. President Biden's proposal seeks to tackle this crisis head-on by introducing a $10,000 tax credit targeted at current starter homeowners. By encouraging these homeowners to sell their properties in 2024, this initiative could potentially add 3 million homes to the available housing market in the U.S.

With current interest rates hovering around 7.5%, a dramatic contrast to the COVID driven rates many homeowners currently enjoy (89% below 6%), the motivation to trade up to a comparable newer home with a higher rate is understandably diminished without this potential tax credit.

The impact of even a modest interest rate change is significant, as demonstrated by our partners at Northwest Bank. For a family with a fixed monthly mortgage of $1,500, a mere 1% decrease on an interest rate can translate into an additional $52,300 of available buying power on a price point of a home. Considering the median price of a single-family detached home in Iowa in 2023 was $220,000, the absence of an interest rate shift underscores the challenge facing prospective buyers in today’s market for their desired home from an affordability standpoint.

Recognizing our homeownership assistance benefit can play a pivotal role with reducing an interest rate for a homeowner post home purchase, we advocate for the introduction of our homeownership assistance benefit to employer groups across Iowa. By aligning our new employee benefit with President Biden's proposed tax credit proposal, employers can empower their workforce with our complimentary tools to pursue homeownership confidently in 2024.