Hey, Kyle here with winthehouseyoulove.com.
Today we're talking about the $15,000 tax credit for first time home buyers that
the Biden administration is proposing.
So, currently, it looks like Biden is the projected winner of the 2020 election.
So they've, put their administration has put out a tax plan,
actually an entire housing plan.
I'm going to walk through that with you and what we know about it so far.
So the Biden administration is proposing a $640 billion fund for
housing over the next 10 years.
Okay.
So what this fund is aiming to do is take care of four main things.
Number one is red lining.
So they're, they're looking to, put money in to remove a lot of the
predatory practices that are still going on in the real estate industry.
Okay.
They also want to increase supply so 300 billion of the 640 billion is
going just towards increasing supply which is huge because we have super
limited supply right now, which is causing home prices to skyrocket.
So hopefully having this housing bill will actually help increase
supply and lower the cost of homes.
Also increasing energy efficiency and affordable housing.
And part of that affordable housing is increasing the supply as well.
They've also talked about increasing low income housing
and subsidies like that as well.
Now, some of the details are a little bit hazy as, since these are just kind of a
general proposals that the administration has put out, but an interesting approach
at least to see what's the potential for the next four years, if Biden
is confirmed as the 2020 president.
Okay.
So here's what we know so far.
What the Biden administration has said is that they'll give
a $15,000 up to a $15,000, tax credit for first time home buyers.
All right.
And the details are a little bit hazy.
This is just because it's a proposal of a transitioning administration.
But, the keyword here is they said "up to", so we're not entirely sure
it's going to be $15,000 or what kind of limit is going to happen.
After the housing crash in the Bush administration, there was a
$7,500 tax credit that was given.
Okay.
and it was actually 10% of the purchase price up to $7,500, the Obama
administration bumped that up to $8,000.
Okay.
So now we're seeing the Biden administration coming in and saying
$15,000, I accidentally added an extra zero there, $15,000.
Okay.
Now again, there's no clear details on who's eligible.
If it's only for first time home buyers, if there's a percentage
included with this, it's really hazy and they haven't ironed that out yet.
But a key detail here that has been explained is that in the Bush
administration, this tax credit was only given at tax filing.
So for instance, if you purchased a home in April, you wouldn't see
that tax credit until you filed your taxes at the end of the year.
Okay.
So you would've had to get that money up front and then receive the credit later.
But in the Biden administration, They have projected, that
they'll actually make those funds available at the time of purchase.
So you'd have those funds available when you actually purchase the home.
And with this, this is huge because you're not fronting the money because
it almost doesn't make sense if you're giving somebody a credit.
Because they, they need money for a down payment and closing costs, but
you're expecting them to front it and then you're going to give them
that money back later, most people don't have that money available.
So this money could be really helpful in stimulating the economy.
Now, the difficult part here is this would not do very well in our current market.
See, the huge problem with this is it could cause home prices to skyrocket.
And the reason why is because this is an incentive for more buyers to come to the
market home prices are already crazy high.
And the market's really competitive.
We're in a sellers market because we have low inventory.
So very few homes and a lot of buyers.
So attracting more buyers with a tax credit is not the smartest move.
So here's my anticipation is I anticipate the Biden administration
is expecting a correction, a market correction in the next four years.
Okay.
And we've talked about this on the channel before.
But we can see this blue line is a average rent affordability, and
this red is home affordability.
So we're currently up here.
There's this huge spread.
This 31% spread between affordabilities here.
Over the next four years, we anticipate a correction, right?
Housing markets and all markets in general go up and go down and go up and go down.
So since we're at the height here, we expect somewhere over the next four
years for this to trail back down.
And my anticipation is that the Biden administration probably has this
$15,000 tax credit, not to put out in the beginning, but possibly to put out
maybe year three or year four, when we see buyer demand to start slow down.
Then they can put the tax credit out, to stimulate demand a little bit more.
That's my assumption.
I'm not an economist, but that's what I'm guessing they're using or wanting to
propose this $15,000 for, but it's all wrapped up into this, this package that
they have, that's $640 billion going to all different aspects of housing.
Okay.
So we'll see if this pans out, if this is something that's
going to come to fruition.
Right now it's just talk.
It's just the proposal by the Biden administration.
Okay.
So if you want to learn more about closing costs, this video over here,
it's going to help you understand a little bit more of the costs that
are going in, and also I have a free download as a calculator for you so
you can estimate what those will be.