Biden's New Housing Credit Proposals: A Bold Move or a Drop in the Ocean?

Stephanie Kroll

In a recent announcement that has sent ripples through the real estate market, President Joe Biden has proposed significant tax breaks aimed at first-time homebuyers and those looking to sell their starter homes. Amidst a backdrop of soaring housing prices and mortgage rates that continue to strain the American dream of homeownership, these measures could be a beacon of hope for many. Yet, as the details unfold, the question remains: Will these proposals meaningfully address the nation's housing affordability crisis, or are they merely a temporary fix to a deeply rooted problem?

A Glimpse into Biden's Plan

During his State of the Union address, President Biden unveiled two key proposals. The first is a “mortgage relief credit,” offering $5,000 per year for two years to middle-class, first-time homebuyers. This move is likened to reducing the mortgage interest rate by 1.5 percentage points for a median-priced home, providing a significant financial reprieve for many aspiring homeowners.

Additionally, Biden proposed a one-year credit of up to $10,000 for middle-class families willing to sell their "starter homes" to another owner-occupant. This initiative aims to invigorate the housing market by encouraging homeowners to sell properties that no longer meet their needs, thus increasing the supply of affordable homes for first-time buyers.

Mixed Reactions from Experts

While the intention behind these proposals is clear, experts are divided on their potential impact. Some argue that these measures could stimulate demand in an already heated market without addressing the root cause of the crisis: a severe shortage of affordable housing. With mortgage interest rates still near "multidecade highs" and a "housing supply crisis" that has been worsening since the Great Recession, the path to sustainable housing affordability appears fraught with challenges.

Keith Gumbinger, vice president of mortgage website HSH, highlights a critical concern: Unless Biden's proposed credits can be counted as qualifiable income, they may not substantially ease the burden for homebuyers to secure mortgages. Meanwhile, Janneke Ratcliffe from the Urban Institute underscores the long-standing issues of inadequate supply, exacerbated by declines in new home construction.

A Step Forward or a Standstill?

As we stand at the crossroads of potential change, it's important to recognize the complexity of the housing affordability crisis. Biden's proposals, while promising on paper, must navigate the intricate landscape of legislative approval, especially during a presidential election year with a split Congress. Moreover, the effectiveness of these measures will ultimately depend on a comprehensive strategy that includes boosting housing supply and addressing systemic issues in the real estate market.


President Biden's recent proposals have sparked a necessary conversation on housing affordability in America. While they represent a hopeful stride towards easing the financial strain on first-time homebuyers and incentivizing the sale of starter homes, the road to resolving the nation's housing crisis is long and winding. As discussions continue, it's crucial for policymakers, industry experts, and communities to come together in search of innovative solutions that address both the demand and supply sides of the equation. Only then can we begin to dismantle the barriers to affordable housing and rebuild the American dream for future generations.

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