Adding Fuel to the Fire

President Biden has called for a $15k FTHB tax credit and 2 members of Congress have created the “First-Time Homebuyer Act.” This bill provides a tax credit for FTHB’s, those who haven’t owned a home for 3 years. This tax credit would be for up to 10% of the purchase price or $15k. Other requirements include the FTHB’s income must be less than 160% of their area median income. This would be $128k here in Metro Denver. Second, the home’s purchase price must be less than 110% of the area’s median purchase price or about $550k here I believe.

Borrowers could claim the credit if they bought a home this year going back to January 1st. They must occupy their home as their primary residence for 4 years or face taxes to repay a portion of the credit.
This tax credit would be received the year after they purchased the home. I have read that this may create a new cottage industry of Payday Lending, companies who will lend this $15k to FTHBs today in exchange for a high interest rate loan that will be repaid when the FTHBs receive their tax refund a year later.

Finally, this bill plus Maxine Waters $25k grant for FTHBs will lead to even more demand for housing and you think the market is hot now…just wait. If both of these bills become law I expect we will see home prices increase by 25% year over year and bidding $100k over list price will become the “norm”.