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Biden’s New Housing Plan to Provide Support for Homeowners

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Biden’s New Housing Plan to Provide Support for Homeowners
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Biden’s New Housing Plan to Provide Support for Homeowners

Source: Pinterest

President Joe Biden, at his State of the Union address, announced a new proposal for a tax credit program for new homeowners in the country. However, some people have criticized this move, citing many disadvantages. 

Increasing House Prices 

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In recent years, the United States has seen a surge in inflation, with several sectors of the economy, including housing taking a hit. There have been increases in housing prices and rent, causing a lot of discomfort for citizens across the country. In turn, Americans have been asking the president to make a move that will benefit the public and reduce the burden of these house prices on them. 

The President’s New Plan

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The president has acknowledged the housing crisis several times and has now revealed a plan to reduce its effects on his State of the Union address. His proposal includes a suggestion of $10,000 in tax credit form in order to help those who are new on the housing market. This means that the plan hopes to give first-time house owners a good start by offering a $10,000 tax credit. 

 

Upgrading Homeowners Get Support

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The president also considered the existing homeowners in his newly proposed plan. He suggested a $10,000 tax credit to help them sell their homes for a larger residence. This will also help keep the real estate market open to changes. People who were once reluctant about selling their properties will be more willing to sell with the $10,000 help. 

A Historic and Relevant Address

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Several housing advocates have shared enthusiasm for President Biden’s new plan. They believe it will lead to more affordable housing opportunities, which the country desperately needs. Particularly, David Dworkin, CEO of the National Housing Council, has applauded Biden’s move, calling it the most “consequential” address on housing in the past 50 years. 

ALSO READ: Workers at Unmarked Arizona Building Refuse to Answer Questions About Housing Migrants

 

The Unaffordability of Houses

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An associate economist, Nick Luettke, also spoke at the president’s address, citing the importance of affordable housing for a booming economy. According to him, Congress and other bodies of the government have been paying attention to this issue, and it has been beneficial. Furthermore, the tax credits will help to tackle a problem that millions of Americans are currently facing. 

Increasing Mortgage Rates

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There is a huge difference between the current mortgage rates and what they were some years ago. Therefore, CBS News highlighted this difference, showing the huge financial strain it has caused homeowners. Ten years ago, the average mortgage rate was low, and it was to the benefit of the citizens. In contrast, people are now struggling to pay their rent and mortgages.

POLL—Should the Government Increase Taxes on the Wealthy To Reduce Economic Inequality?

The Housing Market’s Dynamics

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According to a report by the National Association of Realtors, there is still a good amount of activity in the housing market, even with the high housing prices and interest rates. This also showed an increase in the sales of existing homes. However, a yearly review shows a constant decline in sales but a continuous rise in housing and interest rates. 

 

Approval by Congress

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Before President Biden can pass this proposal into a bill or law, he must first pass it through Congress. The legislature is in charge of the implementation of bills and may pose a threat to this proposal because of the huge tax credits. Depending on what the Congress votes, this proposal may never see the light of day or become a reality as a law soon. 

Possible Disadvantages

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As with every good idea, this tax credit proposal has a downside. This is because it may not cover the expenses that a person needs to buy or sell a home fully. There are many fees, such as closing costs, which may take up the entire $10,000 almost immediately. In addition, many housing payments are more than $10,000, causing some to worry about its feasibility in the long run. 

ALSO READ: Newsom’s Spending Spree Takes Center Stage as California Faces Budget Crisis

The Rental Market

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Biden’s new proposal can also impact the rental market significantly in the future. This is because more people will stop renting and become homeowners, causing a significant decrease in rental demand. A decrease in demand will also lead to lower prices, making housing more affordable for individuals who would have not been able to afford the houses before. 

Future Financial Implications

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With the constant increase in mortgage rates, many people are concerned about the financial implications in the future. Those who use the tax credit system, sell their homes, and buy new ones may end up paying more in the future if the prices continue to rise. Therefore, there will be serious consequences if the proposal fails to fix the current housing problem. 

 

Other Possible Solutions

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There are other solutions which can help address the current housing problems in the country. These include renting smaller homes, increasing the budget for affordable housing projects, and co-housing for those who would prefer it. In addition, having the government support various types of housing will help the community and address the nationwide housing crisis affecting the average American citizen. 

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