This election year has been an incredibly turbulent time for all of those involved, or even interested in, politics. It has been hard to avoid political talks if you’re a person who keeps up with the news or goes on social media with any regularity, even if you’re actively trying to avoid the subject. This election cycle has left people across the nation incredibly polarized, but former Vice President Joe Biden came out on top at the end of it all. Come January 2021, and he will be inaugurated as the 46th President of the United States, with Kamala Harris as his Vice President.
Any new president inevitably brings nationwide changes with them, and this year is no different. The importance of these changes in policy and daily life will most likely feel heightened as they are happening amidst the Covid-19 pandemic, which has been raging for over a year now as the first infection was reported on November 17th, 2019.
So, what does the shift in power from Trump to Biden mean for the housing market in these strange times? Joe Biden has spoken up about his plans to reframe the United States’ housing market—here’s what he is promising:
Help More Americans Achieve Home Ownership
This is perhaps the main pillar of Biden’s housing plan—overall, Biden will set aside a whopping $640 billion to reshape the housing market. A good chunk of that total amount will be dedicated to making it easier for Americans to begin their journey into homeownership. How does Biden plan on turning his plans into reality?
Notably, Biden promises to give first-time homeowners a tax credit of up to $15,000 that will act as a down payment that can be used upfront when the home buyer is making their initial purchase. This tax credit could be an enormous help for those who want to buy but can’t quite keep up with the ever-rising home prices. After all, venturing into homeownership can feel daunting. This is one way to ease the buyer’s minds and give them more of an incentive to decide to buy.
Besides the first-time homebuyer tax credit, Biden vows to assist teachers, first-responders, and all other public and national service workers looking to buy homes. There is a bit of a catch for this assistance, however. The teachers, first-responders, and beyond requesting down payment assistance, if selected for assistance, will be expected to either move into homes in lower-income neighborhoods or move into homes in more expensive areas that don’t yet offer very affordable housing. These stipulations are an attempt to improve communities through housing assistance. So far, this idea has been met with mixed reviews, with some speculating that this method of rebuilding communities, while well-intentioned, may not pan out.
Assist Renters in Need
Biden also recognizes that many of those who rent their homes are struggling to make ends meet. To combat this, he plans on fully funding Section 8 vouchers. With these vouchers, every qualifying low-income American would receive assistance. This would be largely impactful, as there are currently not enough vouchers for all who need them due to lack of funding—about 25% of households who qualify for Section 8 vouchers cannot get them because there simply aren’t enough for everyone in need.
Beyond the vouchers, Biden plans to offer tax credits to low-income renters. These credits would be designed to make it so renters spend only up to 30% of their income on utilities and rent. While this tax credit would be immensely helpful in theory, the logistics could make it, so the credit isn’t as beneficial as it initially seems. Renters who need assistance typically need the help to be on a consistent schedule, and it might not be feasible for them to wait until tax season to file and get money back all at once, once per year.
As the Covid-19 pandemic persists, Biden has also been considering extending Trump’s eviction moratorium, which would give renters peace of mind that they wouldn’t be evicted amidst the pandemic.
Address Housing’s Racial Discrimination Problem
The racial housing gap is a major problem that needs to be resolved. Over time, the gap has widened, which means fewer people of color own homes than white people and, by extension, the household wealth for people of color is lower as well. To combat this, Biden has proposed a national standard that would require properties in communities of color to be appraised fairly. This means two identical homes, one in a white neighborhood and one in a predominately Black area, would be appraised the same, and the one in the Black neighborhood wouldn’t be appraised for less simply because of racist ideas about its community.
While Biden’s intentions are good, it is hard to say if this could be carried out effectively. This seems a bit like a simplified solution to a very nuanced issue—it is nearly impossible to divorce property value from where the property is located. Location is a selling point and matters a lot to home buyers and renters. This national standard is a step in the right direction, but it cannot be the only measure put into place.
Additionally, Biden has mentioned building a public credit agency. This public credit agency would help minority home buyers by raising their credit scores for good behaviors, like paying rent and bills on time. With this assistance, some movement can happen to make it easier for minority buyers to attain mortgages with lower rates and fewer fees.
Biden has also said he will urge both local and state governments to throw out practices that perpetuate segregation. He plans to incentivize these governments, eventually reducing segregation and removing barriers that keep builders from putting up new housing.
The Bottom Line
Biden has some lofty goals about best helping home buyers and renters alike, but he also has the plans to back up those goals. As for how successful his reimagining of the housing market will be—only time will tell.