Legislation introduced by Senators Doug Jones (D-AL) and Cory Gardner (R-CO) is being recognized as a critical component of the effort to address the barriers to first-time homeownership in America. The National Association of REALTORS® (NAR), which submitted a letter in support of the legislation prior to its introduction, expressed optimism that the American Dream Down Payment Act and other similar proposals to address housing affordability would continue gaining momentum on Capitol Hill.
“The resiliency of our residential real estate market has been one of the few bright spots of America’s economy during this pandemic, but numerous would-be homebuyers are finding it difficult or impossible to save the money needed for a down payment on a home,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “This is especially discouraging given record-low interest rates are making it easier for aspiring homeowners to afford monthly mortgage payments.
“Modeled on the very popular 529 education savings account concept, the American Dream Down Payment Act would allow savings for the down payment of a principal residence to grow tax free, offering a responsible and commonsense approach to the multi-faceted problem of housing affordability in America.”
In its letter to Senators Jones and Gardner, NAR relayed hope that these accounts could serve as a tangible resource to aspiring homeowners who have been unable to save sufficient funds for a down payment. According to the Urban Institute, two-thirds of renters have identified the inability to save for a down payment as an obstacle to homeownership.
“We appreciate your initiative in putting forth a reasonable proposal that should attract support from your colleagues as well as the growing population of those for whom down payment assistance would help open the door to their all-important first home purchase,” Malta wrote to the lawmakers.
As described by Senators Jones and Gardner, the American Dream Down Payment Act would:
– Let states establish American Dream Down Payment Accounts, which they would manage in the same way they manage 529 Plan accounts.
– Allow prospective homeowners to save as much as 20 percent of today’s home cost, indexed for inflation, to use for an eligible down payment and other housing costs.
– Facilitate long-term savings for a down payment and allow contributions from family and friends.
– Allow homebuyers to use those savings and earnings tax-free at withdrawal for eligible expenses.
For more information, please visit www.nar.realtor.