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That's a terrible idea. The real life effect is that prices will simply go up. You need to force down real estate prices in general, and offer very low interest rates for first time buyers.
They did this in 2008-09 with an 8k payment to homebuyers that wasn't a loan and didn't have to be repaid. This enabled me to but a foreclosed house and make it livable, and I've been living in it since then. It didn't raise prices in my area, because no one was buying houses anyway because regular possible couldn't afford it.
I don't know if I would have been able to get so financially situated if that payment wasn't there. I could've bought the house, but I would not have been able to fix it enough to ever stay on top of the maintenance and bills.
Would this be exactly the same situation? I dunno. But I know a similar push sure worked in the past.
Different situation, as that was after the market crash.
The argument isn’t that this payment won’t help people in the short term, it will. The problem is that if you have an extra 25k to spend and it’s given to every first time buyer, they’ll just shop in a 25k higher price range. And if the sellers know this, they’ll adjust the market for what everyone can afford now.
This is basic economics, you lower the quantity of available housing by allowing more people to afford it and the price will go up. There’s a reason our solution to every affordability problem works this way and breaks things. For student loans for instance, sure we can pay them off for you, but does that bring down the cost? No. It just means the government pays universities. Same thing here, the government is just letting you use your taxes to give to a real estate agent instead of addressing housing costs.
And didn't advertise it well. I bought my house then and didn't know I had this until it was too late.
It does rather sound like proposing an immediate 25k hike in house prices, yeah.
It's not. First time buyers are a small portion of the market.
The fact that it's limited to first-time house buyers will at least help mitigate some of the advantage that commercial real estate buyers have over ordinary folks that are just trying to get a roof over their heads.
At worst, youre partially right. Maybe they'd go up 10K, but certainly not 25K. That's just not how markets work. It's the same argument as saying UBI will increase prices - yes, it will, but not by more than or as much as the UBI is. If everybody else sells their home at $25K more, you can sell yours in a month by going down to $15K more than before.
I agree, and i didn't say it will increase prices by 25k. Still think this can be tackled in better ways. Low interest rates over a 20-25 year loan can save you much more than 25k. Edit: let's ban corporate from buying up blocks of residential areas. It won't cost you any tax money and will immediately drop the prices
Yeah, that's the real solution. We have to ban any one entity owning more than 2-3 residential properties. The $25K is simply a decent stop gap until we can actually make that law happen, because our capitalist overlords would never allow it.
Yeah a similar policy in the UK (from 10ish years ago) is one of the biggest reasons for hugely inflated prices among small properties.
Obviously, the only real solution is to work to lower real-estate prices, but that would be unpopular with most home owners (who are a majority in the US).
Require that homes that are not homesteads be sold within 6 months as a homestead or they're auctioned off to the highest bidder that will take it as a homestead.
Most of the housing price increases are driven by investors, not first time home buyers. This will have its intended effect. Obviously we still have to build, but this is like claiming minimum wage causes inflation.