The Homeownership Savings Act would create a new type of savings account designed specifically to help first‑time buyers.
struggling to afford a down payment could get a new tax‑advantaged way to save under a new bill introduced this week. The Homeownership Savings Act, introduced in the House of Representatives by Democrat Haley Stevens as H.R. 8709, would create a new type of savings account designed specifically to help first‑time buyers set aside money for “For too many Michiganders, the American Dream of owning a home is slipping away,” Stevens said in a statement.
“Families are working hard just to keep up with everyday costs while homeownership moves further out of reach. This bill is about making sure the next generation of Michiganders can afford to live in the communities they call home. ” With housing affordability worsening nationwide, the bill could help many renters become homeowners by tackling one of the biggest hurdles to homeownership: saving enough cash up front.
While it would not directly lower home prices, supporters argue the proposal could help first‑time buyers reach the starting line sooner. At the center of the proposal are Homeownership Savings Accounts, which are a new class of tax‑advantaged accounts. Save money in a dedicated account for home-buying expensesThe accounts would be limited to first‑time homebuyers, and funds could be used only for approved expenses such as a down payment or closing costs.
"The Homeownership Savings Act addresses a real barrier by allowing first-time buyers to save in a tax-advantaged account specifically earmarked for a down payment, which could meaningfully shorten the savings timeline for moderate-income households who are otherwise competing against rising prices and high rates,” Hannah Jones, senior economic research analyst at Realtor.com, told“That said, demand-side subsidies like this have a mixed track record. Without a corresponding increase in housing supply, the most likely long-term effect in increasing housing demand is that any purchasing power gained by buyers gets absorbed into higher prices.
"The lifetime contribution limit is up to $40,000 per buyer, while annual tax‑deductible contributions vary from up to $3,000 for married couples filing jointly and up to $2,500 for heads of household. For single filers, that limit would be up to $2,000. The bill also allows employers to voluntarily contribute to an employee’s account, potentially accelerating savings for workers receiving that benefit.
Funds must be used for a principal residenceThe bill is designed to focus benefits on working‑ and middle‑class households, according to Stevens’ office.
“With home prices up 60 percent nationwide between 2019 and 2025, it is increasingly difficult for young families to achieve the dream of homeownership,” Steven’s office said in a release. Housing affordability has been a central concern for millions of Americans, and Stevens said this bill would help mitigate some of the challenges renters face in becoming homeowners.
The average age of a first‑time homebuyer has climbed to about 40, according to recent data from the National Association of Realtors, and saving for a down payment has become the biggest obstacle for many buyers. Drew Powers, the founder of Illinois-based Powers Financial Group, said the proposal was “functionally useless. ” “This does nothing to address affordability, which is the real issue in housing. The current median new home price is nearly $400,000,” Powers told.
“After saving $3,000 per year to a $40,000 cap, a decade has passed, and the saver would have barely 10 percent down payment on today’s prices, let alone what home prices will be 10 years later. ”Withdrawals for qualified home-buying costs would not be taxedThe Homeownership Savings Act has already drawn support from several industry groups, including the Mortgage Bankers Association, the Michigan Bankers Association and the Community Economic Development Association of Michigan.
So far, the bill has no cosponsors and has been referred to the House Ways and Means Committee for review. A House vote, followed by Senate consideration if it advancesIt could face pushback from lawmakers who think the larger issue in housing affordability is actually the supply of homes available, said Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com.
“In a market where the core problem is that supply is 4 to 7 million units short of demand, helping more buyers save faster could simply accelerate competition for the same insufficient inventory,” Ryan told“Pushing prices higher for the very buyers the bill is designed to help. It's a necessary piece of the housing affordability solution. But it's not sufficient on its own. ”
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