Rep. Panetta Introduces First-Time Homebuyer Tax Credit to Facilitate and Encourage Homeownership

Monterey, CA – United States Representative Jimmy Panetta (CA-19) authored and introduced the bicameral First-Time Homebuyer Tax Credit Act.  The legislation, co-led by Rep. Earl Blumenauer (OR-03) in the House, would support homeownership among lower- and middle-income Americans by establishing a refundable tax credit worth up to ten percent of a home’s purchase price, up to a maximum of $15,000, for first-time homebuyers. U.S. Senators Sheldon Whitehouse (D-RI) and Martin Heinrich (D-NM) introduced companion legislation in the Senate.

In 2022, the median sale price for a home in the U.S. was 5.6 times higher than the median income, a ratio that is higher than during the years immediately preceding the 2007 mortgage crisis and is the highest disparity on record.  High housing costs reduce disposable income and economic mobility, stifling economic opportunities for those who can no longer afford housing and their communities.  Nationwide, the shortage of affordable housing opportunities costs the American economy an estimated $2 trillion each year. 

A recent report from the California Association of Realtors found that fewer than one in five home buyers could afford to purchase a median-priced, existing single-family home in California in the third quarter of 2023, due to rising prices and interest rates.  California housing affordability is at its lowest level since 2007.

“High housing costs are putting the dream of homeownership out of reach for too many Americans,” said Rep. Panetta.  “Our legislation would provide qualifying first-time homebuyers with a $15,000 tax credit toward the purchase of a new home, providing them with the support that is needed to build wealth and put down roots in our communities.  The First-Time Homebuyer Tax Credit Act is an essential part of the solution to tackling housing affordability throughout the country and investing in the future of our working families in California’s 19th Congressional District.”

In Monterey County, only nine percent of home buyers could afford a median-priced single-family home in Q3 of 2023.  Only 10 percent of home buyers in San Luis Obispo County, 13 percent for Santa Cruz County, and 17 percent for Santa Clara County homebuyers could afford a median-priced home during that time.  The median price of a single-family home in San Jose is $1.75 million, the highest in the country, $1.25 million in Santa Cruz County, $994,000 in Monterey County, and $912,000 in San Luis Obispo County.

“Owning a home is at the core of the American dream, and it has been pushed further out of reach for more families over the last few years,” said Sen. Whitehouse.  “Our legislation will make homeownership, which provides a stable foothold in the middle class and a straightforward way to build wealth, a reality for more Rhode Islanders.”

“The housing crisis did not manifest overnight. It’s the result of decades of deliberate choices from policymakers who long ago picked winners and losers. It will take a concerted effort from the federal government to level the playing field, and this legislation is a critical piece of that work. By creating incentives for families who have been systematically locked out of homeownership, we can promote housing stability and generational wealth-building opportunities for low- and middle-income Americans,” said Rep. Blumenauer.   

“Buying your first home is more than just owning property – it’s a source of pride, stability, and hope for the future. Unfortunately, buying a home is out of reach for many Americans right now. With this legislation, we’re changing that,” said Sen. Heinrich. “I’m proud to introduce the First-Time Homebuyer Tax Credit Act to ease the financial burden on aspiring homeowners to give every working family an equal opportunity to realize the American dream of owning a home.”  

Housing unaffordability is uniquely problematic for young people, who are struggling to reach the same milestones as their parents did at their age.  The typical age of a first-time homebuyer has reached a record high of 36, up from 29 in 1981.  In 2022, first-time homebuyers made up just 26 percent of all homebuyers nationwide compared to 38 percent in 1981. 

Under the First-Time Homebuyer Tax Credit Act, taxpayers would have the option of receiving the credit at the time of purchase by working with their mortgage issuer.  Alternatively, taxpayers could elect to treat the purchase of their home as occurring in the prior taxable year to receive the credit before tax season if they are unable to qualify for the credit at point of sale.

The credit phases out for those making above 150 percent of area median income and for those buying a house with a purchase price above 110 percent of the area median purchase price.  Additionally, the credit is limited to home purchases financed through federally backed mortgages.

“If enacted, this legislation would make a significant difference by assisting thousands of families in achieving the long-sought but increasingly elusive goal of purchasing their first home,” said National Association of REALTORS 2024 President Kevin Sears.  “The First Time Homebuyer Act is a major move toward solving the [obstacles] most families face in purchasing their first home.”

“This bill is a critical step toward making homeownership a reality for homebuyers who have been hampered by high housing costs, particularly lower- to middle-income Californians,” said CALIFORNIA ASSOCIATION OF REALTORS® President Melanie Barker. “By offering a tax credit of up to $15,000, we are directly putting money back into the pockets of hard-working families who are struggling to afford a down payment in our competitive housing market. This incentive will not only help first-time homebuyers achieve the dream of homeownership, it will also strengthen our communities and stimulate the local economy.”

“We applaud Congressman Panetta for reintroducing this vital legislation, which will undoubtedly empower more individuals and families in our community to pursue homeownership,” said President of the Monterey County Association of REALTORS® Tammy LaSala. “The First Time Homebuyer Tax Credit not only provides financial assistance but also fosters stability and prosperity for residents of our communities.”

“Empowering first-time homebuyers isn't just about writing contracts and handing over keys. It's about advocating for policies that pave the way for their dream to become a reality.  I support Congressman Panetta's efforts along with Senator Whitehouse and Congressman Blumenauer, in their plan to re-introduce our First Time Homebuyer Tax Credit, that ensures everyone has a fair shot at homeownership, it's a change long overdue,” said Santa Cruz County Association of REALTORS President Carol VanAausdal.

“The opportunities that Congressman Jimmy Panetta’s legislation will create for hard working families in our community is significant. Sometimes, first-time home buyers are just a couple thousand dollars from realizing their dream of home ownership.  This legislation will help fulfill so many dreams,” said Santa Clara County Association of Realtors 2024 President Michelle Perry.

The First-Time Homebuyer Tax Credit Act is cosponsored by U.S. Senators Peter Welch (D-VT) and Jack Reed (D-RI).

A summary of the bill is available here; bill text is available here.

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