The Biden administration has submitted a proposal to help young people become homeowners.  But will it make a difference?

The Biden administration is proposing to set aside US$26 billion to help alleviate some of the pressure in the US housing market.

The housing situation in the US is pretty intense right now. Mortgage rates are at a decade-high of 8% and mortgage demand is at its lowest point in nearly 30 years. 

See, during the height of the pandemic, interest rates were super low, meaning mortgage rates were super low. This caused a massive uptick in home purchases. But ever since the financial crisis in 2008, developers have kinda been underdeveloping housing, to avoid another fiasco.

So the rule of supply and demand kicked in. Huge demand with limited supply means an increase in prices. US housing prices soared during the pandemic! 

But then interest rates started going up and up and up and housing prices stayed high and the supply stayed limited. All that translates to people being unable to afford to buy a house.

The crisis is disproportionately affecting young people or would-be first-time homeowners.

CEO of ProfitJumpstarter, Keisha Bailey, talked about it recently on Taking Stock.

So the US Government is proposing a US$16 billion programme that would build or rehabilitate 400,000 homes for families.

They’re also proposing a US$10 billion down payment assistance program for first-time homebuyers whose parents do not own a home.  US$100 million of that would be set aside to help pay the down payments for first-generation Americans and/or low-income first-time homebuyers.

So it’s a very interesting plan. The US Congress still has to approve it but if this does go through, it could be a game changer for many young people.

You know many of our parents bought their first home in their twenties, but with inflation, it’s taking our generation much longer to achieve the same thing so this would make it easier for Millenials and Gen Z to become homeowners.

And that’s the bottom.