Whitehouse, Shekarchi, Rivera Push for First-Time Homebuyer Tax Credit Act to Make Homeownership More Accessible in Rhode Island

U.S. Senator Sheldon Whitehouse, Rhode Island House Speaker K. Joseph Shekarchi, and Central Falls Mayor Maria Rivera recently gathered with local housing advocates to advocate for the passage of Whitehouse’s First-Time Homebuyer Tax Credit Act. This legislation aims to expand homeownership among lower- and middle-income Rhode Islanders by providing a refundable tax credit of up to 10 percent of a home’s purchase price, with a maximum of $15,000, for first-time homebuyers. The event, which took place inside a newly constructed affordable home in Central Falls, highlighted the importance of addressing the dramatic increase in housing costs that is preventing families from achieving the American dream of homeownership and gaining a foothold in the middle class.

Whitehouse, Shekarchi, Rivera Push for First-Time Homebuyer Tax Credit Act to Make Homeownership More Accessible in Rhode Island

The Importance of Homeownership and the Challenges Faced by Rhode Islanders

Homeownership is a crucial aspect of the American dream, providing families with security, stability, and a means to build wealth. However, the dream of homeownership has become increasingly out of reach for many Rhode Islanders in recent years. 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 surpasses even the years leading up to the 2007 mortgage crisis. The situation is particularly dire in Rhode Island, where there are no communities where families earning the state’s median income can afford to purchase a typical home.

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

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Speaker Shekarchi echoed these sentiments, adding, “Home ownership provides families with security and stability – emotionally, physically, and financially. Unfortunately, the dream of home ownership is getting more and more out of reach for too many people. I applaud Senator Whitehouse for his leadership in proposing this significant tax credit, which will make homeownership more affordable and sustainable for working families.”

The Economic Impact of Housing Unaffordability

The lack of affordable housing opportunities has far-reaching consequences for the American economy. Nationwide, the shortage of affordable housing is estimated to cost the economy $2 trillion each year. High housing costs reduce disposable income and economic mobility, stifling economic opportunities for those who can no longer afford housing and their communities.

Young people are particularly affected by housing unaffordability, as they struggle to reach the same milestones as their parents at the same age. In 2022, the typical age of a first-time homebuyer reached a record high of 36, up from 29 in 1981. Additionally, first-time homebuyers made up just 26 percent of all homebuyers nationwide in 2022, compared to 38 percent in 1981.

How the First-Time Homebuyer Tax Credit Act Works

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.

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The credit phases out for homebuyers 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.

Support from Housing Advocates and Industry Professionals

The First-Time Homebuyer Tax Credit Act has garnered support from various housing advocates and industry professionals in Rhode Island. Jennifer Hilton Cavanagh, Past President of the Newport County Board of Realtors, emphasized the importance of creating access to homeownership for first-time homebuyers, stating, “Starter homes are the first step on the ladder to building wealth for our families, our communities, and our economy.”

Rhode Island Secretary of Housing Stefan Pryor also expressed support for the legislation, saying, “With a commitment to supporting lower-and middle- income families, the First Time Homebuyer Tax Credit Act would be a valuable tool. By easing the financial burden of first-time buyers, the dream of owning a home can become a reality for more and more Rhode Islanders.”

Carol Ventura, CEO of RIHousing, highlighted the current housing shortage and high purchase prices, stating, “As we continue to face a housing shortage with increasingly high purchase prices, homeownership is out of reach for many families across the country, including in Rhode Island. The First-Time Homebuyers Tax Credit Act, sponsored by Senator Whitehouse, would provide financial assistance to create homeownership opportunities in this difficult homebuying market. The passage of this act would be crucial to assist families find, buy, and build equity in a home like prior generations.”

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Melina Lodge, Executive Director of the Housing Network of Rhode Island, emphasized the challenges faced by low- and middle-income earners, stating, “As home prices escalate beyond what typical wages can support, the dream of homeownership is out of reach for more and more Rhode Islanders, many of whom lack the financial resources to meet down payment requirements. This is particularly true for low- and middle-income earners, who are being increasingly priced-out of that dream. Programs such as the proposed First-Time Homebuyer Tax Credit Act are critical pieces of the puzzle to ensure that households who are ready to become homeowners have access to the one-time resources they need to bridge these real hurdles.”

Endorsements and Conclusion

The First-Time Homebuyer Tax Credit Act, introduced in the U.S. Senate and House of Representatives earlier this month, has received endorsements from various organizations, including:

  • Rhode Island Department of Housing
  • RIHousing
  • Housing Network of Rhode Island
  • HousingWorks RI at Roger Williams University
  • National Association of Home Builders
  • National Association of REALTORS®
  • Rhode Island Association of REALTORS®
  • Cooperative Credit Union Association

As housing costs continue to rise and homeownership becomes increasingly out of reach for many Rhode Islanders, the passage of the First-Time Homebuyer Tax Credit Act could provide much-needed relief and support for those seeking to achieve the American dream of owning a home. By expanding access to homeownership, this legislation has the potential to strengthen communities, build wealth for families, and contribute to a more stable and prosperous economy in Rhode Island and across the nation.

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