Idaho Gov. Brad Little Wants To Help First-Time Homebuyers. Some Wonder If It Will Work
Eric Oliver is looking to buy his first home with his partner and their cat Cecil. But he says looking through online listings in Boise is like torture.
Their budget is well below $325,000 – the median home price in Ada County last December.
“We both work at nonprofits and we want just something humble would be ideal, so the North End is probably off-limits. This stuff that’s in our price range, these are just plots of land, so that’s discouraging,” Oliver says.
He’s 28, has a professional job and has been saving for a down payment for several months.
Oliver says he and his partner are looking for a place between 800 and 1,200 square feet and a quick bike ride away from downtown.
“We don’t need a fortress and we don’t want to isolate ourselves in some big house somewhere. We just want something little on a nice, quiet street, right? The American dream.”
But a combination of fewer houses available and more and more people moving to the Treasure Valley can leave first-time buyers’ heads spinning as they see prices balloon month after month.
“It’s competitive,” says Andrea Pettitt, a real estate agent who’s been selling homes in Boise for 16 years.
"We don't need a fortress and we don't want to isolate ourselves in some big house somewhere. We just want something little on a nice, quiet street, right? The American dream." -Eric Oliver
“Anything that is priced for an average, first-time homebuyer, entry-level property, we can see four, five, six offers on homes,” Pettitt says.
And she notes the buyer that wins out generally pays above the list price and covers closing costs.
It’s a vastly different market than when she paid $77,000 for her first home in the North End in 1996. Still, she says it was a stretch to afford it back then.
“I think that a young couple buying that exact same house today, with their income today, might have a similar kind of experience in terms of affordability that I experienced when I bought.”
But with inflation, that same house would cost about $125,000 in today’s dollars. That’s $200,000 cheaper than the median home price in Ada County for December.
So, Gov. Brad Little (R) wants to join a number of states who have let people sock away money for a down payment without paying state income taxes on it.
The proposal would limit single people to $3,000 a year, or $6,000 annually for a married couple. And how much would that save in taxes? About a couple hundred bucks per person.
Still, Pettitt thinks it’s a good idea.
“I would love to see more than $3,000 a year, but I think it does help move the needle and make home ownership possible for more people,” she says.
And she’s not the only one.
Ed Golding was the head of the Federal Housing Administration for President Obama and is now a fellow at the Urban Institute.
He says he’s not worried about the cap on savings for those struggling to buy a home.
"Anything that is priced for an average, first-time homebuyer, entry-level property, we can see four, five, six offers on homes." -Andrea Pettitt
“It will add up. If people use it to the maximum, they will be able to have the money for a down payment in a couple of years,” Golding says.
That’s because there are federally-backed mortgages available that don’t require buyers to have a traditional 20 percent down payment.
Golding says these types of savings accounts are just one tool in the toolbox to help people afford their own home.
“There’s no one magic bullet that’s going to turn it around. So just because it’s only chipping away at the problem, I don’t think it’s a reason to sort of lose hope,” he says.
The governor’s press secretary says he’s shaping the proposal after “successful models in other states” but declined to make Little available for an interview.
Eight other states have similar programs, but not a lot of people actually use them. For the last few years, about 200 people in Montana have signed up annually. Only 130 people claimed the tax exemption in Virginia in 2015. But in Idaho, Little is budgeting for thousands, not hundreds.
Thinking it over at his apartment in downtown Boise, Eric Oliver says he likes the idea of the program. But with home prices climbing higher and higher every month, he can’t wait around to jump into the market.
“I’d be grateful for a few hundred bucks of savings, but we’re talking a lot bigger sums here at stake,” Oliver says.
The governor's office has yet to introduce a bill to implement the program, but there's still time. Lawmakers expect to gavel out of session in late March.
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