If you’ve been trying to buy a home in the United States for a year and you’re still looking, you’ve probably hit the all-too-common sticking point: there aren’t enough homes in your house. price. and those you can afford get so many bids that your maximum bid gets you nowhere.
The reason, of course, is a dire lack of housing supply. This week, the National Association of Realtors reported that creating enough housing units to meet today’s staggering level of demand would require a full decade in which 2.1 million homes were built. . every year.
“We will have to do something dramatic to close this gap,” Lawrence Yun, chief economist of NAR, said in a press release.
In fact, a rather dramatic proposal that is before Congress could add hundreds of thousands of properties to the supply of homes for sale in the United States: President Joe Biden’s multibillion-dollar infrastructure package.
If successful, Biden’s plan might not get you into the housing market early enough to take advantage of ultra low mortgage rates. But if the additional bid helps reduce the frequency of auction wars that inflate prices, it will be worth the wait.
What’s in Biden’s plan
Besides money for roads, bridges and other more traditional infrastructure, Biden’s proposal includes $ 213 billion to “build, preserve and renovate” more than 2 million homes and commercial properties to reduce the shortage. affordable and energy efficient housing in the country – to buy and rent.
“Millions of families pay more than half of their income in rent, and home energy costs are also a major concern for US renters,” a statement read. outline of the president’s plan. “And people across the country are struggling to buy their first home. “
The package provides for the construction and rehabilitation of half a million homes to help more Americans become homeowners.
In addition to providing funding, Biden’s plan would also try to eliminate a series of state and local zoning laws that the White House says “increase the cost of construction and prevent families from moving to neighborhoods offering more. opportunities for them and their children ”.
How the infrastructure plan could help you move into a home
People say real estate is about location. But when the market is stifling and prices skyrocket, all that matters is the supply.
And America has a major supply problem. Not only has new home construction stagnated over the past 20 years, resulting in a deficit of 5.5 million housing units, but millions of homes across America are empty.
In a 2018 survey, the US Census Bureau found that more than 17 million homes are vacant across the country. Not all of them are abandoned and dilapidated – some are unused investment property, others await tenants – but many are.
Put these two trends together and it’s no wonder real estate prices are skyrocketing. Biden’s infrastructure plan won’t solve the country’s supply problems, but it could help dampen home prices for some buyers.
Now repairing or building 500,000 homes will not bring home prices back to earth. This is only a fraction of the roughly 6 million homes that are sold each year in the United States.
But if Biden’s infrastructure plans materialize and thousands of additional low- and mid-price homes begin to hit the market each year, more people could find themselves bidding on homes than they actually could. afford – and get their offers accepted.
Start preparing this down payment
Optimism and today’s housing market don’t often mix well, but suppose Congress comes to a deal that increases both the country’s housing supply and your chances of owning your own home.
If this happens, you’ll want to be prepared.
the lowest mortgage rates tend to go to borrowers with the strongest credit. Therefore take a free look at your credit score now, to see if it will need some improvement before starting the mortgage process.
If you have multiple high interest debts, take them off your books. Lenders will wonder if you can afford a mortgage when you are already spending a large chunk of your paycheck on credit card balances or other expensive debt. Taking out a single low interest debt consolidation loan can help you pay off your debts faster.
And it’s never too early to start building a down payment. To do this, cut your spending wherever you can and try some simple ways to increase your income. You can download a popular app that helps you make money in today’s fast-paced stock market by investing nothing more than “spare currency”.
When you’re trying to buy your first home, every little bit counts.