Central Falls, RI – U.S. Senator Sheldon Whitehouse, Rhode Island House Speaker K. Joseph Shekarchi, and Central Falls Mayor Maria Rivera today joined local housing advocates to call for passage of Whitehouse’s new legislation to expand homeownership among lower- and middle-income Rhode Islanders. Whitehouse’s First-Time Homebuyer Tax Credit Act would establish a refundable tax credit worth up to 10 percent of a home’s purchase price – up to a maximum of $15,000 – for first-time homebuyers. This morning’s event took place inside of a newly constructed affordable home in Central Falls.
“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,” said Senator Whitehouse. “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. I am grateful for the support of Speaker Shekarchi, a great champion for housing affordability in the Ocean State.”
“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,” said Speaker Shekarchi. “I applaud Senator Whitehouse for his leadership in proposing this significant tax credit, which will make homeownership more affordable and sustainable for working families.”
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.
In Rhode Island, there are no communities where families earning the state’s median income can afford to buy a typical home. Nationwide, the shortage of affordable housing opportunities costs the American economy an estimated $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.
Housing unaffordability is uniquely problematic for young people, who are struggling to reach the same milestones as their parents at the same age. The typical age of a first-time homebuyer reached a record high of 36 in 2022, 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 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.
“Creating access to homeownership for first-time home buyers is critically important. Starter homes are the first step on the ladder to building wealth for our families, our communities, and our economy,” said Jennifer Hilton Cavanagh, Past President of the Newport County Board of Realtors.
“With a commitment to supporting lower-and middle- income families, the First Time Homebuyer Tax Credit Act would be a valuable tool,” said Rhode Island Secretary of Housing Stefan Pryor. “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.”
“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,” said Carol Ventura, CEO of RIHousing. “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.”
“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,” said Melina Lodge, Executive Director of the Housing Network of Rhode Island. “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.”
The First-Time Homebuyer Tax Credit Act was introduced in the U.S. Senate and House of Representatives earlier this month. The First-Time Homebuyer Tax Credit Act was introduced in the U.S. Senate and House of Representatives earlier this month. The legislation has been endorsed by the Rhode Island Department of Housing, RIHousing, the Housing Network of Rhode Island, HousingWorks RI at Roger Williams University, the National Association of Home Builders, the National Association of REALTORS®, Rhode Island Association of REALTORS®, and the Cooperative Credit Union Association.
