The nation's housing market is stuck in neutral—and a big reason is the lack of first-time homebuyers.
Despite record-low home prices and an oversupply of homes, first-time buyers face more obstacles than before to homeownership, including tighter credit standards and down payment requirements.
In our new policy brief, "HomeK Accounts: A Down Payment on Homeownership and Retirement," PPI Senior Fellows Jason Gold and Anne Kim propose a new, cost-effective mechanism to not only spur first-time homebuyer demand but create a new generation of young savers at the same time.
"HomeK" would enable savers to set aside up to 50 percent of their contributions to a 401(k) retirement savings account into a separate down payment account for a first home. This money could then be withdrawn at a steeply discounted rate. This proposal would not only help struggling first-time buyers, it would encourage young savers to open a 401(k) account by giving them a short-term savings goal. Just 13 percent of workers aged 20-30 now own a 401(k).
This idea has already won the support of prominent housing economists and was featured prominently at PPI's housing policy conference this week, which we sponsored with e21.
Read our policy brief HERE.
As always, your thoughts are welcome.
President, Progressive Policy Institute