NY First Home Proposal: Keeping New Yorkers in New York
By Mike Kelly, Director of Government Affairs, New York State Association of REALTORS®, Inc.
It's no secret that individuals are leaving New York, and it is particularly evident in many Upstate communities. Adding to the dilemma is the fact that New York has the lowest state homeownership rate in the country at 51.5 % – the national homeownership rate is 63.7 %.1 [ U.S. Census; 2015 Homeownership Rates by State: https://www.census.gov/housing/hvs/data/ann15ind.html ] This disconcerting statistic, coupled with recent data showing that nation-wide first-time home buyer rates were at their lowest since 1987, is not only problematic in the short term, but also raises some concerns for the future unless steps are taken to address the issue.
The New York State Association of REALTORS® (NYSAR), a not-for-profit trade organization representing more than 52,000 of New York State's real estate professionals, has focused on the issue of declining rates of first-time buyers and has proposed a program – which passed unanimously in the State Senate last June – to help New Yorkers save for a first home. The proposal, aptly named NY First Home, would be similar to the state's existing 529 College Savings Program and would allow individuals and couples to deposit up to $10,000 per year into a tax-free savings account. New Yorkers could then take a state income tax deduction on the principal and apply the total savings and interest earned towards the purchase or construction of a first home in New York State.
NY First Home tackles the main concern of many potential first home buyers, which is saving enough for a downpayment and closing costs. This has undoubtedly been a major contributing factor to the recent national decline and delay in first-time home buying. By addressing this financial hurdle, NY First Home provides a crucial incentive for individuals to stay in New York, put down roots, raise a family and invest in their community. NY First Home has the potential to help thousands of New Yorkers earn financial stability and achieve their dream of homeownership while also providing a boost to the economy.
Here in the Empire State, and across the country, homeownership remains one of the greatest contributors to wealth creation for individuals and families – and the earlier in life you can afford to buy, the more equity you build. Homeownership also provides indirect benefits to areas and neighborhoods. It has been linked to greater civic responsibility, stronger communities and better opportunities for the future. And as a main driver of consumer spending and steady revenue supply for municipalities, it is important to recognize the impact that a healthy housing market can have on our communities. As new first-time buyers enter the market and purchase a home, there is also an economic multiplier effect – more goods and home appliances are purchased, jobs are preserved and created through new home construction and existing home renovations, and increased revenue is created by the sale.
The bottom line is that low homeownership rates hurt local economies, and we are seeing more New Yorkers being locked out of the American Dream of homeownership. Firsttime buyers face a variety of financial hurdles, including high student loan debt, rising cost of living and high down-payment and closing cost r e q u i r e m e n t s . These factors, among others, are causing first-time home buyers to significantly delay their hopes and intentions to buy a home, which could result in serious financial hardships in the future due to that forgone home equity. NY First Home is a common-sense proposal that provides New Yorkers with a responsible method of saving, while improving their ability to afford a first home. Several states have already enacted similar state legislation, however New York would be the largest state to implement this kind of program if enacted. NYSAR will continue to work with the Governor and State lawmakers to enact NY First Home in 2017.