Collin Cahill (J.D. 2025, Ohio State), Home Sweet Home Deduction, 25 U.C. Davis Bus. L.J. 29 (2025):

Presidents have long touted homeownership as key to achieving the “American Dream.” Historically, the rising costs of homeownership have been used repeatedly for different policies. Recently, housing prices led Vice President Kamala Harris to propose a $25,000 downpayment assistance program for first-time home buyers. Another part of Harris’ affordability proposal was to increase the housing supply, but building houses takes time, which is why the plan was to increase the supply by 3 million over the next four years. But is a direct spending plan the best choice when the housing will not be available for some time? Additionally, a direct spending program could raise prices. Finally, direct spending programs are not always easy to get through Congress, even with bipartisan support.

While the discussion of federal direct aid has only recently taken a center stage at the national level, state governments have been looking at ways to provide downpayment assistance for several years. Many states have begun creating tax advantaged homebuyer savings accounts. Currently, 18 states have either enacted or proposed legislation to create these accounts. Even Canada has embraced this approach. These accounts encourage saving over time, thus better matching the time it would take to increase the housing supply and allow prices to decrease. Further, this approach would not have the same inflationary concerns. Finally, the benefits could be achieved through a tax expenditure approach, which is more politically attractive and can pass with less scrutiny. If the support for first-time homeowners can be achieved without these drawbacks, then it would make sense to examine these first-time homebuyer accounts.