Stephen Medeiros

The benefits of home ownership to an individual and to a community are numerous and expansive, and the Massachusetts Association of Realtors is proud to support a state bill that would assist first-time home buyers in saving to make a purchase that, for many, represents the single largest financial investment of their lifetime. Under “An Act Encouraging Home Ownership by Establishing a First-Time Home Buyer Savings Account” (S.1834/H.2840), first-time homebuyer savings accounts would help expand access to the American dream of home ownership.  

If enacted, the bill would allow future home buyers or their families to deposit up to $5,000 per year into a savings account (or $10,000 per year for joint filers), and to claim their deposit as an income tax deduction. Gains would be exempt from tax, and deductions would be permitted for up to 15 years and $50,000. 

The advantages of creating this type of savings opportunity extend far beyond the individual. By incentivizing first-time home buyers to save towards the purchase of a home, we invest in our residents and the future of Massachusetts. Home ownership contributes to community responsibility; civic, economic and employment stability; and family security and well-being, among so many other positive outcomes. In addition, the economic impact of each home sale in Massachusetts is now $146,200.  

Why Accounts Are Needed 

The need for this savings initiative is clear and compelling.  

Home prices in Massachusetts are at record highs, with the median single-family sale price in May reaching $550,000. Income growth, on the other hand, has not been proportional, and many residents have faced financial instability during the pandemic.  

These factors create a rising barrier to home ownership.  

We know that many residents, including recent college graduates and those several years out of school, are carrying heavy amounts of student loan debt, and this debt burden can limit their ability to save for and purchase a home. First-time homebuyers without significant down payments saved up face an additional barrier in competitive markets such as Massachusetts because their offers are not as competitive as those able to make larger down payments. Buyers who are only able to put a small deposit down are more reliant on financing and have fewer financing options available to them, creating uncertainty that can make their offer less attractive to a seller.  

Residents of color are disproportionally burdened with student loan debt, which furthers inequitable access to home ownership and can increase wealth disparities; for many people, home ownership becomes the best vehicle for the appreciation of wealth over a lifetime. 

Towns, Cities Should Step Up 

As we consider the cost of home ownership and housing affordability, we must also consider housing availability – the number of homes on the market and available for purchase – because these two factors are inextricably linked.  

Month after month, we see record-low numbers of housing inventory in cities and towns across Massachusetts, with new home construction failing to keep pace with demand. We know that we need to build up to 200,000 new homes by the end of this decade alone, all across the state.  

Just as saving for a first home purchase is an ongoing process many years in the making, so too is increasing the number of homes available to meet consumer demand. It is a process we must collectively and urgently engage in to sustain our long-term economic and social vitality as a state.  

The Housing Choice law, enacted earlier this year and one of our recent top legislative priorities, provides cities and towns with the tools to make it easier to build a diversity of housing opportunities in ways that fit the community. However, these housing opportunities are only unlocked when a city or town affirmatively votes to change zoning, and this is a process that takes time, as does the process to then build new homes.  

We strongly encourage municipalities across the state to begin local adoption of key zoning provisions as part of their long-term housing strategy. We are always happy to share resources to promote implementation of both the Housing Choice law and other ways to produce homes to meet the needs of residents.  

While there may be no quick or easy fixes to the dual challenges of home affordability and home availability in our state, responsive strategies demand smart and immediate action. By enacting the first-time homebuyer savings account legislation and implementing the provisions of the Housing Choice law, we can create the foundation necessary to support the next generation of first-time home buyers as they work toward the dream of home ownership in Massachusetts. 

Steve Medeiros is a broker associate with Keller Williams in Dartmouth and the 2021 president of the Massachusetts Association of Realtors