I still remember the day. I signed my name for what felt like a thousand times and wrote the largest check I had ever written in my life. But, it was mine. And, when the agent put the keys to my new home in my hands I knew that I had grabbed my piece of the American dream.

Home ownership has always been a symbol of financial accomplishment in our country. Oftentimes it has marked a rite of passage into “finally becoming a grown up” when that purchase is made. Unfortunately for many, the American dream of home ownership is becoming more difficult to attain. It is especially hard for those just starting out on their own due to the challenges involved in saving up for the down payment. Despite all of the positive aspects and advantages of home ownership, affordability for first time homeowners continues to be a significant barrier for far too many New Jersey residents.

In 2015, the New Jersey Association of Realtors reported that 40 percent of people who bought homes in the state were buying for the first time. In contrast, the U.S. figure showed that 32 percent were first-time buyers over that same period. That’s down from 50 percent in 2010. This continues a disturbing trend which shows that the home ownership rate has steadily decreased since the national financial crisis of 2008. This coupled with the fact that the rental market has become tighter and less affordable, illustrates the difficulty individuals have with buying their first home.  

These factors led me to recently introduce a proposal, A-4067, to spur home ownership in New Jersey. The proposal mimics the successful 529 college savings plan model, by creating a similar initiative for first-time homebuyers. The 529 college savings plan, which assists parents by providing a tax-advantaged means to save for their children’s college education, has shown to be a great approach towards offsetting the costs of higher education. A-4067 applies this concept to another area where savings are just as important, buying a first home.  

The New Jersey First-Time Home Buyer Savings Account Program is designed to encourage first-time home owners to accumulate the savings necessary for first-time home ownership, and is modeled after similar laws recently enacted in Colorado, Montana and Virginia. The proposal provides for an exclusion from New Jersey’s gross income tax for earnings on assets maintained in a first-time home buyer savings account. This exclusion would be maintained until the earnings are distributed from the account, unless the withdrawal or distributed is to (1) pay eligible expenses incurred by a certified first-time home buyer for a qualified home purchase, (2) transfer assets to another first-time home buyer savings account, or (3) pay fees charged to the certified first-time home buyer by the banking institution for the establishment or maintenance of this particular savings account. 

As home affordability in our state has been declining recently, real estate prices are rising at a faster rate than personal income. This strains the ability for many to buy their first home. Economic studies have consistently shown that purchasing a home is a critical step towards elevating individuals into the middle class and helping them to maintain that status. Creating these savings accounts will help first-time home buyers put money away for a down payment, closing costs and other expenses associated with the purchase of their first home, and help mitigate this affordability dilemma. The New Jersey First-Time Home Buyer Savings Account Program is a practical step towards empowering first time home buyers and giving them a real opportunity at the American dream. That’s my take. What’s yours?