In an effort to tackle the nation's housing affordability issues, President Joe Biden has unveiled plans to introduce new tax breaks for first-time homebuyers and individuals selling their "starter homes." However, experts are divided on whether these proposals will be effective in easing the burden on middle-class Americans seeking homeownership.

During his recent State of the Union address, President Biden emphasized the importance of addressing the rising cost of housing. He acknowledged that while lower inflation and mortgage rates would alleviate some of the challenges, immediate action was necessary.

Under the proposed plans, middle-class, first-time homebuyers would qualify for a "mortgage relief credit" amounting to $5,000 per year for two years. This credit, equivalent to a 1.5 percentage point reduction in mortgage interest rates for a median-priced home, aims to support prospective homebuyers in navigating the increasingly competitive housing market.

Additionally, the administration is proposing a one-year credit of up to $10,000 for middle-class families selling their "starter homes" to other owner-occupants. The term "starter homes" refers to properties below the median price of the seller's county.

The rationale behind this credit is to address the phenomenon of homeowners being reluctant to sell their properties due to the lower interest rates they currently enjoy. By providing incentives, the hope is that more starter homes will become available, increasing opportunities for aspiring homeowners.

However, experts have expressed mixed opinions on the efficacy of these proposals. Some argue that unless the proposed credits are considered qualifiable income, they might not significantly impact potential homebuyers' ability to qualify for mortgages. Keith Gumbinger, vice president of mortgage website HSH, pointed out that mortgage rates are already close to multidecade highs, making it challenging for individuals to enter the housing market, even with potential tax breaks.

Moreover, experts highlight that the affordability crisis in the housing market extends beyond mortgage rates. Janneke Ratcliffe, vice president for housing finance policy at the Urban Institute, emphasized the long-standing issue of a housing supply shortage, exacerbated by declining new home construction since the Great Recession. Ratcliffe believes that addressing this supply crisis is equally crucial for achieving affordable homeownership.

Despite the mixed opinions, Ratcliffe expressed optimism and regarded President Biden's proposals as a positive starting point in acknowledging and prioritizing the issue of housing affordability.

As the plans are introduced during a presidential election year and with a split Congress, the progression of these proposals remains uncertain. However, the conversation around housing affordability has gained significant attention, prompting discussions on how best to address the challenges faced by everyday Americans seeking to secure a home.

With soaring home prices and mortgage interest rates reaching multidecade highs, middle-class families find themselves increasingly burdened by housing costs. President Biden's proposals aim to alleviate some of these challenges, but their ultimate impact remains to be seen as housing industry experts debate their effectiveness in addressing the complex issue of affordability.