Having spearheaded the effort to create a First-Time Homebuyer Savings Account program in Alabama back in 2018, Alabama REALTORS® revisited the legislation as the end of a five-year sunset clause approached. A Call for Action reminded lawmakers how important the tax-free savings accounts are for aspiring homebuyers, and the law was not only renewed, but extended and strengthened with fraud protections and transparency measures.
Back in 2018, Alabama was among the first handful of states to give aspiring homebuyers a leg up in the process by establishing a First-Time Homebuyer Savings Account (FHSA) program. Alabama REALTORS® was at the forefront of the effort, with support from the REALTOR® Party that included polling, economic research, and legislative development. In the past year, as a five-year sunset clause loomed over the promising new program, Alabama REALTORS® again took the lead, not only to preserve it, but to extend its benefits and increase its transparency and accountability.
Alabama’s original FHSA program allowed first-time buyers and second-chance buyers (those who hadn’t owned a home in ten years) to squirrel away $5,000 in tax-free annual savings ($10,000 for couples) in accounts designated for down-payments and closing costs; it also pointed to a positive net impact for the state economy, given the projected upswing in jobs and economic activity associated with increased levels of homeownership. But, as Alabama REALTORS® CEO Jeremy Walker explains, the Alabama budget requires that all new tax-incentive and tax-credit legislation include a five-year sunset clause, so it was always clear that they’d have to return to bat for the program.
“We see this as a marathon, not a sprint,” he says, “and there was always going to be a big learning curve.” Indeed, Alabama REALTORS® hit the ground running with a robust, multi-level education and awareness campaign for lenders, brokers, and potential homebuyers when the program launched in 2019. Then, the pandemic hit within its first year, and the limited housing inventory and skyrocketing costs in all markets made purchasing a first home even more uncertain. “Not only were we facing the five-year sunset clause on the program,” notes Walker, “but these savings accounts were to be used within five years towards the purchase of a home; circumstances being what they are, that is no longer a realistic expectation.” So, the REALTORS® went back to the legislature to make sure the program was not only renewed, but the terms extended to allow the accounts to build for ten years, allowing participants more time to save – and to find a home.
With help from the REALTOR® Party’s Advocacy Everywhere program, Alabama REALTORS® put out a Call for Action to underscore the importance of strengthening the FHSA program. Says Walker, “There’s a great tradition here in Alabama of our REALTORS® being extremely engaged in our legislative activity, it is always impactful when they make their voices heard. That was certainly the case, this time!” The new legislation passed with full bi-partisan support and was signed into law by Governor Kay Ivey in April.
In addition to doubling the savings account terms from five to ten years, the updated legislation also provides for fraud prevention measures and data collection, so that the state Department of Revenue will be able to track and quantify when accounts are opened, and when the proceeds are used to purchase a home.
“We are so grateful to the National Association of REALTORS® and the REALTOR® Party staff for all the resources and expertise they put towards developing and passing the original draft of this important legislation, plus the educational outreach, and now, this renewal of the program. We could not have done it without their help,” says Walker.
To learn more about how Alabama REALTORS® continues to ensure that the dream of homeownership is as accessible as possible for first-time and second-chance buyers in Alabama, contact CEO Jeremy Walker at firstname.lastname@example.org or 334.262.3808.