The National Association of REALTORS® (NAR) is a trade association that represents residential and commercial brokers, salespeople, property managers, appraisers, counselors, and others engaged in the real estate industry. NAR retained AEG to estimate the economic impacts of a proposed first-time homebuyer savings account (FHSA) program in Wisconsin.
We conducted a literature review on the impacts of homebuyer savings accounts on home sales across North America. We then created a custom model to estimate FHSA participation and increased sales resulting from the program. After determining the increase in home sales, we quantified the increases in spending that would occur as a result of the program, and then applied economic impact multipliers to this spending to determine the indirect impacts of the FHSA program. We also constructed a fiscal impact model to determine the total impact of the FHSA program on State tax revenues.
We found that the economic impact of the program would grow over time as amount of savings deposited into accounts increases and more participants use their savings to purchase homes. We estimated that there would be over 93,000 open accounts by the tenth year of the program, and 13,600 additional homes sold annually by the tenth year of the program. We estimated that this activity would result in an annual economic impact of $315 million. We also determined that, after ten years, the State would see a $20 million annual loss in income tax revenue due to the program. This loss would be offset by other increases in tax revenue, including increased sales and realty transfer taxes, as well as increased income tax revenue stemming from the program’s economic impact.
We provided NAR with a report summarizing our findings. NAR provided the report to policymakers to inform them of the impacts of the program.