Millennials want to buy homes. Missouri lawmakers have a proposal to help them

Micah and Chloe Bottemuller were barely old enough to drink when they bought their first house.

The Lee’s Summit couple said saving for the down payment was difficult, but owning a home had been on Micah’s mind since he got a credit card at 18 to build his credit history. He closed on the house at 22.

Now in their mid-20s, the Bottemullers rent out that first house and live in a second one they bought. Chloe said it’s been surprising to see how much equity they’ve built in a few years.

“We just knew that for us at least, we wanted to make sure it wasn’t being thrown away, so to speak, on rent — that it would actually be going somewhere,” she said.

The Bottemullers buck a trend among their peers. Only 36 percent of adults younger than 35 own homes, according to the U.S. Census Bureau. But that’s not necessarily for lack of interest. According to a joint study by the National Association of Realtors and American Student Assistance, millennials are putting off home ownership by an average seven years, and 83 percent of survey respondents blame student debt.

To make it easier for first-time home buyers, Missouri lawmakers are eying an incentive. A bill before the state Senate would allow Missourians to set aside money in a first-time home buyer savings account and deduct state taxes on half the contributions. The funds could be used for a down payment, closing costs and other home-buying fees.

The measure sailed through the house on a 133-13 vote but awaits action in a Senate committee.

Rep. Becky Ruth, a Festus Republican and real estate agent, said first-time home buyers are often beginning their careers saddled with student debt and minimal savings.

“So that’s a lot of money to have to come up with all at once,” Ruth said.

Notions that millennials prefer urban living aren’t necessarily true in Kansas City, where real estate marketers at Highline Partners found favor for homes and yards in a nonscientific poll earlier this year.

“I know very few who want to do lofts in downtown Kansas City, but everybody that I know my age wants to buy a house,” Micah Bottemuller said. “They just don’t know the best steps to do it.”

Under Ruth’s bill, buyers would have to put the money they’d saved toward a home in Missouri. If account holders bought a home in another state or withdrew the money for a different purpose, they would have to return the tax savings.

The tax savings from Ruth’s bill wouldn’t be huge. The average single person would save about $47 a year in state taxes, said Adam Davis, a lobbyist for the Missouri Association of Realtors, which supports the bill.

“I think any little bit that we can do to help encourage them and help them to be able to save for that first home is absolutely worth it,” Ruth said.

Rep. Holly Rehder, a Sikeston Republican, said she voted against the bill out of concern over the tight state budget, though she called it a “wonderful program and a great idea.” She said she’s been cautious about proposals that would cost the state money after Missouri lawmakers made budget cuts to critical services last year.

“Even what would be considered a small amount makes a difference in other people’s lives that get cut,” Rehder said.

According to a fiscal estimate, the program would cost the state about $4.4 million a year once it is fully implemented. More important, Ruth said, is the revenue and economic impact the state would receive on home buyers’ other purchases.

Home buyers spend as much as $10,000 on repairs, appliances and furniture in their first year of ownership, according to the National Association of Home Builders.

The Bottemullers are working on some of those improvements at the new house they bought last year.

“It’s just crazy being a homeowner for several years already and just seeing how much we’ve paid off on our house so far and how much equity we have in our homes because we’ve done a lot of remodeling,” Chloe Bottemuller said.

This story was originally published March 27, 2018 at 3:40 PM with the headline "Millennials want to buy homes. Missouri lawmakers have a proposal to help them."