Reuters is a business news wire like Bloomberg, so the impact on businesses is always included in reports. Additionally, these kinds of moves do have an impact on various portions of the financial market - from loan underwriting to lending to real estate sales.

Germany also enacted a similar law back in 2008, allowing for the Wohn-Riester, which is basically a 401k but for home purchases or paying off your principal. Allowing a 401k to be used for both retirement and home purchases allows for it to become a unified Riester.

Anybody who is a saving money in a 401(k) is essential investing.

After reading the article, it appears clear that the the administration advisers are saying the new housing plan would let buyers tap 401(k) funds for a home down payment without the usual early-withdrawal penalty. Germany has something very similar to this policy and it has been widely lauded as a success.

My take: For median-income households, the plan under discussion would let individuals pull money from a 401(k) for a home down payment withoutl penalty or taxes, helping buyers overcome the big upfront cost that often stands between them and their first home. Because 401(k) loans or withdrawals today generally trigger substantial taxes and penalties if you’re under 59.5 years old, this change could meaningfully reduce that barrier and broaden the access to homeownership immediately upon enactment. Beyond just tapping savings, the advisers are speculating the administration might include a mechanism to reinvest home equity back into the 401(k) retirement account over time, for example, by allowing a portion of home value growth to count as an asset inside the 401(k) so that the account “grows” alongside the house, offsetting retirement savings losses caused by the withdrawal. Those mechanics, like how much can be withdraw, whether there are caps or limits, how repayment would work, or whether it applies only to first-time buyers, are still being worked out and haven’t been finalized so Caveat emptor; this is speculation on my part based on the read. I like the idea and I'll be contacting my US state representatives with my endorsement and recommendations including the proposed first-time buyer restriction.

> Where are all the “rent control is bad economics” folks now

Complaining about zoning even though in a large portion of America, zoning is orthogonal to housing affordability [0] and supply, especially because no bank wants to finance residential real estate anymore - they'd all rather invest in commercial real estate which has better and more consistent returns (logistics parks, data centers, factories during CHIPS and IRA) [1].

[0] - https://news.ycombinator.com/item?id=42543143

[1] - https://news.ycombinator.com/item?id=42544296

Since nothing is finalized, the same framework could just as plausibly be extended beyond buying existing homes to using 401(k) funds as a down payment toward building a new one, which would be especially relevant for median-income buyers priced out of tight resale markets but able to access land or lower-cost construction pathways; in that version, retirement savings could seed new housing supply rather than just bid up existing stock, and any future “re-vesting” mechanism that’s been hinted at could theoretically allow part of the home’s appreciated value, or structured repayments tied to equity growth, to flow back into the retirement account over time, reframing the withdrawal less as a permanent depletion and more as a reallocation from paper assets into a productive, shelter-providing one that later migrates back into long-term retirement capital. This is a very smart economic policy reform.

Would this also have been the case had the housing price gone down for you? Or if the housing price had just been flat?

These single use tricks make sure that the housing market will go up for yet another couple of year. But every time a trick like this is applied, it will increase the risk in the system. There are also the issue that there are only that many tricks one can use.