What Trump and Harris Say They’ll Do to Fix the High Cost of Housing
The high cost of housing has emerged as a critical economic issue, with both U.S. presidential candidates, Kamala Harris and Donald Trump, pledging to tackle this pressing problem. Housing experts weigh in on their proposed policies, evaluating the realism of each plan and its potential impact on the existing housing crisis.
While it is widely understood that presidents have limited short-term influence over home prices and mortgage rates, they can significantly shape policies that affect buyers and sellers in the housing market. Notable historical examples include Franklin D. Roosevelt, who implemented the New Deal during the Great Depression, introducing the fixed-rate mortgage, setting a standard that persists today. Similarly, President Barack Obama played a pivotal role in stabilizing the housing market post the collapse caused by subprime mortgage lending during the 2008 financial crisis. Fast forward to 2024, the connection between soaring rents and home prices has made housing a vital concern for younger voters, as indicated by recent surveys from Redfin and Harvard’s Kennedy School.
Examining Proposed Policies
Both candidates have touted various strategies, including demand-side measures, such as offering financial assistance to prospective homebuyers, and supply-side measures, like incentivizing builders to construct new housing units. However, experts caution that numerous challenges exist, impacting the efficiently coordinated development of housing projects.
Shamus Roller, executive director at the National Housing Law Project, emphasizes the need for local and state governments to navigate intricate challenges—from NIMBYism (Not In My Backyard) attitudes to complicated building codes—that stymie increased housing supply. He argues for federal leadership to provide support and greater coordination.
Kamal Harris’s Proposed Policies
Down-Payment Assistance
Harris’s plan includes offering up to $25,000 in down-payment support for first-time homebuyers, along with a $10,000 tax credit. While her campaign hasn’t established specific income limits, this initiative echoes previous successful efforts during the Great Recession. In 2009, Congress enacted a similar tax credit for first-time buyers, allowing them to claim an $8,000 tax credit, which ultimately assisted over 2.5 million families to navigate the housing crisis.
However, concerns about potential unintended consequences linger. Economists caution that such subsidies might inadvertently inflate housing prices, as seen in various international studies. For instance, research from Germany indicated that a newly introduced government subsidy resulted in increased home prices in specific regions, underlining the potential pitfalls of such financial assistance. Some experts, like Ed Pinto from the American Enterprise Institute, contend that Harris’s proposed down-payment assistance—while well-intentioned—could exacerbate housing costs to the detriment of buyers.
Still, David Dworkin, president of the National Housing Conference, supports Harris’s comprehensive approach to affordable housing, noting that having such plans from a presidential candidate marks significant progress. He argues that existing down-payment assistance programs could be leveraged without triggering excessive price inflation when complemented with supply-side investments in housing.
Tax Incentives for Builders
Harris’s plan also proposes the introduction of new tax incentives to encourage builders to construct starter homes and expand existing tax incentives to motivate affordable rental housing construction. This initiative aligns with the Neighborhood Homes Investment Act, which promotes investment in distressed neighborhoods by providing federal tax credits for private investments. The pending legislation enjoys bipartisan support, highlighting the urgency of improving housing availability.
Past measures, such as the Low Income Housing Tax Credit established in 1986, allocate substantial resources to help state and local agencies create and renovate affordable rental units. The expansion of these programs has the potential to mitigate high rent costs effectively.
Trump’s Housing Agenda
While the article primarily focuses on Harris’s strategies, Trump has consistently emphasized the need for deregulation and market-driven solutions. His policies, though less outlined in the current discussion, typically advocate for reducing red tape, spurring housing supply by simplifying the regulatory framework that builders must navigate. However, experts have reservations about whether these approaches sufficiently address the multifaceted challenges facing the housing market.
The Bottom Line
As the presidential candidates gear up for the 2024 elections, housing affordability remains a crucial topic, with proposals emerging from both sides. Trump and Harris’s commitments to address high housing costs highlight an urgent need for effective strategies amid a rapidly evolving housing landscape. Experts underscore the complexity of the housing market, emphasizing the necessity of a coordinated effort to tackle both supply and demand-side challenges if meaningful and lasting change is to be achieved.
Given the current housing crisis and the various historical precedents of government intervention in the housing market, the upcoming election could very well serve as a pivotal moment in determining the future of affordable housing in America.