Housing on the ballot: Harris, Trump push different plans to address housing affordability crisis

Millions of Americans cannot afford to buy a home or rent a suitable apartment, making housing a central issue for voters in the upcoming presidential election.

The biggest reason homeownership is out of reach for many is that there aren’t nearly enough homes for sale to balance the market between buyers and sellers.

The shortfall, which some economists say ranges from 1 million to about 4 million homes, has fueled bidding wars for much of the past decade that have pushed the average sale price of a previously occupied home in the U.S. to an all-time high of $426,900 in June—even as home sales have been in a deep slump for more than two years.

Higher mortgage rates have kept many homebuyers on the sidelines. The average rate on a 30-year mortgage rose to a 23-year high of nearly 8% late last year and now it stands at 6.44%.

Tenants did not have it easier. While the average asking rent in the U.S. has fallen for more than a year following a wave of new apartment construction, it remains about 20% higher than it was before the pandemic.

Against this background, Vice President Kamala Harris and former President Donald Trump have made proposals that they say will make the American Dream accessible to more Americans.

Harris’ campaign laid out a detailed policy roadmap aimed at expanding access to affordable housing for both homebuyers and renters, which includes giving first-time homebuyers up to $25,000 in assistance for upfront payment and tax incentives for builders and federal funds to speed up cities. construction. She claims her plan will add 3 million new housing units over the next four years.

Trump says he will create tax incentives for homebuyers, reduce “unnecessary” homebuilding regulations and make federal land available for residential construction, though the campaign platform does not include specifics. Trump also claims he will lower housing costs by reducing inflation and stopping illegal immigration.

Aside from the fact that many of the candidates’ policies would require support from a majority of lawmakers in Congress, which the incoming president may not have, economists say the campaign platforms offer some good ideas but no surefire solutions to the long-term housing market. duration. challenges.

Here’s a look at some of the candidates’ key ideas:

Trump’s immigration crackdown

Trump and his campaign have repeatedly linked the nation’s housing problems to immigration, suggesting that mass deportations will ease the demand for housing, thereby making housing more available and affordable.

The former president has long focused on undocumented immigrants as a core policy issue, but when it comes to housing policy, his campaign has also showcased immigrants who are in the country legally. His running mate, Ohio Sen. JD Vance, blamed Haitian immigrants living in his home state for causing a housing problem.

Chris Herbert, executive director of Harvard’s Joint Center for Housing Studies, said in a statement that rising interest rates and increased housing demand since the pandemic are to blame for rising costs — not immigrants.

“While immigrants are adding to overall housing demand, they cannot be blamed for the recent spike in house prices and rents that has been unleashed in 2020 and 2021 as immigration has reached its lowest levels in decades due to the pandemic,” he said. said Herbert.

Jim Tobin, CEO of the National Association of Home Builders, said mass deportations could exacerbate the supply problem because one-third of the homebuilding industry’s workforce is foreign-born.

“Anything that can disrupt the flow of foreign-born labor into our industry would be disruptive. Without a doubt, Tobin said.

Sarah Saadian, senior vice president for public policy at the National Low Income Housing Coalition, said undocumented people tend to live in overcrowded units, so evicting only immigrants from a home would not create a real vacancy or address affordability . dilemma.

“The most pressing part is that wages and incomes are not high enough to cover rental costs, and that has nothing to do with undocumented people,” Saadian said.

Harris’ $25,000 down payment plan

Harris aims to help homebuyers directly by offering up to $25,000 in down payment assistance to first-time buyers who have paid their rent on time for two years.

The campaign, which claims the program would help more than 4 million first-time buyers and cost $100 billion, says such down payment assistance is not new, noting that as of 2019, nearly three-quarters of single family mortgages included down payment. help provided by state agencies for housing finance.

Like Trump’s plan, Harris’ proposal could backfire in some ways. Economists warn that introducing a buyer incentive when the supply of homes for sale remains tight in many markets could drive down prices, making home ownership less affordable. The impact could depend on the particular market. The impact could depend on the particular market.

“In Los Angeles, $25,000 in down payment assistance isn’t enough, but it’s enough in Detroit,” said Daryl Fairweather, chief economist at Redfin.

However, if the number of homes on the market increases, the financial assistance makes more sense because it can assure builders that “there will be buyers willing to buy” the homes they build, Fairweather said.

The federal government has offered tax incentives to homebuyers in the not-too-distant past. In 2008, the Obama Administration enacted a first-time homebuyer tax credit of up to $7,500 as the housing market reeled from the housing crash and Great Recession. Sales picked up as buyers took advantage of the stimulus, but the housing market remained in a slump until 2012.

The Trump campaign promises to make homeownership affordable for “families, young people and everyone,” but offered no specifics. It says the GOP will “support first-time buyers” and claims it will lower mortgage rates by “reducing” inflation.

However, experts say Trump’s overall economic agenda in a second term would be worsening inflationwhich fell last month to its lowest point in three years.

Agreed: zoning and federal lands

Among the few things the two candidates agree on: relaxing zoning laws and using federal land to build homes.

Trump has pledged to address zoning and other construction regulations to speed up housing production, though his platform did not go into specifics.

Harris is proposing a $40 billion fund to incentivize local governments, which control zoning laws, to streamline their regulations to reduce the time it takes developers to get projects approved and completed. One caveat: State and local governments must demonstrate that they are building housing that is affordable.

Both candidates have also said, however vaguely, that they favor making “limited portions” or “certain” federal lands available for home construction.

Harris’ plan points to the Biden administration’s initiative in Las Vegas, where the Bureau of Land Management sold 20 acres at a deep discount to Clark County to build single-family homes that will eventually be sold to those with an annual income of up to household. to $70,000.

Don Simpson, vice president of the Public Lands Foundation, said the laws were established more than 20 years ago to give Nevada authorities the ability to buy below-market federal land for affordable housing. Simpson said there are other small parcels near places like Barstow, Calif., and Boise, Idaho, where this could be replicated on a limited basis.

Nicholas Irwin, a professor at the University of Nevada, Las Vegas, said the 210 homes would hardly touch the estimated 75,000-unit shortage Southern Nevada needs today.

“We are very short. More federal land alone will not solve this,” Irwin said.