Housing on the ballot: Harris and Trump put forward different plans to combat housing affordability crisis

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

The biggest reason homeownership isn’t possible for most people is that there aren’t nearly enough homes for sale to balance the market between buyers and sellers.

The deficit, which some economists say ranges from 1 million to 4 million homes, has fueled bidding wars for much of the past decade that pushed the average sales price of a previously occupied U.S. home to an all-time high of $426,900 in 2017. June – even Home sales have been in deep decline for more than two years.

High mortgage rates have also kept many home shoppers on the sidelines. The average rate on a 30-year mortgage rose to a 23-year high of nearly 8% late last year, and It currently stands at 6.44%.

Tenants’ job has never been easier. While average rental demand in the U.S. has been declining for more than a year following a wave of new apartment construction, it remains about 20% higher than before the pandemic.

In this context, Vice President Kamala Harris and former President Donald Trump have put forward proposals that they claim will make the American Dream accessible to more Americans.

Harris’ campaign has laid out a detailed policy roadmap aimed at expanding access to affordable housing for both homebuyers and renters, including up to $25,000 in down payment assistance for first-time homebuyers and tax incentives for builders and federal funds to ramp up cities . structure. He claims his plan will add 3 million new homes over the next four years.

Trump says he will create tax incentives for home buyers, eliminate “unnecessary” regulations on home building and use some federal land for housing construction, but his campaign platform does not include any specifics. Trump also claims he will lower housing costs by reducing inflation and stopping illegal immigration.

Leaving aside the fact that most candidates’ policies will need the support of a majority of lawmakers in Congress, which the next president may not have, economists say their campaign platforms offer some good ideas but are not a surefire solution to the housing market’s longstanding challenges.

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

Trump’s pressure on immigrants

Trump and his campaign have repeatedly linked the nation’s housing problem to immigration; He argued that mass deportations would ease demand for housing, thus making housing more accessible and affordable.

The former president has long focused on undocumented immigrants as a main political issue, but when it comes to housing policy his campaign also pointed fingers at immigrants who are in the country legally. His running mate, Ohio Senator J.D. Vance, blamed Haitian immigrants living in his state for causing the housing problem.

Chris Herbert, general director of the Harvard Joint Center for Housing Research, said in his statement that the culprits for the rising costs are not immigrants, but rising interest rates and the increase in housing demand during the pandemic period.

“Although immigrants increase overall housing demand, they cannot be held responsible for the recent increase in house prices and rents in 2020 and 2021, as immigration reached its lowest levels in recent years due to the pandemic,” Herbert said.

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

“Anything that potentially disrupts the flow of foreign-born labor into our industry would be disruptive. There’s no doubt about it,” 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 housing, so simply evicting immigrants from a home wouldn’t create a true vacancy, nor would it eliminate affordability. dilemma.

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

Harris’ $25,000 down payment plan

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

Claiming that the program will help more than 4 million first-time buyers and cost $100 billion, the campaign says this type of down payment support is not new, noting that as of 2019, almost three-quarters of single-family home loans included a down payment. assistance provided by state housing finance agencies.

Like Trump’s plan, Harris’ proposal may backfire in a way. Economists warn that at a time when the supply of homes for sale is tight in many markets, buyer incentives could negatively affect prices and make homeownership less costly. The impact may depend on the specific market. The impact may depend on the specific market.

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

Still, financial aid would make more sense if the number of homes on the market increased, Fairweather said, because it could reassure homebuilders that “there will be buyers who want to buy” the homes they build.

The federal government offered tax incentives to home buyers in the not-too-distant past. In 2008, as the housing market was reeling from the housing crash and Great Recession, the Obama Administration enacted a tax credit of up to $7,500 for first-time home buyers. Sales were brought forward as buyers benefited from the incentives, but the housing market remained in recession until 2012.

Trump’s campaign promises to make homeownership affordable for “families, young people, and everyone,” but does not offer specifics. He states that the GOP will “support first-time buyers” and claims that it will lower mortgage rates by “lowering” inflation.

However, experts say that Trump’s general economic agenda in his second term will change. worsening inflationWhich Last month it fell to its lowest point in more than three years.

Accepted: zoning and federal lands

A few issues the two candidates agree on include loosening zoning laws and using federal land to build homes.

Trump has promised to fight zoning and other building regulations to speed up housing production, but his platform did not go into specifics.

Harris is proposing a $40 billion fund to encourage local governments, which control zoning laws, to streamline their regulations to shorten the time it takes for builders to clear and complete projects. One caveat: state and local governments need to show that they are building affordable housing.

Both candidates have said, albeit vaguely, that they favor making “limited portions” or “specific” portions of federal land available for home construction.

Harris’ plan points to the Biden administration’s initiative in Las Vegas; where the Bureau of Land Management is selling 20 acres of land at a steep discount for Clark County to build single-family homes that will eventually be sold to those with annual household incomes of up to 200 million. Up to $70,000.

The laws were established more than 20 years ago to allow Nevada officials to purchase federal land at below market rate for affordable housing, said Don Simpson, vice president of the Public Lands Foundation. There are other small parcels near places like Barstow, Calif., and Boise, Idaho, where this could be replicated on a limited basis, Simpson said.

University of Nevada Las Vegas professor Nicholas Irwin said 210 homes would not add much to the estimated shortage of 75,000 units that Southern Nevada needs today.

“We have a lot of shortcomings. “More federal land alone is not going to solve this,” Irwin said.