{"id":6770,"date":"2024-10-27T12:34:07","date_gmt":"2024-10-27T12:34:07","guid":{"rendered":"https:\/\/finderica.com\/can-kamala-harris-really-add-new-housing-make-it-cheaper\/"},"modified":"2024-10-27T12:34:07","modified_gmt":"2024-10-27T12:34:07","slug":"can-kamala-harris-really-add-new-housing-make-it-cheaper","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6770","title":{"rendered":"Can Kamala Harris Really Add New Housing, Make It Cheaper?"},"content":{"rendered":"
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Vice President <\/span>Kamala Harris<\/span> is pledging to increase the housing supply and make it more affordable, especially for first-time home buyers. <\/span><\/p>\n<\/div>\n

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She\u2019s preaching to the choir of voters who rank housing affordability as a top-three issue in the election \u2014 about 25%, according to the results of a survey by Ipsos and Redfin, released on Oct. 15. Unsurprisingly, more <\/span>renters<\/span> (31.6%) rank housing affordability as a priority issue compared to already existing homeowners (17.1%). <\/span><\/p>\n<\/div>\n

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The current housing affordability crisis is the result of the construction industry\u2019s sluggish return to form following the 2007-2008 housing collapse and the basic laws of supply and demand. As is, there isn\u2019t enough housing available for the number of buyers: The housing deficit grew to 4.5 million in 2022 up from 4.3 million in 2021, according to Zillow, a real estate website. <\/span><\/p>\n<\/div>\n

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Housing shortages push up prices and keep them high. When a lack of available housing is combined with years of persistently elevated mortgage rates, it becomes even harder for would-be first-time homebuyers to break into the market.<\/span><\/p>\n<\/div>\n

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Then, as fewer people trade renting for home ownership, it puts pressure on the rental market, keeping those <\/span>prices high<\/span>, too. As a result, shelter, which includes both home buying and renting, has remained the greatest factor in core inflation growth for years. <\/span><\/p>\n<\/div>\n

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The only way to effectively combat a lack of affordable homes is by building more housing. Harris\u2019 housing plans are ambitious \u2014 and possibly unrealistic, experts say.<\/span><\/p>\n<\/div>\n

Build new housing <\/span><\/h2>\n
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Harris has outlined policies aimed at creating 3 million new housing units over the next four years \u2014 a 50% increase over the current rate of home building, according to the nonprofit Urban Institute. <\/span><\/p>\n<\/div>\n

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In an Aug. 21 Washington Post editorial, Mark Zandi, chief economist of Moody\u2019s Analytics, and Jim Parrott, a housing expert at the Urban Institute, called her plans \u201cthe most aggressive supply-side push since the national investment in housing that followed World War II.\u201d<\/span><\/p>\n<\/div>\n

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To achieve her end goal, Harris wants to provide several <\/span>tax incentives<\/span> to kickstart construction:<\/span><\/p>\n<\/div>\n

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    A new Neighborhood Homes Tax Credit to construct or rehabilitate 400,000 homes in lower income communities. The homes must be owner-occupied. The incentive would operate similarly to the Low Income Housing Tax Credit (LIHTC) in that states would receive an allocation of credits for specific projects based on local need.\u00a0\u00a0<\/span><\/p>\n<\/div>\n<\/li>\n

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    A tax cut for builders that construct affordable starter homes.\u00a0<\/span><\/p>\n<\/div>\n<\/li>\n

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    A $40 billion innovation fund to incentivize state and local governments, as well as private developers and homebuilders, to find new strategies to expand the housing supply, primarily through regulatory reform and cutting red tape.\u00a0<\/span><\/p>\n<\/div>\n<\/li>\n

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    Open up certain federal lands for new housing developments. Her campaign has not specified which federal lands.<\/span><\/p>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n

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    An analysis of Harris\u2019 proposal by the Urban Institute says Harris\u2019 plans to increase new housing are not out of line with historic standards. But 50% growth is still a daunting task, and would rely on a number of factors outside a president\u2019s direct control. \u201cWhat she’s proposed will probably only go sort of halfway or part of the way in achieving that, because achieving a 50% increase in housing production is gigantic,\u201d says Yonah Freemark, a principal research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute and the research director of the Land Use Lab at Urban. <\/span><\/p>\n<\/div>\n

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    Other observers see the 50% target as unrealistic. \u201cFor anyone who has any knowledge of commercial real estate and the housing industry, that seems like an unachievable number,\u201d says Brian Connolly, assistant professor of business law at the University of Michigan. \u201cBut good for her for trying to get there.\u201d<\/span><\/p>\n<\/div>\n

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    \u201c<\/span>What she’s proposed will probably only go sort of halfway or part of the way in achieving that, because achieving a 50% increase in housing production is gigantic.<\/span><\/span>\u201d<\/span><\/span><\/p><\/blockquote>\n

    Yonah Freemark<\/span>, research associate, Urban Institute<\/span><\/span><\/div>\n<\/div>\n

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    However, her proposals could help spur more construction even if they don’t reach the target, says Connolly. He adds that if the government supports homebuilding through new tax incentives that make it more profitable to build new housing and attract skilled labor, then it could make a meaningful impact on the housing supply. <\/span><\/p>\n<\/div>\n

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    Harris would need Congress to enact much of what she pledges to do. Of the innovation fund, for example, Connolly says, \u201cShe couldn’t just sort of pluck $40 billion out of thin air to deliver to the local government; that would be something that would presumably require congressional authorization.\u201d<\/span><\/p>\n<\/div>\n

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    What there is bipartisan appetite in Congress for, says Freemark, is reducing regulatory restraints on construction. He says there may also be support for expanding the Low Income Housing Tax Credit, which goes toward acquiring, rehabilitating or constructing rental housing for lower-income households. The Democratic National Committee includes expanding LIHTC in its platform.<\/span><\/p>\n<\/div>\n

    Make home buying more affordable <\/span><\/h2>\n
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    A cornerstone of Harris\u2019 housing plans aims to make home ownership \u2014 the most traditional vehicle for wealth-building in America \u2014 more accessible to first-time buyers. She pledges to provide up to $25,000 in down payment assistance for first-time home buyers and an unspecified, greater amount of assistance for first-generation homebuyers. <\/span><\/p>\n<\/div>\n

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    Starter-home buyers could use the help since those homes are much more expensive than they were before the pandemic \u2014 51.1% higher than August 2019, according to a Redfin report released on Sept. 30. But there is one recent positive sign for buyers: Starter homes are less expensive now than a year ago for the first time since August 2020. Homebuyers currently need to earn $76,995 annually to afford a home at the median price of $250,000. <\/span><\/p>\n<\/div>\n

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    There are already places in the U.S. that provide down payment assistance, so Harris\u2019 proposal isn\u2019t new per se, but its size and scope is, says Freemark. \u201cI think that it has the potential to be quite impactful in terms of expanding access to home-purchasing for a large segment of the population that currently, simply, doesn’t have the ability to assemble enough funds,\u201d he adds. <\/span><\/p>\n<\/div>\n

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    But when it comes to how assistance is delivered, the devil is in the details. \u201cIt will take a lot of thought and, potentially, some experimentation on the part of agencies and others that would be implementing this strategy,\u201d Freemark adds. \u201cAlso, this is a potentially very expensive program, so I’m not sure I’ve heard broad enough support in Congress.\u201d <\/span><\/p>\n<\/div>\n

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    It\u2019s much easier to increase demand than it is to increase supply, says Ed Pinto, a senior fellow and co-director of the AEI Housing Center at the American Enterprise Institute, a conservative think tank, and Harris\u2019 down payment assistance plan would serve to add buyers to what is now a strong seller’s market. \u201cUnless that were to change, any efforts along the lines of demand increases would lead to substantial increases in prices,\u201d says Pinto.<\/span><\/p>\n<\/div>\n

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    Connolly agrees. \u201cIf we’re not building those housing units and we’re providing people with $25,000 in credits to go out and buy within a stock of housing that is not sufficient, that’s going to result in bidding up housing prices,\u201d he says.<\/span><\/p>\n<\/div>\n

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    Still, providing credits to first-time homebuyers could be something that both sides of the aisle support, says Connolly. \u201cI tend to be a little more of an optimist about the bipartisan nature of this problem,\u201d he says.<\/span><\/p>\n<\/div>\n

    Make rent more affordable <\/span><\/h2>\n
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    About two-thirds of all homes are owned by the people who live in them, according to the U.S. Census Bureau. The other third are occupied by renters and Harris has plans to make their lives less expensive, too. The natural outcome to her plan to make home ownership more accessible would be freed-up rental housing. But she also wants to target corporate landlords in two ways: <\/span><\/p>\n<\/div>\n

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