Harris’ Housing Policy Breakdown

With housing a major issue on voters’ minds and November inching closer, Vice President Kamala Harris detailed her plan to make housing more affordable.

In a speech in Raleigh, NC, on Friday, Harris outlined policies intended to incentivize building and buying homes.

“There’s a serious housing shortage; in many places, it’s too difficult to build and it’s driving prices up,” she said. “As president, I will work in partnership with industry to build the housing we need, both to rent and to buy. We will take down barriers and cut red tape, including at the state and local levels.“

Her plan is largely built around tax incentives, which she will offer to builders who sell starter homes to first-time buyers and take away from investors buying large numbers of single-family rentals.

Harris also championed $25,000 in down payment support for first-time buyers, plus a $10,000 tax credit (which President Joe Biden has proposed as well.)

The plan further supports an expansion of a tax incentive for building affordable rental housing, a new $40 billion innovation fund to spur innovative housing construction, repurposing some federal land for affordable housing, and a ban on algorithm-driven price-setting tools for landlords to set rents.

Analysts are addressing the plan with a certain degree of skepticism. Increasing the housing supply is a great step, they say, but rent caps and tax incentives for homeowners could backfire.

“What I’ve seen is three parts substance and one part symbolism,” Joe Brusuelas, principal and chief economist at RSM US, told CNN. “The substance is increasing or focusing on supply conditions via the financial channel. It’s a good, solid proposal that’s forward-looking and can actually be accomplished. The symbolism is more organized around price caps on rents.”

Rent caps, which Biden has recently called for as well, are much maligned in the industry as a construction-killer.

The Housing Solutions Coalition, an anti-rent control group founded by five industry juggernauts including the National Association of Realtors and the Mortgage Bankers Association, has criticized rent cap comments from the White House in recent months.

“Decades of academic research from across the United States and around the world clearly show that rent caps – more commonly known as rent control – reduce the supply of available housing and fail to target those renters who need help the most while simultaneously harming other residents and the communities they reside in,” the group wrote in a statement.

Tax credits for buyers are also spooking some analysts who worry that incentivizing Americans to jump into the housing market while inventory is still scarce could throw the market into chaos.

“These promises could end up working at cross-purposes. By helping more Americans afford homes, the Harris proposal to subsidize down payments would almost certainly increase demand, at a time when estimates of the U.S. housing shortage already range from 3 million to as high as 7 million,” Christopher Rugaber and Melissa Goldin wrote in a fact check for the AP.

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