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 are not nearly enough homes for sale to balance the market between buyers and sellers.
The shortage, 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 sales price of a previously occupied U.S. home to a record high of $426,900. June – even if Home sales have been in a deep recession for more than two years.
Higher mortgage rates have also kept many home buyers on the sidelines. The average interest rate on a 30-year mortgage rose to a 23-year high at the end of last year, at almost 8%. now stands at 6.44%.
Tenants haven’t had it easier. Although the average rent in the US has been falling for more than a year after a wave of new apartment construction, it remains about 20% higher than before the pandemic.
Against this backdrop, Vice President Kamala Harris and former President Donald Trump have made proposals that they claim will make the American Dream accessible to more Americans.
Harris’ campaign has laid out a detailed roadmap of policies aimed at expanding access to affordable housing for both homebuyers and renters, including offering up to $25,000 down payment to first-time homebuyers, tax breaks for builders and federal funds for cities to to increase the speed. build. She claims her plan will add three million new homes over the next four years.
Trump says he will create tax incentives for homebuyers, eliminate “unnecessary” regulations on housing construction and make some federal land available for housing development, although the campaign platform provides no details. 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 next president may not have, economists say the campaign platforms offer some good ideas but no sure solutions for the long-standing housing market. challenges.
Here are some of the candidates’ main ideas:
Trump and his campaign have repeatedly linked the nation’s housing problems to immigration, suggesting that mass deportations will reduce demand for housing, making housing more available and affordable.
The former president has long focused broadly on undocumented immigrants as a core political issue, but when it comes to housing policy, his campaign has also pointed the finger at immigrants who are also in the country legally. His running mate, Ohio Sen. J.D. Vance, has blamed Haitian immigrants living in his home state for causing a housing problem.
Chris Herbert, managing director of the Harvard Joint Center for Housing Studies, said in a statement that rising interest rates and the pandemic-era spike in housing demand are to blame for the rising costs — not immigrants.
“While immigrants contribute to overall housing demand, they cannot be blamed for the recent increase in housing prices and rents that took off in 2020 and 2021, when immigration reached its lowest level in decades due to the pandemic ,” said Herbert.
Jim Tobin, CEO of the National Association of Home Builders, said mass deportations could worsen the supply problem because a third of the homebuilding industry’s workforce is foreign-born.
“Anything that potentially disrupts the flow of foreign-born workers into our industry would be disruptive. No doubt about it,” Tobin said.
Sarah Saadian, senior vice president of public policy at the National Low Income Housing Coalition, said undocumented people tend to live in overcrowded units, so evicting only immigrants into a home would not create actual vacancy, nor would to address affordability. dilemma.
“The most pressing thing is that wages and incomes are not high enough to cover rental costs, and that actually has nothing to do with undocumented people,” Saadian said.
Harris aims to directly help home buyers 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 a down payment. assistance provided by government housing finance agencies.
Like Trump’s plan, Harris’s 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 depress prices, making home ownership less affordable. The impact may depend on the specific market. The impact may depend on the specific market.
“In Los Angeles, a $25,000 down payment isn’t enough, but in Detroit it is enough,” said Daryl Fairweather, chief economist at Redfin.
But as the number of homes on the market grows, financial support makes more sense because it can reassure homebuilders that “there will be buyers who want 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 introduced a tax credit for new homebuyers of up to $7,500 as the housing market reeled from the housing crisis and the Great Recession. It lifted sales as buyers seized the stimulus, but the housing market remained in a slump until 2012.
The Trump campaign promises to make homeownership affordable for “families, youth and everyone,” but offered no details. It states that the Republican Party will “support first-time buyers” and claims that it will lower mortgage rates by “lowering” inflation.
However, experts say Trump’s overall economic agenda in a second term would worsen inflationwhich one fell to its lowest point in more than three years last month.
One of the few things the two candidates agree on: relaxing zoning laws and using federal lands to build homes.
Trump has pledged to tackle zoning and other building codes to speed up housing production, though his platform did not go into details.
Harris is proposing a $40 billion fund to encourage local governments, which control zoning laws, to streamline their regulations so that builders can take less time to get projects cleared 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 support making “limited portions” of or “certain” federal land available for housing development.
Harris’ plan references the Biden administration’s initiative in Las Vegas, where the Bureau of Land Management sold 50 acres at a steep discount to Clark County to build single-family homes that will eventually be sold to people with annual household incomes of up to up to $70,000.
Don Simpson, the vice president of the Public Lands Foundation, said the laws were enacted more than two decades ago to allow Nevada authorities to purchase federal land below market price for affordable housing. Simpson said there are other small plots near places like Barstow, California 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 barely make a dent in the estimated 75,000-unit shortage Southern Nevada needs today.
“We are lacking a lot. More federal land alone will not solve this,” Irwin said.
