Americans are facing a housing affordability crisis, driven by low supply and high demand. Sellers are holding onto homes, fearing high mortgage rates, while demand remains strong despite rising prices. Vice President Kamala Harris recently unveiled a plan to address this issue in the hopes of making homes more affordable for buyers. The plan includes down-payment support, tax credits, incentives for builders, and an expansion of tax incentives for affordable rental housing. While economists agree that increasing housing supply will help drive prices down, the proposed rent caps and down-payment support have raised concerns about their effectiveness and potential impact on the market.
Economists have mixed reactions to Harris’ plan, with some praising the focus on increasing supply and others expressing skepticism about the proposed rent caps. While rent increases have been slowing down recently, the 5% rent cap may not be effective in a market where landlords are already offering incentives to attract tenants. Additionally, concerns have been raised about down-payment support potentially stimulating demand and driving up housing costs. Despite the potential challenges, Harris’ plan aims to add 3 million housing units, directly addressing the issue of low inventory that has fueled high prices and worsened affordability across the country.
Support for increasing housing supply through repurposing federal lands and offering tax incentives for builders is a highlight of Harris’ plan that has garnered bipartisan support. Former President Donald Trump and the Republican National Committee have also expressed interest in using federal land for housing construction to help alleviate the housing shortage. However, there are concerns about how these incentives will be targeted and whether they will be effective in actually increasing supply. Tufts University professor of economics Jeffrey Zabel remains cautiously optimistic about Harris’ plan, noting that implementation will be challenging and that more actions are needed to bring housing supply back into balance.
Economists see the focus on increasing supply as a positive aspect of Harris’ plan that could address the root causes of the housing affordability crisis. By adding more homes to the market, inventory will increase, and prices may stabilize or decrease, making homes more accessible to a broader range of buyers. However, concerns remain about the potential impact of rent caps and down-payment support on housing costs and overall market dynamics. The push for supply-side reforms and incentives for builders to construct more housing units has the potential to address longstanding issues related to housing supply shortages and affordability challenges.
In conclusion, housing affordability is a critical issue that is shaping up to be a top priority for voters in the 2024 presidential election. Harris’ plan to address this crisis includes various measures aimed at increasing supply, supporting first-time homebuyers, and providing incentives for builders. While there is bipartisan support for initiatives to repurpose federal lands for housing construction, concerns remain about the effectiveness of rent caps and down-payment support. Economists and experts agree that increasing housing supply is a crucial step in addressing the housing affordability crisis, but the success of Harris’ plan will depend on implementation and the ability to bring housing supply back into equilibrium.
