The escalating housing crisis in the United States has taken center stage in the 2024 presidential election, with both major contenders, Vice President Kamala Harris and former President Donald Trump, outlining their distinct approaches to addressing this pressing issue. For millions of Americans, the dream of homeownership remains elusive, while renting a decent apartment has become increasingly unaffordable. This dire situation stems from a critical shortage of homes for sale, which has fueled bidding wars and pushed the median price of a previously owned home to a record high of $426,900 in June, even as home sales have plummeted for over two years. The burden is compounded by high mortgage rates, which reached a 23-year peak late last year and currently stand at 6.44%. Renters are not spared either, with rental prices, although easing slightly over the past year due to increased apartment construction, still hovering about 20% higher than pre-pandemic levels.
Contrasting Visions: Harris vs. Trump
In this challenging landscape, Harris and Trump have proposed housing policies that they believe will make homeownership more attainable. Harris’s plan emphasizes expanding access to affordable housing, offering first-time homebuyers up to $25,000 in down payment assistance, providing tax incentives for builders, and allocating federal funds to expedite construction. She projects that her policies will generate 3 million new homes over a four-year period. Trump’s approach, on the other hand, hinges on tax incentives for homebuyers, streamlining construction regulations, and making some federal land available for housing development. However, his plan lacks specific details. He also asserts that by curbing inflation and illegal immigration, housing costs will decrease.
The Immigration Debate: A Contentious Factor
Trump’s campaign frequently links the housing shortage to immigration, arguing that deporting immigrants would reduce housing demand and make homes more affordable. His running mate, JD Vance, has even gone so far as to blame Haitian immigrants in Ohio for contributing to the state’s housing issues. However, experts vehemently disagree. Chris Herbert, managing director of Harvard Joint Center for Housing Studies, attributes the soaring housing costs to rising interest rates and increased demand during the pandemic, not immigration. He emphasizes that while immigrants do contribute to overall housing demand, they cannot be blamed for the surge in home prices and rents witnessed in 2020 and 2021, as immigration reached its lowest levels in decades due to the pandemic.
Jim Tobin, CEO of the National Association of Home Builders, warns that deportations could exacerbate the housing shortage, as one-third of the homebuilding workforce is foreign-born. Sarah Saadian, senior vice president of public policy at the National Low Income Housing Coalition, adds that evicting undocumented immigrants would not free up housing units, as they tend to reside in overcrowded conditions. She underscores that the primary issue is the disparity between wages and rental costs, which is not directly linked to undocumented individuals.
Harris’s Down Payment Assistance: A Potential Boon or Bust?
Harris’s proposal to offer first-time homebuyers up to $25,000 in down payment assistance aims to assist over 4 million people with a $100 billion investment. This type of assistance is not novel, as nearly three-quarters of single-family mortgages in 2019 included down payment aid from state housing finance agencies. However, economists caution that this buyer incentive could also drive up home prices in areas with limited housing supply. The effect would vary depending on the specific market. Daryl Fairweather, chief economist at Redfin, notes that while $25,000 down payment assistance may not be sufficient in Los Angeles, it could be meaningful in Detroit. Fairweather argues that if the number of homes available for sale increases, this financial assistance becomes more rational, as it can reassure homebuilders that there will be buyers for the homes they construct.
The federal government has previously offered homebuyer tax incentives. In 2008, the Obama administration introduced a first-time homebuyer tax credit of up to $7,500 during the Great Recession. While this spurred some sales, the market remained sluggish until 2012.
Trump’s Promises: Vague and Potentially Counterproductive
Trump’s campaign pledges to make homeownership more affordable for everyone but offers few specifics. The plan mentions supporting first-time buyers and lowering mortgage rates by addressing inflation. However, experts argue that Trump’s broader economic agenda would likely exacerbate inflation, which recently reached its lowest level in over three years.
Zoning and Federal Lands: A Shared Goal
Both candidates recognize the need to relax zoning laws and make some federal land available for housing construction. Trump’s plan lacks details, whereas Harris proposes a $40 billion fund to encourage local governments to streamline zoning regulations, provided they demonstrate their commitment to building affordable housing. Both candidates have also suggested making portions of federal land available for housing. Harris points to an initiative in Las Vegas, where the Bureau of Land Management sold 20 acres at a discounted price for Clark County to build single-family homes for households earning up to $70,000 annually. However, Don Simpson, the vice president of the Public Lands Foundation, cautions that similar arrangements could only be replicated on a limited basis in small areas near Barstow, California, and Boise, Idaho.
Nicholas Irwin, a professor at the University of Nevada Las Vegas, adds that the 210 homes being built in Las Vegas would barely make a dent in the 75,000-unit shortfall in Southern Nevada. He emphasizes that more federal land alone will not solve the problem, as the shortage is vast.
The upcoming presidential election will undoubtedly be a critical test for the nation’s housing policy. While the candidates offer some promising ideas, their plans may not provide complete solutions to the complex and multifaceted housing crisis. The ability to effectively implement these ideas hinges on gaining support from Congress. The challenge lies in finding a sustainable path forward that tackles affordability issues and ensures a secure future for Americans seeking a place to call home.