Housing on the ballot: Harris, Trump push different plans for tackling housing affordability crisis

Millions of Americans can’t afford to buy a home or rent a suitable apartment, making housing a central issue for voters in the upcoming presidential election.

The biggest single reason homeownership is out of reach for many is there aren’t nearly enough homes for sale to balance out the market between buyers and sellers.

The shortfall, which some economists say ranges from 1 million to around 4 million homes, has for the better part of the last decade fueled bidding wars that boosted the median sales price of a previously occupied U.S. home to an all-time high of $426,900 in June — even as home sales have been in a deep slump for more than two years.

Higher mortgage rates have also kept many home shoppers on the sidelines. The average rate on a 30-year mortgage rose to a 23-year high of nearly 8% late last year, and now sits at 6.44%.

Renters haven't had it any easier. While the median U.S. asking rent has been easing for more than a year following a wave of new apartment construction, it remains roughly 20% higher than it was before the pandemic.

Against this backdrop, Vice President Kamala Harris and former President Donald Trump have put out proposals that they contend 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 both for homebuyers and renters that includes offering first-time homebuyers up to $25,000 in down payment assistance and tax incentives for builders and federal funds for cities to speed up construction. She claims her plan will add 3 million new housing units over the next four years.

Trump says he will create tax incentives for homebuyers, cut “unnecessary” regulations on home construction and make some federal land available for residential construction, though the campaign's platform doesn't include any details. Trump also claims that he will lower housing costs by reducing inflation and stopping illegal immigration.

Setting aside 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 campaigns’ platforms offer some good ideas, but no sure fixes to the housing market’s longstanding challenges.

Here’s a look at some of the candidates' key ideas:

Trump and his campaign have repeatedly tied the nation’s housing woes to immigration, suggesting mass deportations will ease the demand for homes, thus 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 fingers at immigrants who are legally in the country too. His running mate, the Ohio Senator JD Vance, has blamed Haitian immigrants living in his home state for causing a housing problem.

Chris Herbert, managing director of 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 rising costs —– not immigrants.

“While immigrants do add to overall housing demand, they cannot be blamed for the recent surge in home prices and rents that took off in 2020 and 2021, as immigration reached its lowest levels in decades due to the pandemic,” Herbert said.

Jim Tobin, CEO of the National Association of Home Builders, said mass deportations could make the supply problem worse because one-third of the homebuilding industry's labor force is foreign born.

“Anything that potentially disrupts the inflow of foreign-born labor 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 the eviction of only immigrants in a home wouldn’t create an actual vacancy, nor does it address the affordability dilemma.

“The most pressing part is wages and incomes aren’t high enough to cover rental costs and that doesn’t really have anything to do with undocumented people,” Saadian said.

Harris aims to directly aid home shoppers by providing 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 that such down-payment assistance is not new, noting that as of 2019 nearly three-quarters of single-family mortgages included down payment aid provided by state housing finance agencies.

Like Trump’s plan, Harris’ proposal could backfire in a way. Economists warn that introducing a buyer incentive when the supply of homes for sale remains tight in many markets could juice prices, making homeownership less affordable. The impact could depend on the particular market. The impact could depend on the particular market.

“In Los Angeles, $25,000 down payment assistance is not enough, but it is enough in Detroit,” said Daryl Fairweather, chief economist at Redfin.

Still, if the number of homes on the market grows, the financial assistance makes more sense, because it can reassure homebuilders that “there will be buyers willing 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 enacted a first-time homebuyer tax credit of up to $,7,500 as the housing market reeled from a housing crash and the Great Recession. It pulled forward sales as buyers seized on the incentive, but the housing market remained in a slump until 2012.

The Trump campaign promises to make homeownership affordable for “families, young people, and everyone,” but doesn’t offer specifics. It mentions that the GOP will “support first-time buyers” and claims it will reduce mortgage rates by “slashing” inflation.

However, experts say Trump’s overall economic agenda in a second term would worsen inflation, which fell last month to its lowest point in more than three years.

Among the few things the two candidates do agree on: easing up on zoning laws and using federal lands to build homes.

Trump has pledged to tackle zoning and other construction regulations in order to accelerate housing production, though his platform doesn’t go into details.

Harris is proposing a $40 billion fund to spur local governments, which control zoning laws, to streamline their regulations in order to cut down on the time it takes for builders to get projects cleared and completed. One caveat: state and local governments have to show that they’re building housing that is affordable.

Both candidates have also said, however vaguely, that they’re in favor of making “limited portions” of or “certain” federal land available for home construction.

Harris’ plan points to the Biden administration’s initiative in Las Vegas, where the Bureau of Land Management sold off 20 acres at a steep discount for Clark County to build single-family homes that will eventually be sold to those with an annual household income of up to $70,000.

Don Simpson, the vice president of the Public Lands Foundation, said the laws were set more than 20 years ago to give Nevada authorities the ability to buy federal land at below market rate for affordable housing. Simpson said there are other small parcels near places like Barstow, California, and Boise, Idaho where this could be replicated on a limited basis.

Nicholas Irwin, a University of Nevada Las Vegas professor, said the 210 homes will hardly make a dent in the estimated 75,000-unit shortage that Southern Nevada needs today.

“We’re short by a lot. More federal land alone isn’t going to solve this,” Irwin said.