By Lisa Sturtevant, PhD
Chief Economist, Bright MLS
This year, housing has taken on a more prominent role than it typically does during a Presidential election cycle. Persistently high mortgage rates, chronically tight inventory, and record low affordability have become key issues across demographic groups, particularly younger voters. Each of the Presidential candidates has offered commentary—and in some cases full-blown policy initiatives—designed to tackle the growing housing affordability challenge.
With the election just days away, does one candidate offer a better way forward on housing issues than the other? Let’s take a quick look at their positions on housing issues.
The Harris Approach
Harris has released a detailed plan that addresses housing from a number of different angles. Harris’s approach generally makes use of federal tax policies to expand housing supply.
- Harris has pledged to work with the private sector to facilitate the construction of 3 million new homes by the end of her first term. She has proposed a combination of new tax incentives for starter homes, an expansion of the existing federal tax program that supports the construction of affordable rental homes, and incentivizing local governments to streamline permitting and review processes.
- The Vice President has set her sights on corporate landlords by ending tax benefits for investors who acquire significant numbers of single-family homes for the purpose of renting them out. She has also proposed targeting companies that develop rent-setting tools that her campaign has said contribute to surging rents.
- Harris has also proposed offering up to $25,000 in federal down-payment assistance for first-time and first-generation homebuyers.
The Trump Approach
While former President Donald Trump has not offered up a detailed housing plan, he has spoken frequently about housing-related issues on the campaign trail.
- Trump has offered that his administration will make homebuying more affordable by reducing mortgage rates by bringing inflation down and by putting pressure on the Federal Reserve to cut interest rates further.
- The former President has proposed opening up federal land for the development of new housing, along with unspecified incentives for both homebuilders and homebuyers.
- In addition, Trump has argued that rising immigration is a key driver of the housing affordability crisis and has said his administration would deport millions of immigrants currently living in the U.S.
Assessing the Candidates’ Housing Plans
Harris’s plan to incentivize more new construction through federal tax policy is definitely an important step, though the goal of 3 million new homes in four years seems lofty. The Harris plan to expand federal down-payment assistance, while well-intentioned, could exacerbate housing challenges as it would bring more people into the for-sale market while inventory remains low.
The proposals out of the Trump campaign are generally not well-designed to address housing affordability. The President has historically had little influence over mortgage rates, which are influenced by overall economic and market conditions. Trump’s rhetoric around deporting immigrants is a dog whistle for other constituents he is trying to reach and, in fact, would further constrict the housing supply by reducing the construction labor force in the country.
The Bottom Line
While it is encouraging that housing is part of the national dialogue during this election year, the truth is that the Federal government has limited ability to affect housing costs. The current housing affordability crisis is being driven primarily by a lack of supply and the vast majority of decisions about where and how much housing gets built are made at the local level. The biggest impact on housing supply and housing affordability would come if local governments reduced approval and permitting processes, made changes to zoning to allow more housing construction, and supported lower-income residents’ access to housing.
