America’s gaping shortage of affordable housing has rocketed to the top of voter worry lists and to the forefront of campaign promises, as both the Democratic nominee, Kamala Harris, and the Republican candidate, Donald Trump, promise to fix the problem if they are elected.
Their two visions of how to solve the affordable housing shortage have little in common, and Harris’ plan is far more detailed. But they do share one quality: Both have drawn skepticism from outside economists.
Harris is promising a cocktail of tax cuts meant to spur home construction — which several economists said could help create supply. But she is also floating a $25,000 benefit to help first-time buyers break into the market, which many economists worry could boost demand too much, pushing home prices even higher. And both sets of policies would need to pass in Congress, which would influence their design and feasibility.
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Trump’s plan is garnering even more doubt. He pledges to deport immigrants living in the country illegally, which could cut back temporarily on housing demand but would also most likely cut into the construction workforce and eventually limit new housing supply. His other ideas include lowering interest rates, something that he has no direct control over and that is poised to happen anyway.
Economist misgivings about the housing market policy plans underline a somber reality. Few quick fixes are available for an affordable housing shortfall that has been more than 15 years in the making, one that is being worsened by demographic and societal trends. While ambitious promises may sound good in debates and television ads, actual policy attempts to fix the national housing shortfall are likely to prove messy and slow — even if they are sorely needed.
Here’s what the candidates are proposing, and what experts say about those plans.
Harris: Expand Supply Using Tax Credits
Harris is promising to increase housing supply by expanding the Low-Income Housing Tax Credit, providing incentives for state and local investment in housing and creating a $40 billion tax credit to make affordable projects economically feasible for builders.
The point would be to try to very rapidly encourage a burst of building. Mark Zandi, chief economist at Moody’s, and Jim Parrott, a housing adviser under the Obama administration, are advising the Harris campaign on housing issues. They estimate that the United States has a shortfall of 3 million homes, and Harris is promising to close that gap.
But the policies would need congressional approval, which is not assured. Given that, the plans are “a framework that makes it very clear what they will prioritize,” Parrott said.
Michael Strain, an economist at the conservative American Enterprise Institute, said that “we don’t have tons of details” about Harris’ plans, but that the construction of homes was the right goal. “So much of it depends on how it is implemented,” he said.
Harris: A $25,000 Boost for First-Time Buyers
Supply fixes are not all that Harris has suggested: She is also promising to give $25,000 in assistance to first-time homebuyers. The plan is not a detailed one, and it is not clear yet who would be eligible. Nor is it clear how the help would be structured. It could go to buyers upfront, rather than as a delayed tax credit — but exactly how that would work has yet to be explained.
While voters may embrace the promise of housing help, it is contentious among economists. Many worry that the benefit would simply lead to more competition for an already limited supply of housing, pushing prices up.
“I think it’s a really bad idea,” Strain said. “The ultimate beneficiary of that credit is not going to be first-time homebuyers. It’s going to be people selling homes.”
There is a way around that risk, people close to the campaign insist. They will stagger when the $25,000 is paid out, making sure it hits later than the supply-encouraging policies. That way, more houses will be available, and the down payment assistance will not feed straight into prices.
“Vice President Harris’ plan for homeownership is to vastly increase the supply of affordable starter homes, and then to ensure that hardworking Americans” can buy, said Gene Sperling, a senior economic adviser to the Harris campaign. “Of course, this means sequencing the affordable housing supply increase first.”
But nailing the timing might be tough. What if it takes time to build new homes in Washington, D.C., or Charlotte, North Carolina, but a raft of first-time buyers take advantage of the benefit in those places? It could make for hotter competition for a still limited supply of available homes.
Given that challenge, Zandi said of Harris’ package that he is “least enamored” with the $25,000 in assistance to first-time buyers.
Trump: Deport Immigrants
Trump is promising to lower housing costs by stopping “the unsustainable invasion of illegal aliens which is driving up housing costs,” said Karoline Leavitt, his campaign’s national press secretary.
But even if Trump was able to expel large numbers of immigrants — an open question — that alone would not solve the housing crisis. Daryl Fairweather, the chief economist at Redfin, noted that the acceleration in home prices long preceded the recent increase in the population of immigrants in the country illegally, so mass deportations would not address its root cause.
Fairweather added that it was not clear that mass deportations would even significantly reduce the number of families in need of homes. Immigrants often live with relatives who might not be expelled. More than two-thirds of some 6.3 million households with an immigrant in the country illegally are “mixed status,” meaning they contain U.S.-born or lawful immigrant residents.
Albert Saiz, a professor of urban economics and real estate at the Massachusetts Institute of Technology, said mass deportations might slow the rate that rents were increasing in cities like New York and San Francisco, but he doubted that costs for home sales across the country would decrease.
In fact, the policy could prove counterproductive. Fairweather also noted that 25% of construction workers were foreign-born, so mass deportations may also reduce the labor pool available to build new homes and apartment buildings.
“Immigration is not only a strain on the housing supply, but it can also be a boon to the housing supply,” she said.
Trump: Lower Interest Rates
Trump also promises to fix affordability through lower borrowing costs. He has a “real plan to defeat inflation, bring down mortgage rates,” Leavitt said.
She added that he would “eliminate costly regulations, and free up appropriate portions of federal land for housing,” without providing further details on those ideas.
When it comes to mortgage rates, Trump has little ability to follow through on promises. Mortgage rates tend to track rates on longer-term government bonds, which in turn move in part because of Federal Reserve policy. But the Fed sets policy rates independently from the White House.
Trump harangued the Fed to lower interest rates during his term as president, but Fed officials ignored his regular criticisms. Trump also flirted with firing Fed Chair Jerome Powell, but discovered that it was not clear whether he legally could.
Trump has recently said he does not plan to try to fire Powell if elected — although he made that statement somewhat contingent on Powell’s doing the “right thing.”
Even without presidential intervention, mortgage rates are expected to come down slightly in 2025 and 2026, because the Fed is expected to lower borrowing costs amid cooling inflation. But that would have little to nothing to do with who sits in the White House.
Joseph LaVorgna, chief economist at SMBC Nikko Securities and a former Trump White House economist, said lower rates were “going to help regardless of who is in office.”
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