5 ways Harris’ housing policy could impact middle-class homebuyers

The nation’s affordable housing crisis was one of the main issues that took center stage in the first presidential debate between Vice President Kamala Harris, the Democratic nominee, and former President Donald Trump, the Republican nominee.

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“We know we have a housing shortage and housing costs are too high for too many people,” Harris said during the debate.

Last month, the vice president announced a series of proposals aimed at addressing the affordable housing crisis.

Specifically, Harris has stated that she wants to build 3 million new housing units, provide $25,000 down payment assistance to help first-time homebuyers, and increase capital rent by 5% annually.

The GOBankingRates project examined five ways Harris’ home policy could impact middle-class homebuyers.

Increasing the supply of housing

Wayne Winegarden, an economist at the Pacific Research Institute, said housing affordability problems have arisen because demand for homes exceeds the amount available.

“Supply shortages persist because it is too difficult, expensive and time-consuming for builders to build new homes,” Winegarden said. “The result is rising prices and falling affordability.”

Harris supported efforts to increase the supply of affordable housing through investment in construction and renovation. While serving as vice president, Harris supported initiatives that encouraged developers to build affordable housing by providing them with tax breaks.

Harris also supported changes to local zoning laws to allow for the construction of more affordable multifamily homes, making it easier for cities to build more homes.

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Provide rent relief

The Biden-Harris administration has provided more than $46 billion during the pandemic to eligible renters facing eviction.

Harris and Republican vice presidential candidate J.D. Vance noted that many middle-class people have difficulty finding affordable housing because large investment firms are buying homes in bulk and driving up prices.

Large investment companies own about 3% of single-family homes, which they then rent. According to USA Today, that number may be higher in some cities, making it more difficult for first-time homebuyers to find affordable housing.

Harris will also continue a Biden-era initiative to limit rent increases to 5% to alleviate the housing crisis.

Alec Mena is a state government associate at Citizens Against Government Waste, a nonprofit organization and advocacy group.

In an editorial for The Hill, Mena stated: “The Biden-Harris plan would eliminate depreciation deductions for landlords renting 50 or more apartments unless they agree not to increase rent by more than 5% annually for two years. The proposal would apply to existing units and would include an exemption for new units as well as those undergoing “significant renovation or renovation.”

Essentially, Harris’ proposal means the middle class could face higher rents and fewer rental homes will be available because landlords will have to pay higher taxes. Investors would be discouraged from purchasing property to compensate for the loss of the tax loophole.

Create housing resistant to climatic conditions

Harris linked affordable housing to climate change action.

For example, the Biden-Harris administration announced earlier this month that it would award $69.1 million to properties in 10 states to “support significant energy efficiency and climate resiliency renovations to nearly 2,000 homes.”

According to a press release from the U.S. Department of Housing and Urban Development, the grants are intended to “generate renewable energy, lower housing operating costs, promote the use of green building materials, and improve residents’ quality of life by making their homes more resilient to climate hazards.”

Increase demand for housing

The most controversial element of Harris’ housing plan is providing first-time homebuyers with a $25,000 down payment allowance.

“All of Harris’s policies encourage more demand, but it is ineffective to encourage more demand when supply growth is limited,” Winegarden said. “For example, providing 3 million families with $25,000 increases demand.

“Encouraging more demand at a time of stagnant supply will encourage more bidding wars. As a result, housing will be more expensive, not cheaper.”

Create potential barriers to affordable housing

Winegarden recommended that Harris and other policymakers at the national, state and local levels eliminate “overly restrictive” zoning regulations and “time-consuming and costly permitting processes.”

“There are also federal regulations that hurt supply growth, such as tighter energy regulations supported by the Inflation Control Act or vagaries around the federal water bill,” he said. “Reforming these laws (would help) increase housing supply, which (would) promote greater affordability and greater opportunities for homeownership.”

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