Ok, let’s have a closer look at the Vice President’s strategy and its potential pitfalls.

For years, housing advocates have been striving to bring the issue of affordable housing into the national spotlight. The urgency of their cause was underscored by the pandemic-induced bidding wars and a subsequent rise in mortgage rates, which finally brought housing to the forefront of the national conversation. This pivotal issue even reached the stage of the Democratic National Convention, where former President Barack Obama, in his speech, highlighted the efforts of Vice President Kamala Harris:

“She knows, for example, that if we want to make it easier for more young people to buy a home, we need to build more units, and clear away some of the outdated laws and regulations that made it harder to build homes for working people in this country. That is a priority, and she’s put out a bold new plan to do just that.”

Housing’s significant presence in Harris’ platform, and its mention in Obama’s speech, was not by accident. The Democratic Party’s internal polling likely indicated that this issue resonates deeply with voters. In the realm of modern political campaigns, every message is meticulously crafted based on data, and Obama’s 23-second focus on housing was no exception. The enthusiastic response from the audience—cheers that nearly drowned out his final words—further emphasized the importance of this issue to the public.

The fact that Democratic leaders are prioritizing housing reflects a serious understanding of the economic dynamics at play. While other speakers at the convention pointed fingers at “corporate greed” as a general problem, Obama took a more nuanced approach when discussing housing. Instead of assigning blame to landlords or corporations, he pointed out the “outdated laws and regulations” that stymie the construction of new homes.

This increased focus on addressing the supply side of the housing affordability crisis is becoming more widespread. For instance, a recent article in The New York Times highlighted the situation in Kalamazoo, Michigan. The city, which a decade ago had an oversupply of homes, now faces a significant housing shortage—a shift that mirrors the broader, costly trends in the national housing market.

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The Federal Limitations on Housing Reform

However, there’s a harsh reality that no president—or vice president—can easily overcome: the federal government’s limited power over the local and state regulations that primarily dictate housing policy. The federal government cannot unilaterally order cities and states to increase housing density, allow for the construction of accessory dwelling units, or simplify the often cumbersome approval processes that can delay or block new developments. It also cannot eliminate exclusionary zoning laws that restrict the types of housing that can be built in certain areas.

Instead, the federal government has historically relied on incentives and legal challenges to influence local housing policies. For example, it has threatened to cut federal funding to counties that refuse to cooperate with housing initiatives, while offering grants to those that do. The Department of Justice has also pursued discrimination cases against localities that engage in exclusionary practices. Despite these efforts, the ongoing housing crisis suggests that these approaches have not been particularly effective.

Kamala Harris’ Housing Strategy: An Examination

So, does Vice President Kamala Harris bring a new approach to the table? To find out, you might try visiting her official website. Unfortunately, you won’t find a detailed policy page outlining her housing strategy. Instead, the site is replete with links soliciting donations. However, a more thorough search leads to a summary of her housing plan on the Committee for a Responsible Federal Budget’s website. Below is a breakdown of the key components of Harris’ plan and an analysis of their potential effectiveness.

1. Creating a Tax Incentive to Build Starter Homes

Harris proposes a tax incentive aimed at spurring the construction of starter homes, particularly in areas where land costs make such projects unprofitable. This initiative could potentially address some of the housing shortages, particularly in high-demand areas where developers might otherwise shy away from building affordable housing due to slim profit margins.

2. Expanding the Low-Income Housing Tax Credit

Another component of Harris’ plan involves expanding the Low-Income Housing Tax Credit (LIHTC), which has historically played a crucial role in increasing the availability of affordable rental housing. The expansion of this program is likely to yield predictable results, as developers are already familiar with it, thus avoiding the pitfalls of implementing an entirely new initiative. However, this expansion would still require Congressional approval to secure the necessary funding.

3. Launching a $40 Billion Fund for Innovative Housing Solutions

Harris also proposes the creation of a $40 billion fund designed to spur innovative housing construction. The fund aims to “empower local governments to fund local solutions to build housing,” support “innovative methods of construction financing,” and “empower developers and homebuilders to design and build affordable rental and housing solutions.” However, the effectiveness of this initiative is questionable, particularly in localities that are resistant to new housing developments. Additionally, the second and third components of this proposal are vague, making it difficult to assess their potential impact. Securing $40 billion from Congress for this fund could also prove to be a significant challenge.

4. Repurposing Federal Land for Affordable Housing

Repurposing federal land for affordable housing is another idea on Harris’ agenda. This approach could be plausible, as acquiring land at low or no cost could make it feasible to build affordable housing. However, the success of this initiative would largely depend on the location of the federal land in question. If the land is situated far from job centers, the resulting housing might not effectively address the needs of those who require affordable living options near employment opportunities.

5. Cutting Red Tape and Bureaucracy

Harris’ plan also includes measures to “cut red tape and needless bureaucracy,” such as streamlining permitting processes and reviews for transit-oriented development and the conversion of existing structures into housing. While this idea has merit, it’s important to note that these are largely local issues. Without a clear mechanism for federal intervention, it’s unclear how Harris plans to implement these changes on a national scale. She does claim that her plan will build on existing efforts that have proven successful, though details on how this would be achieved are scarce.

6. Providing $25,000 Toward Down Payments for First-Time Homebuyers

One of the more direct proposals in Harris’ plan is to provide $25,000 toward down payments for first-time homebuyers. Since many renters struggle to save enough for a down payment, this initiative could significantly expand the pool of potential homebuyers. However, this increase in demand could also lead to higher home prices, as more buyers enter the market. On the plus side, the heightened demand could incentivize developers to build more starter homes. The $25,000 figure is an average, meaning that some buyers would receive more assistance while others would receive less.

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The Challenges and Criticisms

Beyond these specific initiatives, Harris has expressed support for two additional measures: banning the algorithms that landlords use to set rents and stopping Wall Street investors from buying and marking up homes in bulk. The former is a complex issue that warrants further analysis, while the latter has been criticized as populist rhetoric. Housing commentator Jay Parsons, among others, has argued that such measures could have unintended consequences, such as raising management costs and resulting in higher rents.

On the other side of the political spectrum, Donald Trump’s platform makes no mention of housing. However, the GOP agenda does propose several initiatives aimed at reducing housing costs, such as slashing inflation, opening limited portions of federal land for new home construction, promoting homeownership through tax incentives, and cutting unnecessary regulations. While these proposals sound similar to Harris’ plan, they would likely face the same challenges in implementation. It’s also worth noting that Trump has previously supported efforts to prevent multifamily development in suburbs, a stance that contributes to the high cost of housing in these areas.

Conclusion: A Plan with Promise and Pitfalls

Kamala Harris’ housing plan is undoubtedly ambitious and addresses many of the critical issues facing the U.S. housing market today. However, the plan is not without its challenges. The federal government’s limited ability to directly influence local and state housing regulations, the need for Congressional approval for funding, and the potential unintended consequences of some proposals all present significant hurdles.

While Harris’ plan has the potential to make a positive impact on housing affordability, much will depend on the details of implementation and the political will to push these initiatives through. Whether her vision will ultimately become a reality or remain a well-intentioned fantasy is yet to be seen.

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