VP Harris’s Plan for Giving Homebuyers $25,000
VP Kamala Harris recently recently announced her plan for helping solve our country’s current housing affordability problem.
My emails and articles aren’t normally political, but this topic does give me a chance to share a bit about how the housing market works and the impact who we vote for can have on the housing market (historically the election season has little-to-no immediate impact on the housing market).
VP Harris’s plan includes*:
Federal assistance for first-time homebuyers. The Harris campaign says its plan would allow “over 4 million first time-buyers over 4 years to get significant down payment assistance on average of $25,000.”
Creating a tax incentive to encourage builders to build starter homes. It would “complement” the Neighborhood Homes Tax Credit, the Harris campaign says.
An expansion of existing tax incentives “for builders that build rental housing that is affordable.”
Push homebuilders to deliver 3 million new housing units over the next four and a half years.
Creating a $40 billion innovation fund that would “empower local governments to fund local solutions to build housing.”
To the degree a plan like this is an extension of Harris’s desire to provide dignifying housing at affordable price for hardworking people, I applaud the intent.
Unfortunately, the real estate minds I follow online are left scratching their heads as to how exactly a plan like this can actually be implemented and if the negatives will ultimately outweigh any positives.
At its core, the plan appears to increase demand BEFORE it has time to increase supply.
Questions to Consider:
If over 1 million first-time buyers per year are offered $25,000, how will this not result in bidding wars between those buyers - all competing over the existing limited number of available homes, thus rapidly driving up home prices yet again?
Who is eligible to receive this $25,000 and how does it differ from the currently available programs designed to help first time home buyers?
If builders are expected to build 3,000,000 additional homes over the next four-and-a-half years, is the time needed for construction properly taken into account - especially knowing that builders haven’t built homes in that quantity at that speed for a sustained period…ever.
What if the construction of these 3,000,000 additional units puts a strain on the supply chain or other factors cause limited supply of materials or labor, again driving up construction prices for the builders? What adjustments will need to be made?
More reading:
Fast Company - Lance Lambert reporting
Real Estate News - AJ LaTrace reporting
White House Fact Sheet
Note: Trump’s campaign hasn’t released a detailed policy plan to address housing affordability that I can find. Should they release one, I’ll plan to review it in an upcoming email and article as well.
*as reported by Lance Lambert of ResiClub and Jeff Stein of the Washington Post
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Kevin
