Higher mortgage rates have also kept many home shoppers on the sidelines. The average rate on a 30-year mortgage rose to a 23-year high of nearly 8 percent late last year, and now sits at 6.44 percent.
Renters haven’t had it any easier. While the median US asking rent has been easing for more than a year following a wave of new apartment construction, it remains roughly 20 percent higher than it was before the pandemic.
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Against this backdrop, Vice President Kamala Harris and former president Donald Trump have put out proposals that they contend will make the American Dream accessible to more Americans.
Harris’s campaign has laid out a detailed road map of policies aimed at expanding access to affordable housing both for homebuyers and renters that includes offering first-time homebuyers up to $25,000 in down payment assistance and tax incentives for builders and federal funds for cities to speed up construction. She claims her plan will add 3 million new housing units over the next four years.
Trump says he will create tax incentives for homebuyers, cut “unnecessary” regulations on home construction, and make some federal land available for residential construction, though the campaign’s platform doesn’t include any details. Trump also claims that he will lower housing costs by reducing inflation and stopping illegal immigration.
Setting aside the fact that many of the candidates’ policies would require support from a majority of lawmakers in Congress, which the next president may not have, economists say the campaigns’ platforms offer some good ideas, but no sure fixes to the housing market’s longstanding challenges.
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Here’s a look at some of the candidates’ key ideas:
Trump’s immigration crackdown
Trump and his campaign have repeatedly tied the nation’s housing woes to immigration, suggesting mass deportations will ease the demand for homes, thus making housing more available and affordable.
The former president has long focused broadly on undocumented immigrants as a core political issue, but when it comes to housing policy, his campaign has also pointed fingers at immigrants who are legally in the country too. His running mate, Ohio Senator JD Vance, has blamed Haitian immigrants living in his home state for causing a housing problem.
Chris Herbert, managing director of Harvard Joint Center for Housing Studies, said in a statement that rising interest rates and the pandemic-era spike in housing demand are to blame for rising costs ― not immigrants.
“While immigrants do add to overall housing demand, they cannot be blamed for the recent surge in home prices and rents that took off in 2020 and 2021, as immigration reached its lowest levels in decades due to the pandemic,” Herbert said.
Jim Tobin, CEO of the National Association of Home Builders, said mass deportations could make the supply problem worse because one-third of the homebuilding industry’s labor force is foreign born.
“Anything that potentially disrupts the inflow of foreign-born labor into our industry would be disruptive. No doubt about it,” Tobin said.
Sarah Saadian, senior vice president of public policy at the National Low Income Housing Coalition, said undocumented people tend to live in overcrowded units, so the eviction of only immigrants in a home wouldn’t create an actual vacancy, nor does it address the affordability dilemma.
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“The most pressing part is wages and incomes aren’t high enough to cover rental costs and that doesn’t really have anything to do with undocumented people,” Saadian said.
Harris’ $25,000 down-payment plan
Harris aims to directly aid home shoppers by providing up to $25,000 in down-payment assistance to first-time buyers who have paid their rent on time for two years.
The campaign, which claims the program would help more than 4 million first-time buyers and cost $100 billion, says that such down-payment assistance is not new, noting that as of 2019 nearly three-quarters of single-family mortgages included downpayment aid provided by state housing finance agencies.
Like Trump’s plan, Harris’s proposal could backfire in a way. Economists warn that introducing a buyer incentive when the supply of homes for sale remains tight in many markets could juice prices, making homeownership less affordable. The impact could depend on the particular market.
“In Los Angeles, $25,000 down payment assistance is not enough, but it is enough in Detroit,” said Daryl Fairweather, chief economist at Redfin.
Still, if the number of homes on the market grows, the financial assistance makes more sense, because it can reassure homebuilders that “there will be buyers willing to buy” the homes they build, Fairweather said.
Among the few things the two candidates do agree on: easing up on zoning laws and using federal lands to build homes.
Trump has pledged to tackle zoning and other construction regulations in order to accelerate housing production, though his platform doesn’t go into details.
Harris is proposing a $40 billion fund to spur local governments, which control zoning laws, to streamline their regulations in order to cut down on the time it takes for builders to get projects cleared and completed. One caveat: State and local governments have to show that they’re building housing that is affordable.
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Both candidates have also said, however vaguely, that they’re in favor of making “limited portions” of or “certain” federal land available for home construction.