Here’s What a Kamala Harris Presidency Could Mean For the Housing Market

Democratic presidential nominee Kamala Harris unveiled a plan that promises to combat the housing affordability crisis, and boost supply and demand. Harris’s plan is appealing, but will take a careful balancing act to pull it off.

U.S. home-sale prices have risen nearly 40% since President Biden took office, mortgage rates are just now coming down from a two-decade high and rental prices are near record highs. For voters, the difficulty of paying for a place to live is understandably a major issue in the runup to this year’s presidential election, putting housing policy at the forefront.

Kamala Harris’s housing plan promises to battle the affordability crisis by building millions of new homes and encouraging homebuyer and renter demand. 

Her plan is astoundingly ambitious; its major flaw is that it tries to do too much. And its success depends on all of its various components being implemented in perfect synchrony and harmony, which would require Congress’s complete–and unlikely–cooperation.  For instance, if supply increases but demand doesn’t, home values could drop and Americans could lose equity. If demand increases more than supply, home prices and rents will soar higher than they already have. 

Below is an overview of Harris’s housing plan, along with some potential consequences. 

Here are four key points of Harris’s housing plan:

• Build 3 million new for-sale and rental homes.

1. 1. • This is the cornerstone of Harris’s plan. Building millions of new homes is meant to help middle-class Americans become homeowners and help low-income Americans find affordable housing; there are more details on those goals below.

• To build millions of new homes, Harris proposes cutting down on red tape to allow for quicker, cheaper construction of homes. To do this, she proposes: 

• • • Providing $100 million in HUD PRO housing grants, which support communities nationwide that suffer from a lack of affordable housing by removing barriers to affordable housing, like outdated zoning policies, inefficient procedures and inadequate infrastructure. 
      • • Local governments can decide whether to accept this type of funding. That could mean this policy doesn’t make nearly as much of a difference in supply as the $100-million number suggests. 

• •   Providing more certainty for financing multifamily projects, through measures like better loan terms, more predictability and less variability in rates.
    • • • This could lead to more apartments and lower rents, which is good for renters because it gives them more to choose from, and could push down rents. For that same reason, existing property owners and landlords, may not like this policy. 

• • • Allowing multi-unit buildings under HUD Code for manufactured homes.
      • • This could reduce reliance on union labor, which could encourage faster construction and more supply. Many YIMBYs like this policy, too. 

• • Expediting local permitting processes.
    • • • This could greatly increase supply by reducing delays and uncertainty in the approval process across all segments of the market. If it does that, it should improve affordability. The problem with a policy like this is that local planning committees may ignore it. That could result in strife between federal and local governments. 

• • Streamlining transit-oriented development projects.
    • • • This policy, which calls for faster approval and financing for housing located near public transit, could lead to more dense, mixed-use development in areas with high demand for housing. That would increase supply where it’s needed most and potentially bring down transportation costs. 

• Help middle-class Americans become homeowners. To do this, she proposes:

• • Providing $25,000 down payment assistance to first-time homebuyers.
    • • • This could provide a big demand boost. But to avoid an inflationary impact, i.e. pushing home prices up even more, it would need to be paired with a big increase in supply in places that need it. 

• • Removing tax benefits for big investors who buy up a lot of single-family homes. 
    • • • This is unlikely to apply to mom & pop landlords, who are often the investors who are competing directly with first-time homebuyers because they’re moving up, but keeping their first home as a rental rather than selling it. 

• • Reducing federal income taxes builders pay on sales to first-time homebuyers.
    • • • • This would encourage builders to construct more homes. It would work in places like the Sun Belt, but it’s less likely to work in expensive coastal cities unless those places go through major zoning changes. 

• Help low-income Americans find affordable housing. To do this, she proposes: 

• • Encouraging use of the Low-Income Housing Tax Credit (LIHTC). 
    • • The LIHTC is touted by HUD as its most important resource for creating affordable housing. The LIHTC works by providing tax credits to builders who construct affordable rental housing, and the Tax Foundation estimates the credits to be worth $37 billion over 10 years. 
      • This type of tax credit could provide more homes to the people who need them, specifically low-income Americans. But some would rather see this money distributed more broadly, across developers who build homes at all price tiers, which could increase supply even more. 

• • Using American Rescue Plan funds for public investment in housing projects.
  • Encouraging use of Section 108 Loan Guarantee Program. 
    • • This program is popular with builders, too, because it could lead to more construction. 

The obstacles to implementation of Harris’s plan will likely come down to how much money to spend. It will also come down to whether the money should go primarily to low-income housing, which would benefit the most vulnerable renters, or to market-priced new construction, which tends to only be affordable to higher income earners. 

What’s promising for Harris: There’s growing bipartisan support for addressing the housing shortage, with Republicans in Florida and Utah zoning for more housing units at the same time as Democrats in California and Washington. There has also historically been strong bipartisan support for credits to first-time homebuyers (every state already provides first-time homebuyer credits). If Harris can lead Congress in pulling off her plan, she could make a meaningful dent in the affordability crisis by the end of this decade.

Note that some of the details above are from Kamala Harris’s August 16 economy policy speech, and some are from the Biden-Harris housing plan recently released by the White House.

Here’s our post about what a second Trump presidency could mean for the housing market.