Vice President Kamala Harris’ plan to expand the U.S. housing supply could be the biggest boost since World War II, according to housing expert Jim Parrott and Mark Zandi, chief economist at Moody’s Analytics.
at Washington Post editorial On Wednesday, they said falling home prices were due to a lack of supply, estimating that the U.S. needs 3 million more homes, almost all of which are in the bottom half of the market.
The Harris plan, announced earlier this month, aims to increase affordable housing stock by encouraging more construction, while also providing $25,000 in down payment assistance to new homebuyers.
Parrott and Zandi, co-owners of housing advisory firm Parrott Ryan Advisors and a former White House economic adviser, pointed to expanded tax breaks for developers. Low Income Housing Tax CreditThis will increase the supply of affordable rental housing.
To make homes more affordable, the Harris plan would allow builders to receive tax breaks on the profits from homes built and sold to first-time homebuyers.
Another part of the plan would create a new tax credit to renovate homes that can’t be sold for high enough to recoup the cost of repairs, which would bring additional supply to the market that would otherwise go unused.
To overcome infrastructure shortfalls and local political resistance, the Harris plan seeks to provide more funding to states and communities.
“While each of these moves makes sense on its own, together they would represent the most aggressive supply-side push since the national housing investment following World War II,” Parrott and Zandi wrote.
At that time, the federal government provided assistance to veterans through the GI Bill, which included favorable terms for home purchases. This led to more demand and construction.
Harris Housing Plan Costs
Certainly, this plan comes with a big price tag: $125 billion. They point out that it has to be paid for with tax revenues or offset by spending cuts elsewhere. Otherwise, the federal budget deficit will grow and mortgage rates will rise, making housing less affordable.
But they warned that the up-front costs of increasing supply would be far greater than the long-term costs of allowing the housing crisis to worsen.
“A lack of affordable housing will continue to harm our national economy by hindering savings, opportunity and growth,” Parrott and Zandi said. “Thoughtful efforts to address the problem now will ultimately lead to more growth and lower costs.”
Trump’s Housing Plan
Donald Trump, from his perspective, He told Bloomberg He said he would lower housing costs by relaxing environmental and permitting regulations. But he also Suggested in campaign events He said he would limit the development of low-income housing in suburban areas.
that Republican Party’s 2024 Platform Blaming high housing costs on illegal immigrants and vowing to deport them, some housing experts say this will reduce the availability of construction workers and increase costs. The platform also promises a mix of demand-side and supply-side measures.
“To help new homebuyers, Republicans would lower mortgage rates by dramatically reducing inflation, open up some areas of federal land to new home construction, promote homeownership with tax incentives and assistance for new homebuyers, and cut unnecessary regulations that drive up housing costs,” he said.
