Vice President Kamala Harris, the Democratic nominee for the 2024 presidential election, included initiatives to combat rising housing costs in her economic plan announced Friday. She promised, if elected, to reduce the “red tape” involved in building homes and create tax incentives for first-time home buyers.
“There is a serious housing shortage; in many places it is too difficult to build housing, and that is driving up prices,” Harris said during her first major political speech Friday afternoon in Raleigh, North Carolina. “As president, I will work in partnership with industry to create the housing we need, both to rent and to buy. We will remove barriers and cut red tape, including at the state and local levels.”
The economic plan also includes a $25,000 tax incentive for the down payment of people buying their first home, a larger amount than the one-year tax credit of up to $10,000 for middle-class families selling their first home that President Joe Biden announced during his State of the Union address in March 2024.
At the time, Biden also called for a two-year $5,000 annual tax credit for middle-class first-time homebuyers. Analysts say current members of Congress are unlikely to approve the credit.
“We also know that as home prices have risen, so have down payments. Even if prospective homeowners save for years, it’s often not enough,” Harris said. “While we work on the housing shortage, my administration will provide $25,000 to first-time buyers to help make the down payment on a new home.”
Real estate experts believe Harris has correctly diagnosed the main problems in today’s real estate market – high mortgage rates and a lack of supply – but they fear that her initiatives will increase demand and thereby exacerbate the problem of a lack of supply.
During her speech in Raleigh, Harris said that if elected, she would also introduce a one-year $6,000 child tax credit and reduce the cost of prescription drugs.
Rental market
Harris pledged to end America’s housing crisis by building three million new, middle-class affordable homes by the end of her first term. The plan includes introducing a bill on Capitol Hill called the Stop Predatory Investing Act.
“As you know, some corporate landlords buy dozens, if not hundreds, of houses and apartments, then rent them out at extremely high prices – and that can make it impossible for ordinary people to buy or even rent a home,” she said.
“Some commercial landlords work together to set artificially high rents, often using algorithms in price-fixing software. This is anti-competitive and drives up costs. I will fight for a law that stops these practices.”
Turning to the rental market, Harris mentioned efforts in July to ban “hidden fees and surprise late fees that banks and other companies use to pay out their profits,” while also urging to “crack down on commercial landlords and put an end to unfair rent increases.”
The Democratic candidate’s speech resonates with Americans who often cite housing costs as their biggest concern. Despite some recent trends, the American housing market remains expensive for many and is making housing a difficult choice, according to Nick Luettke, an associate economist at Moody’s.
According to Lüttke, the multifamily sector has significantly expanded its inventory by almost 25% over the past decade, and despite a 20% increase in effective rents since the end of 2019, there was recently a 1% year-on-year decline.
“Looking at income growth, the median income household now spends 26.8% of its income on the average apartment. While rental levels remain high for many, the national rent-to-income ratio has declined 2% since its peak in 2022 and 1% since the start of the pandemic, underscoring the critical role of inventory expansion in improving affordability,” Luettke said.
