Rising home prices will be a prominent campaign issue in the 2024 presidential election.
In a housing market where soaring rents have put home buying out of reach for many Americans, Democratic presidential candidate Kamala Harris and Republican Donald Trump have both vowed to make housing more affordable if they take control of the White House.
Part of Harris’ solution, a plan she floated repeatedly during the campaign, is to build 3 million more housing units over four years.
“Harris has emphasized the need for the federal government to work with local governments and federal agencies to find ways to boost housing construction,” said Yona Freemark, a research associate at the Urban Institute. “There’s also evidence that increased housing supply is associated with lower home prices. I don’t think higher home prices are the only solution to home affordability, but it’s certainly an important factor.”
Between slowing new construction during the pandemic and people hanging on to their homes because of high interest rates, a lack of supply has contributed to rising home prices.
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“It’s not just a shortage of housing, but a shortage of affordable housing in places people want to live,” said Kyle Moore, an economist at EPI Action, noting that many of the new luxury homes developers are building are out of reach for many renters.
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How does Harris plan to increase housing units?
In an August memo, the Harris campaign laid out a plan to add 3 million new housing units to address the housing shortage.
“Vice President Harris will work with industry to build needed housing, for both renters and buyers, and remove barriers to new housing construction, including at the state and local levels,” the memo states, outlining how:
New tax incentives for building starter homes, expanded tax incentives for businesses building affordable rental housing, doubling the Biden-Harris proposed Innovation Fund for local efforts to solve housing problems, and cutting red tape and streamlining permitting processes to speed up homebuilding.
Adding 3 million units to the baseline represents a 50% increase
A Harris campaign official said the 3 million homes she is promising during her first term is on top of new homes already thriving in the market. The Biden administration has proposed an additional 2 million homes.
According to U.S. Census data on new privately owned homes completed each year, the number of homes in the U.S. market fell dramatically after the housing market bubble burst in 2008, only to recover to a post-bubble high in 2023.
According to census data, about 5.5 million new homes were completed over the four-year period from 2020 to 2023. If the U.S. were to match that as a baseline for the next four years, Harris’ plan would represent an increase of about 50%.
“A 50% increase in residential construction is pretty ambitious,” Freemark said. “To surge to that level is pretty challenging, not just in terms of the need for financing and capital and things like that, but also in terms of the supply chain, the construction labor that’s needed to actually build these houses and apartments that we’re talking about.”
He also noted that while Harris’ current plan may not be able to overcome those challenges, vague areas in the plan could suggest additional ways to meet the needs.
Obstacles to Harris’ 3 million new unit plan
Part of the housing crisis, caused by high interest rates that make it impossible to get out of mortgages, may resolve itself, regardless of who is in power, as the Federal Reserve just announced its first interest rate cut in four years.
But experts warned there are problems with other parts of Harris’ plan.
As Freemark noted, these plans would require approval from Congress, which could be heavily influenced by partisan elections, and local governments could challenge federal guidance on zoning and permitting laws.
Where and how these housing units are built will also impact the success of the program.
“The key to this policy is that it will be built where there are jobs,” Moore said, adding that nuclear plants still must comply with safety regulations and sustainability practices.
As Americans spend an ever-increasing share of their income on rent, homeownership is one of the last routes to safely build wealth, and the stakes are high in solving the crisis.
“That component is missing in addition to the fundamental right of access to housing and housing, which is so important for both economic mobility and economic security,” Moore said.