What you need to know about Harris’ financial proposals for affordable housing

“The bipartisan sweet spot around the affordable housing challenges we have today is increasing supply,” said Dennis Shea, executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Housing Policy Center.

Since the foreclosure crisis, a major period of foreclosures in the U.S. between 2007 and 2010, there have been far fewer new single-family homes and multifamily rental buildings under construction, said Janneke Ratcliffe, vice president of Housing Finance Policy. Center at the Urban Institute, a nonprofit think tank in Washington, DC

There is “a more pronounced shortage” when it comes to affordable homes, he said, whether for renters looking for quality rental units or first-time buyers looking for their first home.

To reach those 3 million new units, a Harris-Walz administration would introduce a “first-time tax incentive” for homebuilders who build homes sold to first-time buyers, according to proposals unveiled last week.

The initiative will supplement the neighborhood home tax credit, according to the release. A bill pending in Congress called Neighborhood Home Investment Lawthat would promote the creation and rehabilitation of homes for sale in distressed communities would create that tax credit, Shea said.

“It would create this tax credit, and that has strong bipartisan support,” he said.

Former President Donald Trump also talked about ways to increase housing supply as part of his presidential campaign proposals.

“We’re going to open up a trail of federal land for housing,” Trump said in an Aug. 15 announcement. type conference. “We desperately need housing for people who can’t afford what’s going on now.”

But Edward Pinto, senior fellow and co-director of the American Enterprise Institute’s Housing Center, said it’s “much, much harder” for the government to pass “supply-side proposals,” compared to efforts to create demand by making easier for consumers to buy homes.

“My conclusion is that [Harris’] The housing plan would be worse than doing nothing,” he said.

It will be important for Harris to clarify what she means by “starter home,” said James Tobin, CEO of the National Association of Home Builders.

“It’s hard to define what a starter home is,” Tobin said, since the underlying costs make it difficult to keep construction costs down.

“In most markets in the country, it’s hard to build to that first home buyer because of labor costs, land costs, borrowing costs for a builder and then material costs,” he said.

Establishing a range of price points for a starter home will also be important, as it can vary widely in different markets, Tobin said.

“In California, a starter home might cost seven or $800,000, but in the South … it might only be $250,000 or $300,000,” he said.

Harris’ list of proposals also includes a $40 billion innovation fund. The money will empower local governments to fund local housing solutions, as well as support local housing solutions.

However, some experts are skeptical that it will fulfill its intended purpose.

“The federal government doesn’t have a lot of power over what happens at the local level,” Fairweather said. “It is up to local planning boards whether they allow more housing to achieve this [innovation fund] money.”

“But time and time again, local people and local governments, local homeowners ignore incentives because they’re so resistant to building more homes,” Fairweather said.

In addition, the $40 billion housing innovation fund may be too high, making it unlikely to receive bipartisan support, Shea said: “I don’t know if the market could bear that price tag in Congress.”

Harris hopes to provide $25,000 in down payment assistance to first-time homebuyers who have paid rent on time for two years, with more generous support for eligible first-generation homeowners.

The proposal stems from an idea presented by the Biden-Harris administration earlier this yearwhich called on Congress to implement $25,000 in down payment assistance exclusively for 400,000 first-generation buyers (or first-time buyers whose parents were not homeowners) and a $10,000 tax credit for first-time buyers.

Harris’ plan would apply to all first-time buyers and expand coverage to more than 4 million eligible applicants over four years.

But “there just isn’t a lot of bipartisan support,” Shea said.

During an Aug. 16 appearance on Fox Business, Sen. Tim Scott, RSC, said Harris’ $25,000 in upfront aid “will only increase demand with supply not moving, which means prices will increase, fewer people will be able to afford it.”

“And frankly, unless they’re going to build financial literacy into any program, it just means there’s going to be a higher level of bankruptcy,” Scott said.

To help renters, Harris addressed two pending pieces of legislation. The Democratic presidential nominee called on Congress to pass the Stop Predatory Investing Acta bill calling for the elimination of key tax benefits for those who own 50 or more single-family properties. This initiative would limit large investors from purchasing large amounts of single-family rental housing.

Meanwhile, the Preemption of the Algorithmic Facilitation of Rental Cartel Act it will crack down on companies that use tools to determine market rents.