Vice President Kamala Harris last month announced an ambitious plan to construct 3 million new housing units over the next four years. The proposal, which she made one of the key issues of her presidential campaign, aims to address the severe housing shortage that has pushed homeownership out of reach for millions of Americans and exacerbated the generational wealth gap.
Harris' plan, announced on August 16, includes the first-ever tax incentive for building starter homes, an expansion of tax incentives for affordable rental housing construction and a $40 billion innovation fund to empower local governments. The cornerstone of the proposal is a $25,000 down-payment assistance program for first-time homebuyers, expanding on the Biden administration's earlier initiatives.
"I know what homeownership means. It's more than a financial transaction; it's so much more than that — it's more than a house," Harris said during a campaign speech in Raleigh, North Carolina, cited by MarketWatch. "Homeownership and what that means, it's a symbol of the pride that comes with hard work, it's financial security, it represents what you will be able to do for your children."
The plan comes at a critical juncture, with both major party candidates addressing housing as a key campaign issue for the first time in decades.
“Both presidential candidates are talking about housing, and not just housing, they're talking about adding housing supply,” Jim Tobin, CEO of the National Association of Home Builders, told Salon. “I've been in Washington, D.C. for 30 years now, and this is the first time in my career that I can remember housing being a major presidential campaign issue.”
It also highlights the growing concern over what housing experts call America's broken "wealth escalator" — the traditional path to building generational wealth through homeownership that has become increasingly inaccessible to younger generations.
“It's not working for more and more people, and we just don't have great wealth building solutions for people living in multi-generational households, for example,” said Katherine McKay, an associate director at the Aspen Institute Financial Security Program.
A Crisis of Affordability
The urgency of the housing crisis is underscored by recent data.
According to a recent study by CardRates, over 76% of Americans are spending more than 31% of their gross monthly income on housing, with many spending even more. This financial strain is compounded by record home prices and historically low sales volumes over the past three years.
A key measure of U.S. home values, the S&P CoreLogic Case-Shiller national home price index, reached another record high — showing a 5.4% year-over-year increase in June, as reported in Tuesday's data release.
"We've seen first-time homebuyers getting older. They're bringing smaller down payments to the table, and what that means is that they have fewer years to build that equity in their house during their adult lives, and they're starting out with less equity in it because of lower down payments," says McKay. "So that does have really big implications for generational wealth building."
The impact on younger generations is particularly stark.
"The reason Harris' policies are so impactful is she wants to actually help first-time homebuyers in a world where even a starter home is out of reach for Gen Z, facing a different reality than our parents and grandparents,” says Meagan Loyst, founder and CEO of Gen Z VCs.
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A Bipartisan Recognition of the Problem
The prominence of the housing issue in the presidential campaign signifies a shift in political priorities.
While both major candidates are addressing the issue, their approaches differ significantly. Harris' plan focuses on increasing supply and providing direct assistance to buyers, while expectations for a potential second term for former President Donald Trump lean towards deregulation.
The Trump campaign's housing plans, if Project 2025 is any indication, would focus heavily on deregulation and limiting federal involvement in housing issues. Key proposals include eliminating the new Housing Supply Fund and restricting access to federally assisted housing for non-citizens, including mixed-status families. The plan emphasizes local control over housing policies, opposing federal efforts to weaken single-family zoning and advocating for maximal flexibility in local land use and zoning decisions.
“I expect a second Trump term will see that deregulation, that would be a good thing," says Tobin. He notes that the Harris plan lacks mention of federal deregulation, which he considers a "big miss."
While Harris’ proposal does include “cutting red tape and needless bureaucracy,” it offers few details. The Harris campaign declined to elaborate further.
Despite the broad, ambitious nature of Harris' proposal and housing targets, experts point out potential challenges and shortcomings.
Tobin questions the need for more demand-side incentives, suggesting that when interest rates fall, demand will naturally increase.
"Finding incentives to build more housing is what we need," he argues.
The scale of the proposed construction boom also raises questions. Tobin estimates that under Harris' goal, an additional 750,000 homes would need to be built annually on top of the 1.1 million they are projecting in new single-family homes for the coming year. Achieving this would require overcoming significant hurdles in land availability, local government cooperation and labor shortages.
"We're about 400,000 workers short in construction," Tobin points out, highlighting a persistent issue in the industry.
The Path Forward
Experts agree that increasing supply is crucial to solving the housing crisis.
For Harris' plan to succeed, it will need to address these supply-side challenges while also addressing local zoning laws and regulations.
A potentially divided Congress will also be a major hurdle and will not make implementing these proposals any easier, no matter who wins the election.
Meanwhile, financial analysts project that the expected interest rate hike in September will take time to have an impact on the market.
The financial hardships and economic environment of the last few years took a toll on the financial health and wealth of millions of Americans, especially younger generations and will take years to remedy.
“We did a lot of research showing that if you buy a home earlier in life, you have significantly higher housing wealth at an age during retirement,” says Jung Choi of the Urban Institute. “We do think this has long-term implications on a lot of younger adults in the country and intergenerational wealth transfer impact.”
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