Harris Proposes 3 Million New Homes and $25K Down Payment Aid: Experts Weigh Potential Effects on Housing Market

Written by Elvis Guaman

August 22, 2024

Vice President Kamala Harris has unveiled a bold new housing proposal aimed at addressing the nation’s affordability crisis. The plan, which seeks to spur the construction of 3 million new houses over the next four years, is designed to increase both rental and for-sale housing options. Alongside this ambitious goal, Harris is proposing a range of measures to support first-time homebuyers, including a significant tax incentive for builders and $25,000 in down-payment assistance.

The proposal aims to tackle the affordability issue by expanding housing supply, a strategy that housing experts argue could help ease the financial burden on prospective homeowners. The tax incentive for builders is intended to encourage the construction of homes that are accessible to first-time buyers, making homeownership more attainable for a broader segment of the population.

However, not all reactions to the plan have been positive. Edward Pinto, a senior fellow and co-director of the American Enterprise Institute’s Housing Center, has expressed skepticism about the effectiveness of Harris’ proposal. Pinto argues that supply-side measures, which focus on increasing the housing inventory, are inherently more challenging to implement compared to demand-side efforts that facilitate homebuying by consumers. According to Pinto, “It’s much, much harder for the government to pass supply-side proposals,” and he contends that Harris’ plan might be less effective than doing nothing.

Additionally, concerns have been raised about the potential impact of the down-payment assistance component of the plan. Harris proposes $25,000 in down-payment support for first-time homebuyers who have demonstrated responsible rent payments over the past two years, with enhanced assistance for first-generation homeowners. During an August 16 appearance on Fox Business, Senator Tim Scott (R-S.C.) criticized the proposal, arguing that it could exacerbate existing problems. Scott asserted that the down-payment assistance could drive up demand without corresponding increases in supply, leading to higher home prices and reduced affordability. “Harris’ $25,000 down payment assistance will only make the demand higher with the supply not moving, which means that prices will go up, and fewer people are going to be able to afford it,” he said.

The debate over Harris’ housing proposal highlights the complexities of addressing the housing affordability crisis. While the plan’s ambitious goals and financial support measures are intended to help first-time buyers and stimulate construction, the mixed reactions from experts and policymakers underscore the challenges of balancing supply and demand in the housing market.

As the proposal moves through the legislative process, it will likely face scrutiny from both supporters and critics. The effectiveness of Harris’ plan will ultimately depend on its ability to address the fundamental issues of housing supply and affordability in a meaningful way.

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