The severe shortage of affordable housing in America has emerged as a top concern for voters and a key issue in the current presidential campaign. Both Democratic nominee Kamala Harris and Republican candidate Donald J. Trump have pledged to address the problem if elected, but their approaches differ significantly. While Harris offers a more detailed plan, both candidates’ proposals have attracted skepticism from economists.
Kamala Harris aims to increase the supply of affordable housing by expanding the Low-Income Housing Tax Credit, providing incentives for state and local governments to invest in housing, and introducing a $40 billion tax credit to make affordable projects more attractive to builders. Economists like Mark Zandi from Moody’s and Jim Parrott, a former housing adviser under the Obama administration, estimate that the U.S. currently faces a shortfall of three million homes, a gap Harris is determined to close.
However, Harris’s plans would require congressional approval, which is uncertain. Despite the lack of detailed implementation strategies, the proposal outlines clear priorities for her administration. Michael Strain, an economist at the conservative American Enterprise Institute, agrees that focusing on construction is a positive step but emphasizes that the success of these plans heavily depends on their execution.
In addition to supply-side measures, Harris proposes a $25,000 assistance package for first-time homebuyers. The specifics of this initiative, including eligibility and payment structure, remain vague, raising concerns among economists that this could drive up housing demand and prices further. Michael Strain criticized the plan, suggesting that the primary beneficiaries would likely be home sellers rather than buyers.
Supporters of Harris’s proposal argue that by sequencing the implementation—boosting supply first, then rolling out the buyer assistance—the risk of inflating prices could be mitigated. Gene Sperling, a senior economic adviser to Harris, stressed the importance of increasing the availability of affordable starter homes before providing financial assistance to buyers.
Donald Trump’s approach to lowering housing costs includes aggressive immigration policies and economic measures. He has pledged to deport undocumented immigrants, arguing that reducing the number of people in need of housing would lower demand. However, this strategy has been met with criticism. Daryl Fairweather, the chief economist at Redfin, pointed out that the rise in home prices predates recent increases in unauthorized immigration, suggesting that deportations would not address the core issue.
Moreover, reducing the immigrant population could backfire by shrinking the construction workforce, which relies heavily on foreign-born labor. Albert Saiz, a professor of urban economics and real estate at MIT, cautioned that such a move might temporarily slow rent increases in major cities but is unlikely to decrease home prices nationwide.
Trump also proposes lowering interest rates to make mortgages more affordable. His campaign has mentioned plans to cut regulations and free up federal land for housing, though details are sparse. However, Trump’s influence over interest rates is limited, as they are largely controlled by Federal Reserve policy, which operates independently of the executive branch.
The skepticism surrounding both candidates' housing policies highlights the complexity of America’s affordable housing crisis, which has been developing for over 15 years. Demographic and societal trends have compounded the problem, making it unlikely that any quick fix will be effective. Even if Harris or Trump can implement their proposed policies, the solutions are expected to be slow and challenging.
Harris’s primary focus is on increasing housing supply by expanding tax credits for builders and encouraging state and local governments to invest in affordable housing projects. Her plan aims for a rapid boost in construction to close the current housing gap. However, without detailed execution plans and the necessary legislative support, the effectiveness of these tax credits remains uncertain.
Trump’s plan to curb housing costs by deporting undocumented immigrants and reducing interest rates faces significant hurdles. Economists argue that deportations would have a limited impact on housing demand and could negatively affect the construction sector. Additionally, Trump’s promises to influence interest rates are beyond the scope of presidential authority, as the Federal Reserve controls these decisions independently.
While Harris and Trump present vastly different strategies for tackling America’s housing shortage, both face substantial challenges in turning their campaign promises into reality. Harris’s detailed tax incentives and buyer assistance plan hinge on complex timing and legislative approval, while Trump’s reliance on immigration policies and interest rate changes offers limited direct impact on the housing market.
Ultimately, addressing the affordable housing crisis in the United States will require a nuanced, multi-faceted approach. Voters are rightfully concerned, but any significant progress will likely be gradual, requiring cooperation across government and the private sector to increase housing supply, manage demand, and ensure affordability for millions of Americans.
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