Kamala Harris's Housing Affordability Plan: A Comprehensive Analysis

Making Housing More Affordable: Assessing Democratic Presidential Candidate Kamala Harris's Policy Proposal

Kamala Harris, the Democratic candidate for President in 2024, is advocating for policies med at alleviating housing affordability challenges by offering down payment assistance to first-time homebuyers and promoting new housing construction. As an expert on real estate and household finance, Prof. Cameron LaPoint analyzes whether these proposed policy changes have the potential to make a significant difference.

In light of recent trs, the U.S.'s housing market has seen unprecedented levels of unaffordability over the past three years since the COVID-19 pandemic. Housing costs for both owners and renters have escalated far faster than average income growth during this period. The home price-to-income ratio in America has reached historically unparalleled heights. Additionally, the share of cost-burdened renters-those sping more than 30 of their income on rent-has grown from 20 to 45 since 1960.

The issue exts beyond ownership costs for those who own or wish to buy a home. The expenses associated with mntning a house encompass property taxes, mntenance and repr costs, along with mortgage payments minus tax benefits like itemized deductions. Since the onset of COVID-19, national property tax burdens as a share of income have slightly decreased from pre-GFC levels. Nevertheless, if we compare a new homeowner who secured a fixed-rate mortgage and made a 20 down payment just before the pandemic in 2019 to another hypothetical homeowner doing the same in 2023, the latter would incur approximately half agn as much each month servicing their mortgage due to the confluence of higher interest rates and increased home prices.

Zillow's buy vs. rent calculator offers guidance for prospective homeowners by evaluating whether renting or buying is more financially viable based on various factors. The tool suggests that down payment assistance may benefit a limited number of younger households, potentially even having a counterproductive effect on overall housing affordability.

To address the complexities of ensuring affordable housing, Prof. LaPoint offers insights into effective policy tools:

1. Controlling Housing Demand: Policymakers can restrict mortgage access through measures like increasing required down payments e.g., from 20 to 30. These policies reduce the attractiveness of buying by limiting supply, thereby enabling single-family homes for sale. In times of overheated housing markets, such policies are particularly effective when targeted only at investors seeking second homes in costly areas.

2. Boosting Housing Supply: Encouraging developers and builders to increase construction can alleviate pressures on both rental prices and home values. However, the current low levels of new residential permit filings across most states indicate that this challenge is more complex than it initially seems. Overcoming these obstacles requires addressing the intricate web of local land use regulations and zoning codes.

In , Prof. LaPoint's evaluation emphasizes the need for a nuanced approach to policy-making in tackling housing affordability issues. While down payment assistance may benefit certn segments of the population, policymakers must consider broader strategies that can impact demand for housing and stimulate supply growth to ensure equitable access to affordable housing solutions.
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