Kamala Harris’ plan to create more housing shortages

Written by Mike Shedlock via MishTalk.com,

If you want more shortages, artificially stimulate demand. That is exactly what Harris proposes, following AOC.

The Kamala Harris Plan

The National Low Income Housing Coalition discusses the Harris campaign’s plans to lower housing costs.

To address the housing shortage and lower prices for both renters and homeowners, the Harris campaign plan calls for a historic expansion of the Low-Income Housing Tax Credit (LIHTC) and the first-ever tax incentive for homebuilders who build starter homes sold to first-time homebuyers. Building on the Biden-Harris administration’s proposed $20 billion Innovation Fund, the campaign proposes a $40 billion fund that would support local innovations in housing supply solutions, catalyze innovative methods of construction financing, and empower developers and homebuilders to design and build affordable housing.

The campaign plan cites the Biden-Harris administration’s continued actions to support the lowest-income renters, including actions to expand rent subsidies for veterans and other low-income renters, increasing the supply of housing for the homelessenforce fair housing laws and hold commercial landlords accountable.

To make homeownership attainable, Vice President Harris’ proposal would provide up to $25,000 in down payment assistance to first-time homebuyers who have paid their rent on time for two years. First-generation homeowners — those whose parents did not own a home — would receive more generous help.

A rebuttal by the Wall Street Journal

Think of Kamala Harris’ plan for more housing shortages

A signature feature of Kamala Harris’ housing plan is the provision of $25,000 in down payment assistance to first-time homebuyers, at a total cost of $100 billion over four years. Absent a severe recession, this policy would almost certainly lead to higher home prices. That’s because the program’s four million recipients would become price setters for all buyers in their neighborhoods.

According to the American Enterprise Institute’s Housing Center, 77 percent of all home purchases would be subject to this “tax for buyers,” which would increase the price of those homes by 3.6 percent. Over four years, the increase in home prices would total $175 billion, more than the $100 billion the program cost. The price increase would translate into higher income for sellers, which would act as a wealth transfer for them.

The plan’s flaws don’t stop there. Ms. Harris’ proposed tax incentive for building starter homes is designed to significantly increase the supply of housing. This approach has led to significant market distortions on at least two occasions.

The Housing and Urban Development Act of 1968, with its easy credit and substantial subsidies, led to a wave of housing permits in 1971 and 1972. By 1975, the housing boom had reversed itself, leaving lasting scars in cities like Detroit, Chicago, and Cleveland. Similarly, the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which set affordable housing goals, combined with Bill Clinton’s National Homeownership Strategy, led to credit liberalization in the run-up to the financial crisis of 2008-2009. The number of housing permits doubled from 1.1 million in 1992 to 2.2 million in 2005, but then fell by 73% by 2009. In the aftermath, millions faced foreclosure, and the resulting housing shortage continues to plague us today.

Without such dangerous credit easing, it is likely that Ms Harris’s proposal would largely provide incentives for new homes that would have been built anyway, with any incremental construction unevenly distributed across the country, leading to further imbalances between supply and demand.

History offers a cautionary tale against such federal interference in the housing market: from the 1930s to 2008, at least 43 housing, urban renewal, and community development programs were signed into law. Despite the lofty goals of these laws, these initiatives have consistently failed to make housing more affordable.

A stupid proposal

It’s economically insane to believe that giving people $25,000 to buy a house will do anything other than raise prices.

On the supply side, the following applies: the houses would have been built anyway, or the new construction would have been of poor quality.

We have had dozens of “affordable housing” programs over the years, and if we include state and local government efforts, the number of plans numbers in the hundreds, if not thousands.

All these plans led to higher prices or an economic crisis.

Now let’s talk about Harris’ plan to “increasing the supply of housing for the homeless“

Harris has no costs attached to this. We need look no further than California for the reason, nor for the likelihood of success.

A new high-rise building will house LA’s homeless in $600,000 apartments

Remember my post of June 19 A new high-rise building will house LA’s homeless in $600,000 apartments

A grand opening of Weingart Tower will have 278 units to house the homeless. Hooray!?

Beyond crazy math

NBC News reports that there are 75,518 people experiencing homelessness in the county and 46,260 in the city of Los Angeles. That’s up from 69,144 in the county and 41,980 in the city in 2022, as of Jan. 23, 2023.

$600,000 * 278 = $166,800,000. That’s $166.8 million. And that doesn’t include free property taxes, caseworkers, maintenance, utilities, insurance, food, police, clothing, doormen, or medical care.

If the county were to house the 75,518 homeless, the cost would be $45,310,800,000. That’s $45.3 billion, again not including free property taxes, social workers, maintenance, utilities, insurance, food, police, clothing, doormen, or medical care.

And it wouldn’t stop there. Every homeless person in the state would move their tent to LA to join in.

Affordable housing

Dear woke fans, this is what we call “affordable housing.”

Taxes need to go up to accommodate such stupidity. It makes me angry to think about it. Why? Does the city think this will solve the homeless problem?

Most of these people are a combination of drug addicts, alcoholics, mentally unstable, and physically unable to ever work. And even if they did work, they wouldn’t be living in $600,000 units.

California Proposes No-Contact Orders to Stop Thieves

More and more headlines seem to be coming from the Babylon Bee.

On June 17th I responded Hoot of the Day: California Proposes No-Contact Orders to Stop Thieves

What’s happening in California is absolutely insane.

See also Twenty percent of California’s population lives in poverty. What’s going on?

On a cost-adjusted basis, California leads the nation in percentage living in poverty. Blame it on progressive oligarchs like Governor Newsom.

Green new housing deal

If you don’t understand where this is going, let me explain it to you again:

Harris has adopted the AOC guidelines New Green Deal for social housing

My hoot of the day is that AOC and Bernie Sanders have joined forces for a new green housing deal. I explain where we stand and what’s coming.

How much would this cost?

According to AOC, the bill would invest up to $234 billion over a decade to “weatherize, electrify and modernize our public housing.”

Don’t kid yourself, the whole policy would cost many trillions of dollars.

Harris’ ploy is to start small and then add trillions of dollars if she discovers that free down payments of $25,000 aren’t enough to lower costs.