Experts: Harris’s proposal could ease the housing crisis – while Trump’s plan would drive up inflation

The next president of the United States, among other pressing issues, will inherit a housing crisis that has seen average rents rise 19% since 2019, leaving tens of millions of Americans paying more than 30% of their income on rent and leaving many others homeless . . Vice President Kamala Harris, seeking the mantle of a hard-nosed problem solver compared to former President Donald Trump, has released a comprehensive plan to lower the cost of housing, largely by building more of it.

Harris’ proposed effort to add 3 million new homes, part of “A New Way Forward for the Middle Class,” focuses on providing plenty of incentives — expanding the Low-Income Housing Tax Credit (LIHTC) to help developers help build affordable rental housing, create a new community center tax credit to support the construction and renovation of owner-occupied homes in low-income communities, implement a tax credit for homebuilders who build homes for first-time homebuyers, and provide a additional $40 billion to state and local governments to expand housing supply. Additionally, Harris plans to offer a $25,000 down payment assistant to first-time homebuyers.

In an analysis published in the Washington Post, Mark Zandi, the chief economist at Moody’s Analytics, and Jim Parrott, a fellow at the Urban Institute, described the plan as “the most aggressive supply-side push since the national housing investment that followed.” World War II.” Other experts who are less optimistic about the possibility of reaching the 3 million mark still acknowledge that substantial growth is possible.

The premise of Harris’ plan is of course that an increase in housing supply will reduce costs. While economists largely agree on this logic, some progressives have emphasized that the plan will only be effective if a Harris administration invests primarily in low-cost housing built for low-income renters and separated from the speculative market. In that regard, policy analyst Matt Bruenig argues in Jacobin, the Harris plan falls short by funneling public money into the profitable housing market, providing only temporary affordability to working and middle-class Americans.

“To meaningfully address the housing crisis, Democrats must move beyond the public-private paradigm and invest directly in housing as a public good,” he wrote, while also acknowledging that Harris’ plans represent meaningful policy to combat exploitation by the private sector. landlords.

The willpower to build more housing often falters due to seemingly unaffordable costs, political opposition and selfish incentives, a reality that plays out at the state and local level. Perhaps that’s why Harris is relying on subsidies to stimulate growth, rather than trying to impose housing requirements on states. Attempts by governors to require low-density cities and suburbs to do their part have faced strong pushback from local governments and suburban legislators who did not want to be forced to do anything, or heard from voters who wanted to lose their valuable, wanted to preserve pristine areas. neighborhoods. While California and Massachusetts Democrats reached a deal in their respective states, Gov. Kathy Hochul, DY, was forced to scrap her housing proposal despite running with a large Democratic majority in the Legislature.

Progressives at the time cast some of the blame on Hochul for opposing the inclusion of “just cause” eviction, which would give tenants the ability to challenge rent increases in court, missing out on an opportunity to file a to form a broader coalition around her proposal. While sudden and unfair evictions have always been an unfortunate reality, tenants’ rights groups warn that since the chaos and desperation of the COVID-19 pandemic, landlords have become even more brazen in their attempts to maximize profits and exploit tenants.

In August 2024, the Justice Department sued RealPage, a real estate company it accused of fixing prices to drive up rents. DOJ officials alleged that the company’s algorithmic pricing helped landlords collude and set rents above market rates, which “deprives renters of the benefits of apartment rental competition and harms millions of Americans.” The consequences of RealPage’s plan were far-reaching; at least half of landowners reportedly ate out of the hole, calculating that even if rent increases led to vacancies, they would still make bigger profits.

Harris, citing unscrupulous behavior by these landlords, proposes in her housing plan to pass the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act in Congress, which would make price fixing illegal under antitrust laws. While some conservative economists have warned that the proposal would discourage development and worsen the housing shortage, others have argued that the conventional neoliberal antipathy to rent controls is misplaced — in many places where strong rent controls are in place, such as New Jersey, supply has actually increased .

Landlords have also been accused of hoarding cheap properties and selling them at an exorbitant price, knowing that the desperation of some tenants would more than compensate for the wasted space. In some cases, they are reportedly deliberately keeping some units off the market. In New York City, for example, while the vacancy rate for on-market units hovers around 1.4% – the lowest since 1968 – no one knows exactly how many units should be open that aren’t included in the official numbers. Local lawmakers have proposed legislation to get to the bottom of this by requiring landlords to disclose all vacant units, and possibly find an ally in the White House soon.

“Some homeowners – some of them are buying dozens, if not hundreds of houses and apartments. Then they trade them and rent them out at extremely high prices, and it can make it impossible for ordinary people to be able to do that. buy a house or even rent it,” Harris said in a speech focused on the cost of living. To address this, Harris is proposing a second piece of housing legislation – the Predatory Investing Act – that would provide tax breaks for investors who buy up large numbers of single-family rental properties.

To pass both bills aimed at curbing unfair practices by landlords, Harris will need support from Congress and she certainly prefers her fellow Democrats as governing partners. GOP positions on housing this election cycle have largely ranged from oppositional, in the case of Project 2025 proposals to scale back federal affordable housing programs and weaken tenant protections, to ambivalent, in the case of the promises of the Trump campaign to lower costs by beating inflation and stopping “the unsustainable invasion of illegal aliens that is driving up housing costs.” Critics of Trump’s economic policies have argued that his plans to raise rates across the board are likely to drive up inflation, not ease it.

Harris, building on a series of chilling comments from Trump, has focused on her rival’s dictatorial and vengeful fantasies in the final days of the campaign. However, there are indications that more time to compare her housing plan to Trump’s seemingly missing homework or Project 2025 wish list would be effective – many Americans have fallen victim to the housing crisis and are now looking not only to their president for help in the broadest sense of the word. of the word, but also, according to polls, policies like rent control and the expansion of affordable housing.