What to know about Harris’ affordable housing economic proposals

“The bipartisan sweet spot around the housing affordability challenges that we have today is on increasing supply,” said Dennis Shea, executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy.

Ever since the foreclosure crisis, a major period of property seizures in the U.S. between 2007 and 2010, there have been far fewer new single-family homes and multi-family rental buildings under construction, said Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute, a non-profit think tank in Washington, D.C.

There’s “a more acute shortfall” when it comes to affordable homes, she said, whether for renters looking for quality rental units or first-time buyers.

To get to those 3 million new units, a Harris-Walz administration would introduce a “first-ever tax incentive” for homebuilders who sell starter homes to first-time homebuyers, according to the proposals unveiled last week. 

The initiative would complement the Neighborhood Homes Tax Credit, according to the announcement, which would be created by a bill pending in Congress called the Neighborhood Homes Investment Act.

Shea said the tax credit, which “has strong bipartisan support,” would promote the creation and rehabilitation of starter homes for sale in distressed communities.

Former President Donald Trump has also talked about ways to increase housing supply as part of his presidential campaign proposals.

“We’re going to open up tracks of federal land for housing construction,” Trump said in an Aug. 15 press conference. “We desperately need housing for people who can’t afford what’s going on now.”

But Edward Pinto, senior fellow and codirector of the American Enterprise Institute’s Housing Center, said it’s “much, much harder” for the government to pass “supply-side proposals,” compared with efforts that generate demand by making homebuying easier for consumers.

“My conclusion is that [Harris’] housing plan would be worse than doing nothing,” he said.

It will be important for Harris to clarify what she means by “starter home,” said James Tobin, CEO of the National Association of Home Builders.

“It’s hard to define what a starter home is,” said Tobin, as underlying costs make it hard to keep building expenses low.

“In most markets in the country, it’s hard to build to that first-time home buyer because of labor costs, land costs, borrowing costs for a builder, and then material cost,” he said.

Defining a range of price points for a starter home will also be important, as it may vary widely across…