How Trump and Harris plan to bring down housing costs : NPR

Vice President Kamala Harris and former president Donald Trump don’t agree on much, but they do on one thing: The cost of housing is too high.

Housing costs have become a major source of worry and financial stress for many Americans as prices have outpaced paychecks and the share of renters burdened by housing costs has grown. Home prices have risen about 50% in the last five years, and many households are struggling to find a home they can afford to buy.

Here’s how the Harris and Trump campaigns say they will address the country’s housing woes.

Kamala Harris’s housing plan

When Harris talks about housing, she makes it personal, remembering how her mother saved up to buy a home and recalling her mother’s pride when she bought it. Then she hits the highlights of how she plans to make housing more affordable.

“As president, I will fight to help first-time homebuyers with your down payment, take on the companies that are jacking up rents, and build millions of new homes,” Harris said in a speech this week at the Ellipse, near the White House.

For Harris, the plan is a mix of increasing supply, providing financial support to aspiring homebuyers and curtailing corporate landlords.

Building a lot more homes

Harris wants to build three million new housing units. America is millions of housing units short, and increasing supply would help bring down rents and mortgages. Many housing experts agree that this focus on supply is a good approach.

To amp up that construction, especially at the cheaper end, Harris wants to expand the existing tax credits that are used to build affordable rental housing. She also wants to create a new tax credit that would incentivize building more starter homes.

Harris also proposes a $40 billion fund to spur new methods in housing construction, including more affordable home designs and new ways to finance construction.

The vice president also vows to cut the red tape that slows housing construction and makes it more expensive to build.

But much of the regulation and bureaucracy that limits housing is at the state and local level. The federal government has a limited ability to shape those rules, though it can certainly incentivize what it wants to see happen.

Assistance for first-time buyers

Harris is calling for $25,000 in down payment assistance for first-time homebuyers. With prices so high, down payment assistance for first-time buyers “can really help people make that leap,” says Shamus Roller, executive director of the National Housing Law Project.

But many economists argue that this support would actually drive prices higher.

Giving a bunch of people an extra $25,000 will increase demand, says Michael Strain, an economist at the American Enterprise Institute, a center-right think tank. And there’s already a lot of demand. More buyers bidding on homes would lead to higher prices, Strain says.

And though first-time buyers are the target of the assistance, “a lot of that $25,000 is going to go to the sellers of homes, and not to the buyers of homes,” Strain says.

The 2024 GOP platform also calls for tax incentives and support for first-time buyers. It’s not clear what the eligibility requirements would be in either party’s proposal.

Targeting corporate landlords

Harris is calling on Congress to pass two bills she says would lower rents. One would remove tax breaks from large investors that buy up single-family homes, and another would prohibit landlords from using algorithmic software to increase rents.

Donald Trump’s housing plan

Trump’s plans when it comes to housing are much less detailed than Harris’s, but the former president frequently brings up housing costs in his speeches.

Like Harris, Trump talks about building more homes. He has called for opening more federal lands for housing, an idea that Harris also supports. He also pledges to slash regulations and make it easier to build.

A focus on mortgage rates

Trump says he’ll bring down mortgage rates to make homebuying more affordable, even though the president doesn’t set mortgage rates or interest rates (though his or her policies can affect them).

At a rally last month in Arizona, Trump lamented the prevailing mortgage rates. Rates were then a little over 6%, but Trump overstated them by several points.

“Today the mortgage rates are at 10%, 11%, 12%, you can’t get the money. We’re going to bring it down very fast, we’re going to bring energy down. We will drive down the rates so you will be able to pay 2% again and we will be able to finance or refinance your homes drastically,” he said.

During the pandemic, mortgage rates did dip below 3% at the end of Trump’s presidency. But it’s been more than three decades since they were at 10%, and they’re far below that level now.

Trump says he’ll bring mortgage rates down by slashing inflation. But inflation has cooled significantly, and many economists say that other aspects of Trump’s economic plans would make inflation worse.

A crackdown on immigration

Trump and his vice-presidential nominee JD Vance have blamed undocumented immigrants for driving up housing prices. At the vice presidential debate last month, Vance said competition from illegal immigrants is one of the most significant drivers of home prices in the U.S.

This is another exaggeration, though there is some effect.

Immigrants do increase housing prices, just like any population growth does, if supply doesn’t keep up with demand, according to Albert Saiz, associate professor of urban economics and real estate at MIT.

But the effect is not nearly as large as the Trump campaign has made it sound.

“That effect is relatively small,” Saiz says, and it cannot account for much of the rise in rent prices. One analysis found rents have increased 19% since 2019, rising 1% this year.

The effect on housing prices would be larger in an area where there is a higher concentration of immigrants, Saiz adds.

Trump has also talked about conducting a mass deportation of illegal immigrants, which would have a number of effects on the housing market. There would be fewer people in the country, decreasing demand for housing. But it would also remove a significant number of construction workers, which would likely make building new homes more expensive.

“My baseline view is that the deportation scheme that President Trump is discussing would increase home prices, not decrease home prices,” says Strain, the AEI economist. “But I think we know very little about what he actually has in mind.”