Priced Out of Reach: The Flawed Housing Plan of the Harris Administration

In the wake of the September 10 presidential debate, the spotlight shone on Vice President Kamala Harris's housing plan, touted as a solution to make homeownership and renting more affordable for working Americans. However, a closer look reveals a plan that would only exacerbate the housing crisis, driving up costs and reducing supply. It's essential to understand the Administration's overall approach, which has been marked by unrelenting spending, resulting in rampant inflation. A slew of significant spending packages, including the $1.9 trillion American Rescue Plan, the $1 trillion infrastructure package, the $280 billion Chips and Science Act, and the $1 trillion Inflation Reduction Act, has left Americans with less disposable income. Harris's plan focuses on tackling the cost of living, with a particular emphasis on housing, which is often the largest expense for many families. Unfortunately, her proposal would have the opposite effect, driving up housing costs and constricting supply, further compounding the problems caused by the Biden-Harris administration. One crucial aspect of Harris's plan is her proposal for tens of thousands of dollars in new downpayment assistance. While it may seem appealing to provide support for potential homebuyers, it would have a significant inflationary effect, throwing gasoline on the proverbial fire and driving prices even higher.

To create a more affordable and sustainable housing market, it's crucial to cut red tape, streamline federal housing programs, and remove barriers to building new units. Subsidizing homeownership doesn't make housing more affordable; it only inflates prices and creates artificial demand that may not be sustainable. Earlier this year, the Biden-Harris Administration announced its plans to impose rent caps on "corporate landlords." However, rent caps have a long track record of exacerbating housing shortages by dissuading developers from building new rental units in high-demand areas. This results in fewer options, driving demand for existing units even higher, which pushes rents up in buildings that aren't subject to the caps. The combination of these two policies—downpayment assistance and rent caps—creates a one-two punch. It artificially increases the demand for homes with downpayment subsidies, driving home prices up, while disincentivizing the construction of new rental units, reducing supply. The result is a housing market where both renters and potential homeowners are squeezed, leaving everyone with fewer choices and higher prices.

Actions