During the September 10 presidential debate, Vice President Kamala Harris spotlighted her housing plan, claiming to make homeownership and renting more affordable for working Americans. While Harris does have a plan for housing, her approach would only make it more expensive and less accessible at a time when families across the country are still reeling from the impact of rising inflation from the last few years.
To understand the consequences of the Harris housing plan, let’s take a closer look at the policies of the Biden-Harris Administration over the last three and a half years. The Administration’s unrelenting torrent of spending—the $1.9 trillion so-called American Rescue Plan, the $1 trillion infrastructure package, the $280 billion Chips and Science Act, and of course ,the ironically-named Inflation Reduction Act which clocked in at $1 trillion—could not have been worse timed after a year of pandemic-related economic stimulus. This spending-fueled inflation left Americans with less to spare in their family budgets.
Now Harris says she wants to tackle Americans’ cost of living with a focus on housing, which is most people’s largest expense. Unfortunately, the Harris plan would do the opposite by driving up housing costs and constricting supply, further compounding the problems caused by the Biden-Harris administration.
Let’s start with Harris’ proposal for tens of thousands of dollars in new downpayment assistance. America has already experienced a severe shortage of housing. Large amounts of downpayment assistance might sound nice, but it will have a significant inflationary effect, throwing gasoline on the proverbial fire and driving prices even higher.
If America wants to boost housing supply and end the inflationary policies of the Biden-Harris era, we need to cut red tape, streamline federal housing programs and remove barriers to building new units.
Bob Sacha
Subsidizing homeownership doesn’t make housing more affordable. It only inflates prices and creates artificial demand—demand that may not be sustainable. Buyers who enter the market solely based on government assistance may find themselves with a mortgage payment they can’t get out of or afford in the long run if the market cools and housing prices taper.
Earlier this year, the Biden-Harris Administration announced their intention to impose rent caps on “corporate landlords.” Rent caps are a failed policy with a long track record of exacerbating housing shortages by dissuading developers from building new rental units in high-demand areas. If investors know that future rent increases will be capped, they will shift their capital elsewhere, reducing the overall supply of housing. 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.
We’ve seen how these policies work in New York and San Francisco, where rent control has been in place for decades. According to the American Institute for Economic Research, rent control policies in New York City resulted in more rental units being abandoned than built in the 1970s and 80s. We can expect more of the same under the Harris housing plan, which will replicate these failures on a national scale.
The combination of these two policies—downpayment assistance and rent caps—creates a one-two punch. On the one hand, Harris artificially increases the demand for homes with downpayment subsidies, driving home prices up. On the other hand, her rent control measures disincentivize the construction of new rental units, reducing supply.
The result?
A housing market where both renters and potential homeowners are squeezed, leaving everyone with fewer choices and higher prices.
When Harris insists that “Bidenomics is working,” her words should be taken as a warning that she plans to continue the inflationary policies of the administration she’s been leading. Her housing plan, far from solving the housing crisis, would only exacerbate it, leaving renters with less options and future homebuyers with ever-higher costs.
If America wants to boost housing supply and end the inflationary policies of the Biden-Harris era, we need to cut red tape, streamline federal housing programs, and remove barriers to building new units.
Until we move toward solutions that encourage private investment in new development, we can expect that our country’s housing shortage will persist, leaving the American dream out of reach for many working families.
Congressman Mike Flood represents Nebraska’s First Congressional District.
The views expressed in this article are the writer’s own.
