The housing affordability plan proposed by Vice President Kamala Harris is under scrutiny, with critics arguing that it could exacerbate the already escalating home prices under the Biden administration.
Harris's plan, which she unveiled during a recent debate, aims to address the national housing supply crisis by constructing three million affordable rental units and homes in her first term. However, skeptics argue that the plan could inadvertently inflate housing prices and make homeownership an unattainable dream for many young Americans.
According to The Federalist, Harris's plan includes cutting bureaucratic red tape to expedite housing construction and penalizing firms that hoard available homes to inflate prices. She also intends to sign legislation to outlaw new forms of price fixing by corporate landlords. "Vice President Harris knows rent is too high," the plan states, promising to provide first-time homebuyers with up to $25,000 to assist with their down payments, with additional support for first-generation homeowners.
However, critics argue that this plan could perpetuate the prohibitive conditions that Harris and President Biden have created for future generations of homeowners. "The worse this gets, the more we are essentially attaching a penalty to people who are investing in themselves, investing in their financial future, investing in their family, and investing in intergenerational wealth," said EJ Antoni, a research fellow and public finance economist at the Heritage Foundation. He added that this situation is creating a divide between the "haves and have-nots."
Antoni likened Harris's $25,000 plan to student loans and financial aid plans, which were intended to assist students with financial struggles but ultimately led to colleges and universities inflating their tuition costs. He pointed out that the situation with mortgages is even worse because the $25,000 will not reduce the overall price, but rather serve as a down payment, potentially prompting sellers to increase the price.
The plan's lack of clarity on whether the down payment assistance will be reserved only for Americans has also raised concerns. Sen. J.D. Vance (R-Ohio) noted that Harris's plan could potentially allow millions of illegal immigrants to receive this assistance, thereby driving housing demand in a supply-limited environment.
The economic conditions under the Biden-Harris administration have led to soaring mortgage rates and rental premiums. Sen. Tim Scott (R-S.C.) questioned the Harris-Biden Department of Housing and Urban Developments rent control mandates at a Senate Banking, Housing, and Urban Affairs Committee hearing in April, arguing that they reduce housing supply and inflate prices.
"Despite empty promises from the White House about helping working families, the simple fact is that housing costs under President Biden and Vice President Harris have skyrocketed," Scott told The Federalist. He attributed this to reckless spending, progressive proposals like rent controls, and costly 'green climate' goals.
The federal government's push for energy efficiency standards on new buildings and homes is also seen as detrimental to housing affordability. The National Association of Home Builders estimates that these standards could add up to $31,000 to homeowners' costs, with a return on investment that could take up to 90 years.
The Federal Reserve's interest rate fluctuations have also been criticized for enabling large hedge funds, such as BlackRock, to hoard single-family homes, outbidding average Americans. Antoni attributed this to the Federal Reserve's decision to impose extremely low interest rates, followed by skyrocketing rates in response to massive federal spending since 2021.
"Harris literally owns half of the inflation that we face today, and even for the other half, she was the administrations arguably the administrations biggest cheerleader for all of that spending as well," Antoni said.
While the higher interest rates have somewhat curbed purchasing from BlackRock, they have also made homeownership more challenging for Americans, as houses enter the market at exorbitantly high prices. Antoni explained that sellers are compelled to sell their homes at a premium to compensate for the interest rates on their next home purchase. This situation, critics argue, underscores the potential pitfalls of Harris's housing plan and the need for a more sustainable solution to the housing crisis.
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