Housing affordability has emerged as one of the most critical issues in the 2024 presidential election, capturing the attention of both Kamala Harris and Donald Trump. With the U.S. facing a housing shortage of between 1.5 million and 2 million units, according to estimates from Moody’s Analytics and Freddie Mac, the need for robust policy solutions has never been more urgent. As investors and industry stakeholders prepare for the potential impact of the election's outcome on the real estate market, understanding the contrasting approaches of the two leading candidates is crucial.
Kamala Harris: Building Toward Affordability
Kamala Harris, the Democratic candidate, has made housing a cornerstone of her economic agenda. Her comprehensive plan to tackle the housing crisis is centered around increasing the supply of housing to alleviate affordability pressures. Here’s a closer look at her key proposals:
1. Development of 3 Million New Housing Units
Harris has proposed an ambitious plan to develop 3 million new housing units during her first term as president. This proposal directly addresses the ongoing housing shortage, which has contributed to skyrocketing home prices and rents. By increasing the supply of housing, Harris aims to create a more balanced market, which could help stabilize or even reduce housing costs.
For investors, this surge in housing development could present significant opportunities. As new residential properties come online, particularly in underserved areas, there may be potential for increased returns in affordable housing projects, as well as in related industries such as construction, materials, and services.
2. Tax Incentives for Developers
To incentivize the construction of affordable housing, Harris plans to introduce tax incentives for developers, particularly those focused on building homes for first-time buyers. High interest rates and rising construction costs have been major barriers to new development, but these incentives could help offset some of these challenges, making it more feasible for developers to undertake new projects.
This aspect of Harris’s plan is particularly relevant for investors looking to enter or expand their presence in the residential real estate market. By targeting first-time homebuyers, these incentives could stimulate demand in a segment that has been increasingly priced out of the market, creating opportunities for growth in the affordable and middle-income housing sectors.
3. Expansion of the Low Income Housing Tax Credit (LIHTC) Program
Harris also intends to expand the Low Income Housing Tax Credit (LIHTC) program, which has been a critical tool for financing affordable housing across the country. Her plan includes increasing the number of credits available and lowering the threshold for projects to qualify. This expansion could make it easier for developers to access the capital needed to build affordable housing, further boosting supply.
For investors, the expansion of LIHTC could open new avenues for investment in affordable housing projects. With more credits available, developers may be more likely to pursue these projects, leading to increased opportunities for partnerships and investment in this sector.
4. $40 Billion Fund to Support Local Governments
Another key element of Harris’s housing strategy is the creation of a $40 billion fund to support local governments in addressing their unique housing challenges. This fund is designed to reduce bureaucratic red tape and encourage local solutions to the affordability crisis. By aligning her campaign with the YIMBY (Yes In My Backyard) movement, Harris is advocating for more housing development in areas where local regulations have traditionally hindered growth.
Investors should pay close attention to how this fund is implemented, as it could lead to changes in local zoning laws and regulations that may open up new markets for development. Areas that were previously difficult to develop due to restrictive regulations could become more accessible, offering new investment opportunities.
5. Down-Payment Assistance for First-Generation Homeowners
To support first-generation homeowners, Harris has proposed offering up to $25,000 in down-payment assistance for renters who have demonstrated financial responsibility by paying rent on time for two years. This initiative is aimed at helping those who have been locked out of homeownership due to the high cost of entry.
For investors, this program could stimulate demand for entry-level homes, particularly in markets where affordability has been a significant barrier to homeownership. By making it easier for renters to transition into homeownership, Harris’s plan could drive demand in this segment of the market, creating opportunities for investors focused on first-time homebuyer markets.
Donald Trump: Deregulation and Federal Land Use
Donald Trump’s approach to housing affordability is shaped by his broader economic philosophy of deregulation and market-driven solutions. While his proposals are less detailed than Harris’s, they reflect a continued focus on reducing government intervention and unlocking new development opportunities. Here’s a closer look at Trump’s key proposals:
1. Opening Up Federal Land for Housing Development
One of Trump’s most significant proposals is to open up federal land for housing development. This strategy is particularly focused on the western United States, where large tracts of federal land could be made available for new housing projects. By unlocking these lands, Trump aims to create more opportunities for affordable housing construction, particularly in areas where land scarcity has driven up prices.
For investors, this policy could open up new frontiers for development. Federal land, particularly in fast-growing regions like Nevada, Utah, and Colorado, could become available for large-scale housing projects. Investors who can navigate the complexities of federal land development could find lucrative opportunities in these newly accessible areas.
2. Slashing Regulations to Lower Housing Costs
Trump has long been an advocate for reducing regulatory burdens on developers, arguing that excessive regulations have artificially inflated housing costs. His platform includes a continued focus on deregulation, to make it easier and less expensive to build new housing.
For investors, Trump’s deregulation efforts could reduce the cost and complexity of real estate development. By removing barriers to construction, such as lengthy permitting processes and restrictive zoning laws, Trump’s policies could lead to an increase in housing supply, particularly in areas where development has been stymied by regulation.
3. Protecting Single-Family Zoning
Trump has also expressed support for protecting single-family zoning, which has been a contentious issue in many parts of the country. While some industry leaders argue that more flexible zoning laws are needed to accommodate higher-density housing, Trump’s stance suggests a preference for maintaining traditional suburban landscapes.
For investors, this focus on single-family zoning could have mixed implications. On one hand, it could preserve the value of existing single-family neighborhoods, making them attractive for long-term investment. On the other hand, it could limit opportunities for higher-density developments in suburban areas, potentially slowing the growth of multifamily and mixed-use projects.
4. Continuation of Opportunity Zones
Trump’s creation of opportunity zones during his first term was a significant policy initiative aimed at attracting investment to economically distressed areas. These zones offer tax incentives to investors who fund projects in designated areas, to spur economic growth and job creation.
If re-elected, Trump may continue to focus on opportunity zones as a tool for addressing housing affordability. For investors, this could mean continued opportunities to invest in these areas, taking advantage of the tax benefits and potential for high returns in regions that are poised for revitalization.
5. Reducing Immigration to Address Housing Supply
Trump has also connected the issue of housing affordability to immigration, stating that reducing both legal and illegal immigration would open up the existing housing supply for U.S. citizens. This proposal is part of his broader immigration platform, which includes securing the border and deporting illegal immigrants.
For investors, this aspect of Trump’s policy could have implications for housing demand, particularly in regions with large immigrant populations. While reducing immigration could ease pressure on housing supply in some areas, it could also lead to a decrease in demand in markets that have traditionally relied on immigrant communities for growth.
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