Kamala Harris Embraces YIMBY Approach, Housing Experts Are Hopeful

The latest housing proposal from Vice President Kamala Harris is bringing some much-needed optimism to the housing market, which currently struggles to meet demand. During her first policy speech, Harris outlined her ambitious plan to construct 3 million new homes over a span of four years.

This initiative aligns with the “Yes, In My BackYard” (YIMBY) movement, which advocates for increased high-density and affordable housing by addressing the obstacles to new construction. In recent years, the housing market has faced significant challenges from a limited supply, leading to skyrocketing prices and making it hard for many potential buyers to enter the market.

Harris emphasized that her administration would prioritize partnerships with both labor and the private sector to overcome barriers to new construction at various levels of government. “There’s a serious housing shortage,” Harris stated. “In many places, it’s too difficult to build, and it’s driving prices up. As president, I will work in partnership with industry to build the housing we need both to rent and to buy.”

Housing policy experts agree that addressing the supply issue is essential. Jung Hyun Choi, a principal research associate at the Urban Institute, highlighted the current supply deficit as the main problem plaguing the housing market, asserting that Harris’ proposal is a vital step toward a solution.

John Walsh, another expert from the Urban Institute, praised the proposal’s recognition of existing housing challenges. He noted that the plan explicitly aims to boost the construction of not just any homes, but specifically affordable homes, which are desperately needed.

According to Christopher Mayer, a real estate professor at Columbia Business School, homeownership is crucial for creating economic stability in the lives of many Americans. He asserted that homeownership remains a fundamental pathway to wealth creation, particularly in light of the declining homeownership rates among younger generations.

The existing shortage of starter homes is a significant barrier for those transitioning from renting to owning, particularly as high prices and elevated mortgage rates continue to strain their abilities to buy. Recent reports indicated that the United States is short between 4 to 7 million homes, a situation exacerbated by supply chain issues and restrictive zoning laws—problems intensified by the COVID-19 pandemic.

Harris’ housing initiative aims to fill this crucial gap by facilitating the creation of new starter homes. The vice president’s proposals build upon existing policies pursued by the Biden administration, including efforts to relax regulations that hinder construction and previous calls for zoning reform.

Among her innovative strategies, Harris plans to introduce the nation’s first tax incentive for builders who construct starter homes designated for first-time buyers. Additionally, she aims to establish a $40 billion federal fund to encourage local housing construction, building upon Biden’s earlier proposal of a $20 billion fund. Harris also pledges to enhance tax incentives for businesses that invest in affordable rental housing.

Susan Wachter, a professor of real estate and finance at the Wharton School, expressed strong support for Harris’ commitment to building 3 million homes, calling it a crucial response to what she termed a “generational crisis” related to housing costs. Wachter noted the necessity of increasing available land for housing simultaneously.

However, experts caution that while Harris’ proposal offers a promising start towards alleviating the housing crunch and reducing economic disparities, additional details are crucial for assessing its potential impact fully. Walsh pointed out that the specifics of where these homes would be constructed will be vital in determining the proposal’s efficacy.

A few aspects of Harris’ plan have garnered mixed reactions. For example, her down-payment assistance proposal of $25,000 for new homeowners drew both praise and skepticism. Mayer mentioned the proposal may be well-intentioned but may not be the most cost-effective approach, suggesting that it might benefit those with family support for down payments more than lower-income buyers. Conversely, Wachter expressed her support for helping potential homeowners but expressed doubts about the political viability of the proposal.

On the other hand, the idea of curtailing Wall Street investors from buying up starter homes elicited varied opinions. Mayer pointed out that a significant portion of single-family rentals is not owned by large institutional investors but rather by small-scale homeowners. He noted that while institutional investors might bring efficiencies to property management, the focus should remain on building more homes for everyone.

Despite some uncertainties surrounding specific elements of Harris’ plan, there is a consensus among experts that increasing the availability of affordable first-time homes is imperative for the nation. Wachter remarked, “This would be a huge impact. Right now, what’s threatened is the ability to get onto that ladder to achieve housing security, especially in markets where jobs are available.”

Source: Business Insider