What Harris and Trump’s Housing Plans Really Mean

In recent weeks, both Kamala Harris and Donald Trump have put forward plans to address the nation's housing and home affordability crisis, a concern for millions of Americans. But beyond these proposals, a key question remains: Which ideas are simply campaign rhetoric, and which have the potential to become reality in what will likely be a politically divided Congress?

It’s a Supply Crisis

As our team recently covered, US home prices were already reaching record highs leading up to 2020, but with profound shifts in housing demand during and after the pandemic, rents and valuations have continued to reach stratospheric levels.

For the average American consumer and voter who has had to cope with across-the-board price inflation in recent years, the ongoing constraints of home affordability are far from trivial. According to the National Low Income Housing Coalition (NLIHC), in 17 states and the District of Columbia, a person needs an hourly wage above $30 per hour to afford an average two-bedroom rental.

How to effectively solve the nation's housing affordability crisis is a question that will immediately face the next US president. Although both candidates’ plans are short on details, each implicitly acknowledges that the crisis's persistence is primarily a supply problem.

In August, Vice President and Democrat presidential nominee Kamala Harris seemingly boosted the salience of the housing issue in this year's election by pitching a set of housing plans in her campaign's first policy proposal release. For Harris and the Democrats, the strategy is to use targeted initiatives to boost supply and improve homeownership access. Harris' campaign plan includes building 3 million new units over the next four years, emphasizing expanding affordable housing.

For the Trump campaign and the GOP, market-based solutions will form the backbone of any approach to solving the crisis. According to reporting by the Carolina Journal, the Trump campaign highlights regulatory hurdles as a critical barrier to new housing development and would place federal deregulation at the center of any pro-supply strategy. The Republican Party’s 2024 platform also proposed opening portions of federal lands for new home construction.

Making Homeownership Accessible

Since the advent of the New Deal in the 1930s, homeownership has been viewed as a central element of the American dream. It should come as little surprise then that 90 years after implementing pro-homeownership policies like the Federal Housing Administration (FHA) and the Home Owners’ Loan Corporation, US presidential candidates continue to pitch voters on making homeownership more accessible.

As part of those efforts, the Harris campaign is proposing roughly $40 billion in initiatives for construction financing, including a new tax incentive for home builders to construct starter homes. The funding proposal would include a plan to give eligible first-time home buyers up to $25,000 towards a down payment. Still, how a Harris Administration would fund this is less clear. Some point to a separate proposal the Harris campaign has put out that would tax unrealized capital gains and hike the nation’s top income tax rate from 37% to 39.6%.

Donald Trump's proposals for increasing Americans' access to homeownership follow the pro-market and deregulatory approach of his housing supply growth plans. According to a recent National Multifamily Home Council (NMHC) breakdown of each candidate's positions on a range of economic policy issues, the 2024 GOP platform also includes a plan for tax incentives to support first-time buyers and rescinding what the party views as "unnecessary" regulations.

Room for Compromise

These days, policy agreements between America's two major political parties are rare to see out in the open. Still, within the nuances of policymaking in what will likely be a divided federal government, some proposals are more likely to succeed than others if the salience of today’s housing crisis forces lawmakers to act.

Both Harris and Trump and critical segments of each party's lawmakers appear to share a willingness to use tax credits to foster housing construction. Accordingly, tax credit mechanisms could end up sitting at the nexus of any potential congressional compromise dealing with housing policy during either candidate's presidential term.

Former President Trump has signaled his desire to extend the temporary tax cuts established in the Tax Cuts and Jobs Act that his administration signed into law in 2017, which will expire at the end of 2025. Additionally, Trump looks to remove taxes on social security payments and further reduce the corporate tax rate if re-elected to the White House. Though the Trump plan is short on real estate or housing specifics, it's conceivable that a Republican-introduced tax bill will cast a wider net of tax cuts for businesses and individuals that could include taxes on real estate investment returns.

Vice President Harris has proposed expanding the Low-Income Housing Tax Credit (LIHTC), which has received some of the highest bipartisan support for supply-side housing policy in recent years. Harris's plan would also seek to establish a business-related tax credit similar to that proposed in the Senate-proposed Neighborhood Homes Investment Act to encourage home construction and rehabilitation.

Legislative compromise in the upcoming administration may also arise from bipartisan consensus in Congress on items where the presidential candidates have deeper divisions.

For example, changes to zoning laws may also find palatability in the upcoming Congress. Although zoning reform was not featured in the platforms of either presidential candidate or party, it has seen bipartisan success at the state and local levels in recent years and remains an essential piece of any discussion on housing policy changes.

Donald Trump has opposed changes to zoning laws in the past, but if the nation's housing crisis makes its way onto the agenda of federal lawmakers, a future President Trump may be forced to adapt to the more moderate positions of sitting lawmakers.

Similarly, Kamala Harris’s recent embrace of rent caps noticeably deviates from the median position of congress members and economists. Consequently, a future President Harris may have to soften her position to achieve a national policy response.

Manifesting Consensus

Of course, no matter who becomes the 47th president come January, America's enduring housing affordability crisis will challenge the upcoming administration's ability to strike legislative compromises.

While each campaign's lack of detail makes meaningfully comparing these plans difficult, how each campaign and party is telegraphing their framing of the crisis and how they view the government's role in solving it can tell us much about how either administration would approach economic policy issues more broadly. For now, today's housing crisis affects voters in Red and Blue states alike—the question is, will the winner of the 2024 election have the mandate from voters to solve it?