Wednesday, September 25, 2024

What would be the effects of VP Harris' housing plan?

Here is the plan:
  •  expand rental assistance for veterans and other low-income renters, 
  •  increase housing supply for people experiencing homelessness, 
  •  enforce fair housing laws, 
  •  hold corporate landlords accountable [for charging high prices?]. 
  •  provide up to $25,000 in down payment assistance for first-time homebuyers 
  •  First-generation homeowners – those whose parents did not own homes – would receive more generous assistance.
  • The law of supply and demand dictates that an increase in demand without a commensurate increase in supply will result in higher prices.
  • As of August, the overall supply of homes for sale was 3.7 months’ worth. For houses in lower price tiers, that number drops to 2.4 months. Sellers’ markets create upward price pressure on home prices, which grows more powerful when demand is further stimulated. Ms. Harris’s policy would do just that, boosting demand by giving buyers more spending money.
My take is that the real barrier to increasing housing supply is not money but rather the restrictive zoning (see Nice Summary of the Affordable Housing Crisis) but, politically, restrictive zoning is very popular.  

The WSJ is right to point out that increasing demand will exacerbate the very problem VP Harris says she wants to address.  She can begin by listening to her economists, if she has any.  


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