America’s gaping shortage of affordable housing has risen to the top of voter concerns and campaign promises, as both Democratic candidate Kamala Harris and Republican candidate Donald Trump promise to fix the problem if elected.
Their two visions of how to solve the affordable housing shortage have little in common, and Harris’ plan is much more detailed. But they have one thing in common: Both have drawn skepticism from outside economists.
Harris is promising a cocktail of tax cuts aimed at boosting home building — which many economists say could help create supply. But he’s also offering a $25,000 perk to help first-time homeowners break into the market, which many economists fear could increase demand too much and push up home prices even further. And both policies would have to be approved by Congress, which would affect their design and implementation.
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Trump’s plan raises even more doubts. He promises to deport immigrants living in the country illegally, which could temporarily reduce the demand for housing, but will most likely also cut the workforce in the construction industry and ultimately limit the supply of new housing. His other ideas include lowering interest rates, something he has no direct control over and is poised to happen anyway.
Economists’ doubts about housing market policy plans highlight the grim reality. There are only a few quick fixes available for the affordable housing shortage that has lasted for more than 15 years, which is being exacerbated by population growth and social trends. While ambitious promises may sound good in debates and television commercials, real political efforts to fix the national housing deficit are proving to be messy and slow—even when they’re desperately needed.
Here’s what the candidates are proposing and what experts are saying about these plans.
Harris: Expand supply through tax credits
Harris promises to increase housing supply by expanding the low-income housing tax credit, providing incentives for state and local housing investment and creating a $40 billion tax credit to make affordable projects financially viable for developers.
The purpose would be to try to encourage construction demolition very quickly. Mark Zandi, Moody’s chief economist, and Jim Parrott, an Obama administration housing adviser, are advising the Harris campaign on housing issues. They estimate there is a shortfall of 3 million homes in the United States, which Harris promises to fill.
But the policy would require congressional approval, which is not certain. Because the plans are “a framework that makes it very clear what they’re prioritizing,” Parrott said.
Michael Strain, an economist at the conservative American Enterprise Institute, said “we don’t have a ton of details” about Harris’ plans, but building housing was the right goal. “It depends so much on how it’s implemented,” he said.
Harris: $25,000 boost for first timers
Delivery fixes aren’t all Harris has proposed: He’s also promising $25,000 in assistance to first-time home buyers. The plan is not detailed, and it is not yet clear who would be eligible. It is also not clear how the aid would be structured. It could go to buyers up front, rather than as a deferred tax credit – but how that would work has yet to be explained.
While voters may accept the promise of housing assistance, it is controversial among economists. Many fear the benefit would simply lead to more competition for an already limited housing supply, driving up prices.
“I think it’s a really bad idea,” Strain said. “The ultimate beneficiary of this credit will not be the first-time home buyer. It will be people who sell homes.”
This risk can be circumvented, people close to the campaign claim. They falter when the $25,000 is paid, ensuring that it hits later than practices that encourage supply. In this way, there will be more apartments, and the down payment assistance will not be eaten directly into the prices.
“Vice President Harris’ homeownership plan is to greatly increase the supply of affordable starter homes and then make sure hard-working Americans can buy,” said Gene Sperling, senior economic adviser to the Harris campaign. “Of course, this means that the supply of affordable housing needs to be increased first.”
But nailing the timing can be difficult. What if it takes time to build new homes in Washington, DC or Charlotte, North Carolina, but a bunch of first-timers are taking advantage of what those places have to offer? It could increase competition for the still limited supply of available housing.
Because of that challenge, Zandi said he was “least enamored” of Harris’ package with $25,000 in first-time buyer assistance.
Trump: Deport immigrants
Trump promises to lower the cost of housing by stopping the “unsustainable onslaught of illegal aliens driving up the cost of housing,” said Karoline Leavitt, his campaign’s national press secretary.
But even if Trump were able to deport large numbers of immigrants — an open question — that alone would not solve the housing crisis. Daryl Fairweather, chief economist at Redfin, noted that the housing price boom long predated the country’s recent increase in the undocumented immigrant population, so mass deportations won’t address its root cause.
Fairweather added that it was not clear that mass evictions would even significantly reduce the number of families in need of a home. Immigrants often live with relatives who may not be deported. More than two-thirds of the roughly 6.3 million households where an immigrant is in the country illegally are “mixed,” meaning they include U.S.-born or legal immigrants.
Albert Saiz, a professor of urban economics and real estate at the Massachusetts Institute of Technology, said mass evictions might slow rent increases in cities like New York and San Francisco, but he doubted that the cost of selling homes across the country would decrease.
In fact, the policy may prove counterproductive. Fairweather also noted that 25 percent of construction workers were foreign-born, so mass deportations could also reduce the labor available to build new apartments and high-rises.
“Immigration is not only a strain on the housing supply, but it can also be a boon to the housing supply,” he said.
Trump: Lower interest rates
Trump also promises to fix affordability by lowering borrowing costs. He has “a real plan to beat inflation and lower mortgage rates,” Leavitt said.
He added that he would “remove costly regulations and free up appropriate portions of federal land for housing,” without giving further details on those ideas.
When it comes to mortgage rates, Trump has little ability to keep his promises. Mortgage rates generally track interest rates on longer-dated government bonds, which in turn move in part due to Federal Reserve policy. But the Fed sets policy rates independently of the White House.
Trump urged the central bank to lower interest rates during his presidency, but Fed officials ignored his regular criticism. Trump also flirted with firing Fed Chairman Jerome Powell, but found it unclear whether he could legally do so.
Trump has recently said he won’t try to fire Powell if elected — though he made the statement somewhat contingent on Powell doing “the right thing.”
Absent presidential intervention, mortgage rates are expected to fall slightly in 2025 and 2026 as the central bank is expected to lower borrowing costs amid cooling inflation. But that would have almost nothing to do with who sits in the White House.
Joseph LaVorgna, chief economist at SMBC Nikko Securities and a former Trump White House economist, said lower interest rates “are going to help no matter who’s in office.”
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