Kamala Harris’ welcome housing boost is overdue

Yes in my backyard. Like Richard Nixon going to China, sometimes a change in policy is sold best by an unlikely proponent. Vice President Kamala Harris leading the charge for more housing supply in the United States shows just how far her party has come. Democrats have long been skeptical about overhauling supply and regulation to make housing more affordable. Harris’ $40 billion housing agenda, released last week, is a welcome recognition that drastic changes are needed to close a national shortage of 4.5 million homes.

Harris, who hails from California, the western epicenter of the national housing crisis, wants three million new homes in four years, on top of what homebuilders were already planning. That’s a punchy target: developers completed just 1.5 million units in 2023. Her campaign aims to encourage what it calls “innovative” approaches to affordable housing, like providing grants and loans to local developers and non-profit organizations. The plan leans heavily on zoning reforms and employs language about cutting red tape usually used by Republicans. Former President Barack Obama endorsed the shift in his speech to the Democratic National Convention on Tuesday night, saying his party needed to "clear away the ideas of the past" and slash outdated rules.

Several American cities and states have already pushed through ambitious home-building plans with measurable effects on prices. Washington, D.C., for example, achieved its 2019 goal of building 36,000 new homes by 2025 several months ahead of schedule. In Wisconsin, a top election battleground state, Democrats joined with Republicans to pass supply-focused housing laws, encouraging municipalities to change land-use rules and streamline project reviews.

Nevertheless, a nationwide housing drive risks stoking homeowners’ ire in a country where the middle class derives most of its wealth from real estate and two-thirds of dwellings are occupied by their owners. Residents seek to defend property values at planning board meetings, for example by delaying projects so they become uneconomical. Harris’ plan would not remove local control but would use federal power to support more building.

Given the immense shortage, though, more housing will probably slow the appreciation in home values, not send them plummeting. In Washington, D.C., the new burst of housing is estimated to keep rents 5.5% lower than if development had proceeded at its prior pace, according to a city-commissioned study.

Real estate prices also vary with other factors like incomes and borrowing costs. In this sense, Democrats’ embrace of building comes at a good time. If Harris is elected, her first year in office will likely be marked by the Federal Reserve cutting interest rates. Builders missed an opportunity to build while interest rates were low. Now, the political and economic winds are blowing in the same direction. Start the bulldozers.

Context News

U.S. Democratic presidential candidate Kamala Harris released a housing proposal on Aug. 16 that aims to spur the construction of three million new homes in four years by providing subsidies for home builders and home buyers. The plan would spend $40 billion on grants for local housing authorities, in part to promote land-use regulation changes.