Vice President Kamala Harris’ latest housing proposal gives YIMBYs, which is great news for a housing market where supply is not keeping up with demand, driving up prices and driving buyers away.
The Democratic presidential candidate on Friday unveiled for the first time details of a new economic package she wants to implement within her first 100 days in office, and a key part of her proposal is building 3 million new homes over four years.
This fits nicely with the YIMBY movement, which stands for “Yes, In My BackYard,” a pro-development movement focused on increasing the supply of high-density, affordable housing by targeting barriers to new construction (it’s the counterweight to the NIMBY, or “Not In My BackYard,” movement).
Governor Harris said Friday that she plans to build 3 million housing units by partnering with labor and the private sector to remove obstacles to new construction at both the state and local levels.
“We have a serious housing shortage,” Harris said Friday. “In many places, housing is extremely hard to build and expensive. As president, I will work with industry to build the homes we need, both for rent and for purchase.”
Housing policy experts say that’s the most important aspect of her multifaceted plan, because what the market needs most right now is more supply.
Chung Hyun Choi, a senior research fellow at the Urban Institute’s Housing Finance Policy Center, said a housing supply shortage is “the root cause of the housing market’s current problems,” adding that Harris’ proposal to build more housing is “an important solution to the housing market problems.”
Four housing policy experts Business Insider spoke to all agreed.
“The best thing about this proposal is that it recognizes the major problems with housing today and explicitly aims to increase the amount of housing that is built — not just the amount of housing, but the amount of affordable housing,” John Walsh, a research analyst at the Urban Institute’s Housing Finance Policy Center, told Business Insider.
Christopher Meyer, a real estate professor at Columbia Business School, praised Harris’ focus on supply, saying homeownership is one of the surest ways to bring stability to Americans’ financial lives and should be prioritized.
“I believe most people should own their own home,” Meyer said, noting that homeownership rates are declining among young people. “Homeownership is a sure way to build wealth. It brings stability to a family.”
A Las Vegas housing development similar to Tao’s property. James Marshall/Getty Images
Addressing the housing shortage
But with a low supply of starter homes, people making the transition from renting to homeownership often have to deal with both high prices and steep mortgage rates.
The US is facing a serious housing shortage, with the country missing between 4 and 7 million homes, NPR reported this spring. Builders have cited supply chain issues and other factors as reasons for the slowdown in construction. Zoning is also a major obstacle to homebuilding.
Mayer said the problem has been exacerbated by more people working remotely during COVID-19, and Harris’ proposal to build 3 million new housing units aims to fill that critical gap.
Harris’ housing proposals expand on policies President Joe Biden has sought to implement since taking office, including relaxing regulations that restrict construction. Former President Donald Trump also urged states and cities to pursue some zoning reforms during his presidency.
The vice president’s plan to build millions of new homes hinges on several novel methods. Harris would offer the nation’s first tax incentives to builders who build and sell first-time homes to first-time buyers. Harris would also create a $40 billion federal fund, expanding Biden’s proposed $20 billion fund, to incentivize local housing construction. Additionally, Harris vowed to expand existing tax incentives for companies that build affordable rental housing.
“The answer is to increase supply, and increase supply to the optimal group of people, which is first-time homebuyers,” said Susan Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania.
Wachter believes Governor Harris’ pledge to build 3 million housing units is the strongest part of her plan because it addresses a “generational crisis” in rent and home affordability. The increase in housing supply needs to be matched with an increase in available land, he added.
Part of Harris’ proposed federal funding to boost housing would allow some federal land to be converted into new affordable development, something President Trump also recently promised.
Both Chay and Walsh were quick to caution that while Harris’ proposal is a great first step toward easing housing burdens and narrowing the wealth gap, more details are needed to judge its ultimate effectiveness.
“The details of where these homes will actually be used are what matter,” Walsh said.
Harris unveiled several housing proposals at a rally on Friday. Megan Varner/Getty Images
Down payments and targeting Wall Street
Harris’ other flagship proposals, such as offering $25,000 in down payment assistance to new homebuyers and preventing Wall Street investors from buying up first homes, drew more mixed reactions from experts who spoke to Business Insider.
In Mayer’s view, down payment policies are well-intentioned but not particularly cost-effective. Mayer said many first-time homebuyers typically rely on family members to help with a down payment, and low-income buyers often don’t have access to inherited wealth, so the $25,000 would be a big help to them. But he would rather find a way to lower down payments overall than spread the money around, as Harris is proposing.
Wachter, meanwhile, said he supports efforts to help prospective homebuyers with down payments but isn’t confident the proposal would have broad political support.
Wachter declined to comment on Harris’ proposal to restrict Wall Street from buying single-family homes, but Mayer is less enthusiastic.
“The vast majority of single-family rental housing is owned not by Wall Streeters, but by people who own a small number of homes,” he said of the plan. “Institutional investors are looking to create efficiencies in management, and those efficiencies generally translate to better opportunities for renters.”
While questions remain about some aspects of Harris’ proposal, experts agreed that the basic premise of building more affordable first-time housing is something the country needs.
“This is going to have a huge impact,” Wachter said. “What’s under threat right now is the ability to climb the ladder to achieve housing stability. And housing stability in places where there are markets and where there are jobs is a key issue for young Americans today.”
