In his policy speech, Harris calls for a $25,000 tax break for first-time homebuyers
Vice President Kamala Harris, the Democratic nominee for the 2024 presidential election, included initiatives to address rising housing costs in her economic plan announced Friday. She promised that, if elected, she would reduce “red tape” in building homes and offer tax breaks to first-time homebuyers.
“There is a serious housing shortage; in many places it is too difficult to build and it drives up prices,” Harris said during her first major policy speech on Friday afternoon in Raleigh, North Carolina. “As president, I will work with the industry to build the homes we need, both to rent and to buy. We will break down barriers and reduce red tape, including at the state and local level.”
The economic plan also includes a $25,000 tax incentive for down payments for people buying their first home. This is a higher amount than the one-year tax credit of up to $10,000 for middle-class families selling their starter homes that President Joe Biden announced during the March 2024 State of the Union address.
At the time, Biden also called for a $5,000 annual tax credit for two years for middle-class first-time buyers. Analysts believe the credit is unlikely to be approved by current members of Congress.
“We also know that as home prices have risen, so have the size of down payments. Even if aspiring homeowners save for years, it is often still not enough,” Harris said. “As we work to address the housing shortage, my administration will provide first-time homebuyers with $25,000 to help with the down payment on a new home.”
Housing industry experts believe Harris has correctly diagnosed the key issues impacting today’s housing market – high mortgage rates and low housing supply – but they fear her initiatives could increase demand, solving the shortage problem supply would increase even further.
During the speech in Raleigh, Harris said that if elected, she would also provide a $6,000 child tax credit for one year and reduce prescription drug costs.
Rental market
Harris pledged to end America’s housing shortage by building three million new homes affordable to the middle class by the end of her first term. The plan includes introducing a bill on Capitol Hill called the Stop Predatory Investing Act.
“As you know, some homeowners are buying dozens, if not hundreds, of homes and apartments, trading them up and renting them out at extremely high prices – and it can make it impossible for ordinary people to be able to buy or even rent a home,” she said.
“Some commercial landlords collude to set artificially high rents, often using algorithms in price-setting software. It is anti-competitive and drives up costs. I will fight for a law that curbs these practices.”
Turning to the rental market, Harris in July mentioned efforts to ban “hidden fees and unexpected late fees that banks and other businesses use to pay their profits,” while pushing to “take on corporate landlords and limit unfair rent increases.” ”
The Democratic nominee’s speech resonates with Americans, who often cite housing costs as their biggest concerns. Despite some recent trends, the U.S. housing landscape remains expensive for many, accounting for about 70% of the total U.S. debt burden, according to Nick Luettke, an associate economist at Moodys.
Luettke said the multifamily sector has significantly expanded its inventory by nearly 25% over the past decade and, despite a 20% increase in effective rents since the end of 2019, there has recently been a 1% year-over-year reduction.
“Considering income growth, middle-income households now spend 26.8% of their income on an average apartment. While rental levels remain high for many, the national rental-to-income ratio has fallen by 2% since the 2022 peak and by 1% since the start of the pandemic, underscoring the critical role of inventory expansion in improving affordability,” said Luettke.
