America’s dire shortage of affordable housing tops voters’ lists of concerns and is a key campaign promise. Both Democratic presidential candidate Kamala Harris and Republican candidate Donald Trump pledge to solve the problem if elected.
Their two visions for how to solve the affordable housing shortage have little in common, and Harris’s plan is much more detailed. But they do share one quality: Both have drawn skepticism from outside economists.
Harris is promising a cocktail of tax cuts designed to stimulate housing construction — which several economists say could help create supply. But she’s also rolling out a $25,000 benefit to help first-time homebuyers enter the market, which many economists say could stimulate demand too much, pushing up home prices even further. And both sets of policies would have to be passed by Congress, which would affect their design and feasibility.
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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 demand for housing but would likely hurt the construction industry and ultimately limit the supply of new homes. His other ideas include lowering interest rates, something he has no direct control over and that seems imminent anyway.
Economists who question housing policy plans underscore a bleak reality. There are few quick fixes for an affordable housing shortage that has been more than 15 years in the making, and is exacerbated by demographic and social trends. While ambitious promises sound good in debates and TV ads, actual policy action to solve the national housing shortage is likely to be messy and slow — even if it is desperately needed.
Below you can read what the candidates propose and what experts say about these plans.
Harris: Expand offerings using tax incentives
Harris promises to increase the supply of housing by expanding the tax deduction for low-income housing, providing incentives for housing investment at the state and local level, and creating a $40 billion tax credit to make affordable projects economically feasible for builders.
The point would be to try to stimulate a building boom very quickly. Mark Zandi, chief economist at Moody’s, and Jim Parrott, a housing adviser in the Obama administration, are advising Harris’ campaign on housing issues. They estimate that the United States has a 3 million-home shortage, and Harris promises to close that gap.
But the policy would need approval from Congress, which is not certain. Given that, the plans are “a framework that makes it very clear what they’re going to prioritize,” Parrott said.
Michael Strain, an economist at the conservative American Enterprise Institute, said “we don’t have a whole lot of details” about Harris’ plans, but that building housing was the right goal. “So much depends on how it’s executed,” he said.
Harris: $25,000 boost for first-time home buyers
Supply fixes aren’t the only thing Harris has proposed: She’s also promising $25,000 in assistance to first-time homebuyers. The plan isn’t detailed, and it’s not yet clear who would qualify. Nor is it clear how the aid would be structured. It could go directly to buyers, rather than as a tax-deferred deduction — but exactly how that would work has yet to be spelled out.
While voters embrace the promise of housing assistance, it is controversial among economists. Many worry that the benefit would only increase competition for an already limited supply of homes, pushing up prices.
“I think it’s a really bad idea,” Strain said. “The ultimate beneficiaries of that credit are not the first-time home buyers. They’re the people who are selling their homes.”
There is a way around that risk, people close to the campaign argue. They will stagger when the $25,000 is paid out, and make sure it arrives later than the supply-boosting policy. That way, more homes will be available and the down payment assistance won’t be directly factored into prices.
“Vice President Harris’ plan for homeownership is to vastly increase the supply of affordable starter homes and then make sure that hardworking Americans can buy them,” said Gene Sperling, a senior economic adviser to Harris’ campaign. “Of course, that means we have to increase the affordable housing stock first.”
But timing can be tricky. What if it takes time to build new homes in Washington, D.C., or Charlotte, North Carolina, but a lot of first-time buyers are taking advantage of the benefits in those places? It could make for stiffer competition for a still-limited supply of available homes.
Given that challenge, Zandi said of Harris’ package that he is “least enamored” with the $25,000 in assistance for first-time home buyers.
Trump: Deport Immigrants
Trump promises to lower the cost of housing by ending “the unsustainable invasion of illegal aliens that is driving up the cost of housing,” said Karoline Leavitt, his campaign’s national spokesperson.
But even if Trump were able to expel large numbers of immigrants — an open question — that alone wouldn’t solve the housing crisis. Daryl Fairweather, Redfin’s chief economist, noted that the acceleration in home prices long preceded the recent surge in the population of immigrants living in the country illegally, so mass deportations wouldn’t address the root cause.
Fairweather added that it was unclear whether mass deportations would significantly reduce the number of families in need of housing. Immigrants often live with relatives who may not be deported. More than two-thirds of the roughly 6.3 million households with an immigrant living in the country illegally are “mixed status,” meaning they contain U.S.-born or legal immigrants.
Albert Saiz, a professor of urban economics and real estate at the Massachusetts Institute of Technology, said mass deportations could slow rent growth in cities like New York and San Francisco, but he doubted it would lower the cost of selling homes nationwide.
In fact, the policy could prove counterproductive. Fairweather also noted that 25% of construction workers were foreign-born, so mass deportations could also reduce the available labor pool for building new homes and apartment buildings.
“Immigration is not only a burden on housing supply, it can also be a boon to housing supply,” she said.
Trump: Lower interest rates
Trump also promises to improve affordability by lowering borrowing costs. He has a “real plan to beat inflation, lower mortgage rates,” Leavitt said.
She added that he would “eliminate costly regulations and free up appropriate portions of federal land for housing,” without providing further details about those ideas.
When it comes to mortgage rates, Trump has little ability to deliver on his promises. Mortgage rates typically track yields on longer-term Treasuries, which in turn change in part because of Federal Reserve policy. But the Fed sets policy rates independently of the White House.
Trump pushed the Fed to cut rates during his tenure, but Fed officials ignored his frequent criticism. Trump also flirted with firing Fed Chairman Jerome Powell, but found it unclear whether he legally could do so.
Trump recently said he has no plans to fire Powell if elected, though he made that statement somewhat contingent on Powell doing the “right thing.”
Even without presidential intervention, mortgage rates are expected to decline modestly in 2025 and 2026 as the Fed is expected to lower borrowing costs amid cooling inflation. But that would have little to do with who is in the White House.
Joseph LaVorgna, chief economist at SMBC Nikko Securities and a former Trump White House economist, said lower interest rates “will help no matter who is in power.”
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