Redfin economists break down proposals from Harris and Trump and discuss their viability and what they might mean for housing supply, affordability.
Key points:
- With home prices at record highs, affordability has become a topic of conversation on the campaign trail.
- While the federal government has little sway over local and state zoning regulations, both candidates are looking for ways to boost supply.
- Neither candidate is likely to solve the affordability crisis, but Redfin economists said it could “likely worsen” under one administration.
Affordability and other housing market challenges are on the minds of voters, and as the discussion has gone national, the issues have also caught the attention of presidential candidates.
With last night’s official nomination of Kamala Harris as the Democratic candidate, the presidential contest is set, but strategies to address housing could be very different depending on who gets elected in November.
When discussing the topic on a national level, presidential candidates have to walk a tightrope: On the one hand, rising home prices are good for one segment of voters — existing homeowners — but for renters and other would-be buyers, those high prices have created an affordability crisis.
And in reality, regardless of the candidates’ proposals, the federal government can only do so much to increase supply (which should push prices down) — states and counties regulate zoning, and some believe local zoning changes are key to boosting inventory.
Despite those limitations, the Republican and Democratic presidential nominees — Donald Trump and Kamala Harris — have shared proposals aimed at addressing housing within the broader economy.
Redfin’s economic research team has taken a look at what they’ve been saying on the campaign trail and how their policies could play out.
Can either candidate solve the affordability problem?
The Redfin team said the Harris plan could “put a meaningful dent in the affordability crisis by the end of this decade” — but they believe it comes with risks.
“Her plan is astoundingly ambitious; its major flaw is that it tries to do too much. And its success depends on all of its various components being implemented in perfect synchrony and harmony, which would require Congress’s complete — and unlikely — cooperation,” economists Daryl Fairweather and Chen Zhao wrote in their analysis.
While the Harris plan may be a long shot, the economists were more dubious of Trump’s agenda, concluding that housing affordability “would likely worsen” if Trump were to become president again.
Here’s where Redfin’s economic team landed on specific proposals:
Addressing housing supply: Harris recently unveiled a plan that includes building 3 million new for-sale and rental homes by removing some of the red tape, which would enable quicker and less expensive construction. This would be accomplished through initiatives including grants and better loan terms for multifamily projects.
The plan also calls for streamlining the local permitting process — something Redfin economists say could be difficult to accomplish since it relies on local cooperation.
According to an analysis of Trump’s proposals, the former president has been less specific about addressing housing supply, but he has been a proponent of reducing regulatory barriers to building new housing. He has also called for cutting back on immigration, however, which Redfin economists believe could reduce demand for housing over the long term — but also hamper residential construction.
“Critically for housing, there would be much less labor supply for the construction industry. That means there would be less residential construction, which would put a cap on supply growth and perhaps push up home prices,” said Zhao, research lead at Redfin.
Both parties appear to be supportive of opening more federally owned land to development.
Mortgage rates: Trump plans to address high mortgage rates by boosting domestic energy production (and dropping energy prices), but that may lack some punch, according to Zhao, who noted that energy prices were not a big contributor to the recent rise in inflation.
“The primary drivers were supply chain issues, the war in Ukraine, a shift in consumer preferences during the pandemic and pandemic-era fiscal stimulus,” Zhao said.
Trump’s focus on rolling back government regulations could reduce the role of mortgage lending in the housing market, Zhao said. If lending standards become looser, it would increase demand for housing as homebuyers find it easier to get a mortgage.
“But it would also increase risk in the mortgage system, and to borrowers,” Zhao said.
Harris’ housing plan doesn’t specifically address mortgage rates, so it may come down to the Federal Reserve as it continues to implement interest rate changes to get inflation down to its goal of 2%.
