And the op-ed this article cites is titled: Harris plan could solve the longtime affordable housing crisis
FreakensteinAG on
“Aggressive”, I prefer “Progressive”.
anylastway on
You know what, here is the op-ed:
>*Jim Parrott is co-owner of Parrott Ryan Advisors and a nonresident fellow at the Urban Institute. Mark Zandi is chief economist of Moody’s Analytics.*
>The cost of housing has rarely been higher or more painful for so many Americans. Since the pandemic hit, rents are up about 20 percent, forcing half of all renters to spend more than 30 percent of their monthly income on rent, the highest number on record. And with home prices up 50 percent and mortgage rates up almost 100 percent, the monthly payment for a median-priced house has more than doubled, from $1,000 to $2,250. A home that was affordable only a few years ago is well out of reach now.
>The strain this is putting on families is doing significant damage to the economy. If not for the ever-increasing cost of housing, inflation would have returned to the Federal Reserve’s target almost a year ago, and it would have long since begun cutting interest rates. It’s a serious impediment to savings, making it difficult for many to cover everyday expenses, much less save for their kids’ college or a down payment on a home. And it constrains labor mobility, making the economy less resilient against shocks.
>The cause of the rising cost of housing is not a mystery: We simply don’t have enough affordable homes for rent or for sale. We have enough homes at the top of the market — homes that wealthy families can afford. But we don’t have enough homes for sale that aspiring homeowners can afford, or enough to rent that working families can afford. We estimate that, all told, the nation is short approximately 3 million homes, almost entirely in the bottom half of the market.
>Given this unmet demand, why haven’t developers built more of these homes? Because the numbers don’t add up. For a mix of reasons dating back to the financial crisis and worsened by the pandemic, the cost of land, labor and materials has risen to levels that make it all but impossible for most builders to make an adequate profit on affordable housing.
>The solution is to change these economics.
>This is at the heart of the housing proposal released last week by Vice President Kamala Harris, which lays out a set of tax breaks with which the numbers for building affordable housing would finally pencil out.
>To incentivize building affordable rental housing, Harris would expand a tax break for developers known as the Low-Income Housing Tax Credit. LIHTC has been a critical source of financing for affordable rental housing for almost 40 years. While it is not perfect — not all of the subsidy goes into units that would not otherwise be built — it has broad political support, can be scaled up quickly and distributes the tax break equitably nationwide.
>Harris also proposes creating a comparable tax break for builders to address the shortfall in affordable homes for purchase. Policymakers have largely ignored this shortfall, focusing instead on demand-side support for homeownership that alone would do little to help in a supply-constrained market such as the one we have today. Under the new proposal, home builders would get a tax break on profits made from homes built and sold to first-time home buyers. As with LITHC, this would increase the returns for builders and developers to focus on the lower-income side of the market.
>Finally, Harris proposes a new tax credit for renovating homes that can’t be sold for enough to cover the cost of repairing them. This would help bring to the market homes long languishing in neighborhoods that have fallen into disrepair.
>These three moves would provide enough incentive for developers to tackle the supply shortfall across much of the country. In some areas, however, lack of infrastructure or political ambivalence over the additional density needed would still stand in the way. Harris thus proposes significant funds for states and communities to overcome local hurdles to building more affordable housing, making it easier for communities to get behind the projects needed to make up the shortfall.
>Each of these moves would be meaningful on its own, but together they would amount to the most aggressive supply-side push since the national investment in housing that followed World War II. As one would expect from an effort of this scale, it is not cheap. The supply-side measures in Harris’s proposal would cost an estimated $125 billion, a hefty tab that must be paid with spending cuts or taxes, since adding to the federal deficit would drive up mortgage rates and undermine the very housing affordability effort it’s paying for.
>*Any effort* adequate to the scale of this challenge will be expensive, however, and pale in comparison to the long-term cost of letting the nation’s housing shortfall deepen. Our lack of affordable housing will continue to depress savings, opportunity and growth in ways that will do long-term harm to the nation’s economy. A thoughtful effort to address the problem now will ultimately lead to more growth and less cost.
>For all the controversy Harris’s plan will likely generate in an election year, it is precisely the sort of effort needed, both in its scope and its design. Indeed, it is one that both sides of the aisle should eventually find appealing, as it marshals the resources of the private sector to tackle a public policy challenge that plagues red and blue states alike. By making it economical to build the housing we need, it would finally end the decade-long shortfall, easing rents and home prices and the daunting weight that these ever-rising costs are putting on the nation’s economy.
sh4desthevibe on
Oh you mean the most successful era for the middle class in this country ever?
Sounds great.
Mediocretes08 on
“Good ol days” folks real quiet right now
PlentyMacaroon8903 on
Good. The housing crisis is the worst since then, maybe even worse. We need a powerful plan.
TuggMaddick on
Curious if the plans may affect anyone currently with a mortgage.
TAHINAZ on
When I was in the market for a house a few years ago, I told the realtor what my budget was and she laughed at me. Thankfully, God smiled on me and I found a little 1200 sq ft cottage on 1/4 acre on the outskirts of town for $110k. It was built in the 50s, which was probably the last time small homes were a thing. My dad says it’s laughably small, but it’s perfect for me, and bigger than the apartments that most millennials my age have. Why can’t they build more modest homes like that?
0nlyHere4TheZipline on
Really wish she’d speak about corporations and wealthy investors buying up all the SFHs available making the supply issue even worse
ChetManley20 on
I don’t see how building more housing is different than infrastructure initiatives. It’s good for everyone.
Hoodrow-Thrillson on
The problem with any federal plan to build more housing is that it will eventually run into city zoning regulations purposely designed to block new housing from being built.
For example Democrats passed a LOT of funding for infrastructure with the IRA and IIJA but many of those projects remain stuck in an endless regulatory maze.
People need to be more active in local politics, it matters more than you think.
San Francisco has some of the strictest housing regulations in the country and only built [16 new housing units](https://www.newsweek.com/san-francisco-only-agreed-build-16-homes-this-year-1907831) in the first half of this year. That’s not a typo. Coincidentally a studio there will cost you over $2k a month and thousands of people are homeless in that city.
We need the full control of Congress to do anything. These conservative supposedly “unbiased” judges striking down new regulations and rules each day will just roll over into her administration, so passing these new laws through Congress is the only real way to get some much needed change.
juanzy on
Yah, but she announced today she’s increasing marginal taxes on the $400k/year mark!!! How will I ever manage making $125k!!
Nimulous on
There are more than enough new homes being built, you just can’t buy them, it’s all lease only or snapped up by greedy rich fuckers who turn them into rentals or airbnb’s.
Begood18 on
What happened to student loan 10k cancellation?
boringhistoryfan on
She needs the Senate and house for this. It’s not enough to have the white house. Voters need to give her a clean Senate control. Otherwise much like the best parts of Biden’s plans, it’ll get chipped down to something half as good
gatsby712 on
But what about her talking about policy /s
Sevren425 on
These policies only have a chance if we can control Congress! Vote blue up and down ballot!
misfitx on
I hope there is something for disabled folk. My building has cockroaches and I might have to rehome my cat because the other disability building in the county also has cockroaches. HUD is so underfunded they can’t even fight for those of us lucky enough to have housing. Social security disability is low because they say we can live in affordable housing but 95% is for families and retirees. I agree children deserve homes but so do sick people. That’s why so many disabled are homeless.
heatherdukefanboy on
Let’s fucking go! This gen z-er wants to be a homeowner one day
mashedpotatocake on
Hope you read the fine print. The $$ is for first generation home buyers and will be up to $25,000. Doesn’t this mean that if your parents are homeowners, then you do not qualify? Shady if so!
Grunblau on
How about forcing change in the availability of housing through policy not money printing?
Change zoning, change permitting but leave my tax dollars out of it!
T1Pimp on
I can’t wait for her high heel to crush MAGA hats.
danisse76 on
We need it.
JonKonLGL on
Fucking finally.
coffee_mikado on
Based and YIMBY pilled.
foffl on
So weird, I thought she had no plans and was just running on vibes?
28 Comments
Fine. Someone needs to fucking do something
And the op-ed this article cites is titled: Harris plan could solve the longtime affordable housing crisis
“Aggressive”, I prefer “Progressive”.
You know what, here is the op-ed:
>*Jim Parrott is co-owner of Parrott Ryan Advisors and a nonresident fellow at the Urban Institute. Mark Zandi is chief economist of Moody’s Analytics.*
>The cost of housing has rarely been higher or more painful for so many Americans. Since the pandemic hit, rents are up about 20 percent, forcing half of all renters to spend more than 30 percent of their monthly income on rent, the highest number on record. And with home prices up 50 percent and mortgage rates up almost 100 percent, the monthly payment for a median-priced house has more than doubled, from $1,000 to $2,250. A home that was affordable only a few years ago is well out of reach now.
>The strain this is putting on families is doing significant damage to the economy. If not for the ever-increasing cost of housing, inflation would have returned to the Federal Reserve’s target almost a year ago, and it would have long since begun cutting interest rates. It’s a serious impediment to savings, making it difficult for many to cover everyday expenses, much less save for their kids’ college or a down payment on a home. And it constrains labor mobility, making the economy less resilient against shocks.
>The cause of the rising cost of housing is not a mystery: We simply don’t have enough affordable homes for rent or for sale. We have enough homes at the top of the market — homes that wealthy families can afford. But we don’t have enough homes for sale that aspiring homeowners can afford, or enough to rent that working families can afford. We estimate that, all told, the nation is short approximately 3 million homes, almost entirely in the bottom half of the market.
>Given this unmet demand, why haven’t developers built more of these homes? Because the numbers don’t add up. For a mix of reasons dating back to the financial crisis and worsened by the pandemic, the cost of land, labor and materials has risen to levels that make it all but impossible for most builders to make an adequate profit on affordable housing.
>The solution is to change these economics.
>This is at the heart of the housing proposal released last week by Vice President Kamala Harris, which lays out a set of tax breaks with which the numbers for building affordable housing would finally pencil out.
>To incentivize building affordable rental housing, Harris would expand a tax break for developers known as the Low-Income Housing Tax Credit. LIHTC has been a critical source of financing for affordable rental housing for almost 40 years. While it is not perfect — not all of the subsidy goes into units that would not otherwise be built — it has broad political support, can be scaled up quickly and distributes the tax break equitably nationwide.
>Harris also proposes creating a comparable tax break for builders to address the shortfall in affordable homes for purchase. Policymakers have largely ignored this shortfall, focusing instead on demand-side support for homeownership that alone would do little to help in a supply-constrained market such as the one we have today. Under the new proposal, home builders would get a tax break on profits made from homes built and sold to first-time home buyers. As with LITHC, this would increase the returns for builders and developers to focus on the lower-income side of the market.
>Finally, Harris proposes a new tax credit for renovating homes that can’t be sold for enough to cover the cost of repairing them. This would help bring to the market homes long languishing in neighborhoods that have fallen into disrepair.
>These three moves would provide enough incentive for developers to tackle the supply shortfall across much of the country. In some areas, however, lack of infrastructure or political ambivalence over the additional density needed would still stand in the way. Harris thus proposes significant funds for states and communities to overcome local hurdles to building more affordable housing, making it easier for communities to get behind the projects needed to make up the shortfall.
>Each of these moves would be meaningful on its own, but together they would amount to the most aggressive supply-side push since the national investment in housing that followed World War II. As one would expect from an effort of this scale, it is not cheap. The supply-side measures in Harris’s proposal would cost an estimated $125 billion, a hefty tab that must be paid with spending cuts or taxes, since adding to the federal deficit would drive up mortgage rates and undermine the very housing affordability effort it’s paying for.
>*Any effort* adequate to the scale of this challenge will be expensive, however, and pale in comparison to the long-term cost of letting the nation’s housing shortfall deepen. Our lack of affordable housing will continue to depress savings, opportunity and growth in ways that will do long-term harm to the nation’s economy. A thoughtful effort to address the problem now will ultimately lead to more growth and less cost.
>For all the controversy Harris’s plan will likely generate in an election year, it is precisely the sort of effort needed, both in its scope and its design. Indeed, it is one that both sides of the aisle should eventually find appealing, as it marshals the resources of the private sector to tackle a public policy challenge that plagues red and blue states alike. By making it economical to build the housing we need, it would finally end the decade-long shortfall, easing rents and home prices and the daunting weight that these ever-rising costs are putting on the nation’s economy.
Oh you mean the most successful era for the middle class in this country ever?
Sounds great.
“Good ol days” folks real quiet right now
Good. The housing crisis is the worst since then, maybe even worse. We need a powerful plan.
Curious if the plans may affect anyone currently with a mortgage.
When I was in the market for a house a few years ago, I told the realtor what my budget was and she laughed at me. Thankfully, God smiled on me and I found a little 1200 sq ft cottage on 1/4 acre on the outskirts of town for $110k. It was built in the 50s, which was probably the last time small homes were a thing. My dad says it’s laughably small, but it’s perfect for me, and bigger than the apartments that most millennials my age have. Why can’t they build more modest homes like that?
Really wish she’d speak about corporations and wealthy investors buying up all the SFHs available making the supply issue even worse
I don’t see how building more housing is different than infrastructure initiatives. It’s good for everyone.
The problem with any federal plan to build more housing is that it will eventually run into city zoning regulations purposely designed to block new housing from being built.
For example Democrats passed a LOT of funding for infrastructure with the IRA and IIJA but many of those projects remain stuck in an endless regulatory maze.
People need to be more active in local politics, it matters more than you think.
Minneapolis [deregulated their housing industry](https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability) which led to a construction boom and [a decline in rent.](https://i.imgur.com/B8uHaas.jpg)
San Francisco has some of the strictest housing regulations in the country and only built [16 new housing units](https://www.newsweek.com/san-francisco-only-agreed-build-16-homes-this-year-1907831) in the first half of this year. That’s not a typo. Coincidentally a studio there will cost you over $2k a month and thousands of people are homeless in that city.
It needs to be. The housing crisis is one of those issues that effects almost everything else we need to improve: [https://worksinprogress.co/issue/the-housing-theory-of-everything/](https://worksinprogress.co/issue/the-housing-theory-of-everything/)
We need the full control of Congress to do anything. These conservative supposedly “unbiased” judges striking down new regulations and rules each day will just roll over into her administration, so passing these new laws through Congress is the only real way to get some much needed change.
Yah, but she announced today she’s increasing marginal taxes on the $400k/year mark!!! How will I ever manage making $125k!!
There are more than enough new homes being built, you just can’t buy them, it’s all lease only or snapped up by greedy rich fuckers who turn them into rentals or airbnb’s.
What happened to student loan 10k cancellation?
She needs the Senate and house for this. It’s not enough to have the white house. Voters need to give her a clean Senate control. Otherwise much like the best parts of Biden’s plans, it’ll get chipped down to something half as good
But what about her talking about policy /s
These policies only have a chance if we can control Congress! Vote blue up and down ballot!
I hope there is something for disabled folk. My building has cockroaches and I might have to rehome my cat because the other disability building in the county also has cockroaches. HUD is so underfunded they can’t even fight for those of us lucky enough to have housing. Social security disability is low because they say we can live in affordable housing but 95% is for families and retirees. I agree children deserve homes but so do sick people. That’s why so many disabled are homeless.
Let’s fucking go! This gen z-er wants to be a homeowner one day
Hope you read the fine print. The $$ is for first generation home buyers and will be up to $25,000. Doesn’t this mean that if your parents are homeowners, then you do not qualify? Shady if so!
How about forcing change in the availability of housing through policy not money printing?
Change zoning, change permitting but leave my tax dollars out of it!
I can’t wait for her high heel to crush MAGA hats.
We need it.
Fucking finally.
Based and YIMBY pilled.
So weird, I thought she had no plans and was just running on vibes?