“Build the American Dream”
August 29, 2024 9:28 AM Subscribe
Harris campaign releases plans to lower housing costs The first component of the agenda, “Build the American Dream: Lowering the Costs of Renting and Owning a Home,” calls for the construction of 3 million new housing units in the next four years, outlines actions for creating a fairer rental market, and proposes $25,000 in downpayment support for first-time homeowners.
I want policy makers to determine why low cost housing isn't being built, and then fix that.
The last time housing costs went down (2008) every local government nearly collapsed from the loss in tax revenue. Until that linkage is severed it feels like true housing affordability will be impossible.
posted by pwnguin at 9:43 AM on August 29 [10 favorites]
The last time housing costs went down (2008) every local government nearly collapsed from the loss in tax revenue. Until that linkage is severed it feels like true housing affordability will be impossible.
posted by pwnguin at 9:43 AM on August 29 [10 favorites]
The last time housing costs went down (2008) every local government nearly collapsed
see Economic Downturn and Legacy of Bush Policies Continue to Drive Large Deficits [cbpp]
posted by HearHere at 9:53 AM on August 29 [8 favorites]
see Economic Downturn and Legacy of Bush Policies Continue to Drive Large Deficits [cbpp]
posted by HearHere at 9:53 AM on August 29 [8 favorites]
I want policy makers to determine why low cost housing isn't being built, and then fix that.
It is being built. New housing isn't high cost. It's high price. And the price is high because the quantity being built is ridiculously paltry and it sells at auction.
posted by ocschwar at 9:55 AM on August 29 [10 favorites]
It is being built. New housing isn't high cost. It's high price. And the price is high because the quantity being built is ridiculously paltry and it sells at auction.
posted by ocschwar at 9:55 AM on August 29 [10 favorites]
I can only support this if we make it unappealing for builders to keep installing laminate flooring and other awful materials, and if there is some provision for protecting unspoiled land from being turned into toxic lawns and/or parking lots and/or basically lifeless.
posted by amtho at 9:56 AM on August 29 [8 favorites]
posted by amtho at 9:56 AM on August 29 [8 favorites]
Increasing housing supply: awesome
$25k down-payment subsidy: oh cool another Democrat handout to the middle class that completely skips large swaths of the working poor. Like student loan forgiveness. This is truly going to be the election of pandering by promising to throw money at certain demographics; see also Trump's pledge to stop taxing social security payments.
posted by qxntpqbbbqxl at 9:57 AM on August 29 [16 favorites]
$25k down-payment subsidy: oh cool another Democrat handout to the middle class that completely skips large swaths of the working poor. Like student loan forgiveness. This is truly going to be the election of pandering by promising to throw money at certain demographics; see also Trump's pledge to stop taxing social security payments.
posted by qxntpqbbbqxl at 9:57 AM on August 29 [16 favorites]
That $25,000 might help folk with a $40,000 and up income. It certainly won't help the poor purchase a home.
posted by Czjewel at 9:58 AM on August 29 [1 favorite]
posted by Czjewel at 9:58 AM on August 29 [1 favorite]
A $25K subsidy for purchasing a home when there's no possible supply increase of those houses will simply increase the cost of new homes by $25K.
Not necessarily. Note that the 25K would only be available to first-time homebuyers. I assume the idea is to give a little boost to people who don't have the extra wiggle room to escalate their offers. I bet a lot of first-time buyers lose out on purchases because some investor swoops in offering the same price but with better financing. Having access to an extra 25K in cash would allow them to sweeten the deal and get their offers accepted.
posted by RonButNotStupid at 10:04 AM on August 29 [8 favorites]
Not necessarily. Note that the 25K would only be available to first-time homebuyers. I assume the idea is to give a little boost to people who don't have the extra wiggle room to escalate their offers. I bet a lot of first-time buyers lose out on purchases because some investor swoops in offering the same price but with better financing. Having access to an extra 25K in cash would allow them to sweeten the deal and get their offers accepted.
posted by RonButNotStupid at 10:04 AM on August 29 [8 favorites]
>I bet a lot of first-time buyers lose out on purchases because some investor swoops in offering the same price but with better financing
Hey I have an idea!
posted by torokunai at 10:14 AM on August 29 [15 favorites]
Hey I have an idea!
posted by torokunai at 10:14 AM on August 29 [15 favorites]
I am trying to balance my "this doesn't seem like a great plan, functionally" feelings with my "this may really appeal to voters and might help her edge past the authoritarian shitshow" feelings.
posted by DirtyOldTown at 10:14 AM on August 29 [24 favorites]
posted by DirtyOldTown at 10:14 AM on August 29 [24 favorites]
I bet a lot of first-time buyers lose out on purchases because some investor swoops in offering the same price but with better financing
Are FHA mortgages a thing anymore? Those were always the best deal a first-time buyer could get, IME.
posted by Thorzdad at 10:16 AM on August 29 [1 favorite]
Are FHA mortgages a thing anymore? Those were always the best deal a first-time buyer could get, IME.
posted by Thorzdad at 10:16 AM on August 29 [1 favorite]
FHA mortgages are fantastic, and I'm always surprised at how few people seem to know about the program. I used it myself, and the only real drawback was having to pay PMI which, let's be honest, wasn't really that much money compared to the downpayment savings and I fixed that a few years later by refinancing when rates dropped.
California (natch) also has their own variant.
posted by aramaic at 10:21 AM on August 29 [12 favorites]
California (natch) also has their own variant.
posted by aramaic at 10:21 AM on August 29 [12 favorites]
$25k down-payment subsidy: oh cool another Democrat handout to the middle class that completely skips large swaths of the working poor.
IMO, a far better solution would be to only give the credit to those who are below a credit score of about 650 and the home is less than around $250k, regardless of buyer status (first time or not). You'd put so many lower income earners into properties.
I've not seen the latest chart, but the last one said that about 90% of the housing market mortgage dollars are going to high credit score/ high earners, so home prices are going to continue to rise.
I doubt that would play as well politically.
posted by The_Vegetables at 10:21 AM on August 29 [2 favorites]
Are FHA mortgages a thing anymore? Those were always the best deal a first-time buyer could get, IME
When I was buying a house in 2020 (from a developer), my agent told me that the seller went with me over the other buyers because my competition was buying with an FHA loan. They had already had a sale (on this same house) fall through 6 months prior because FHA required a higher level of inspection, which didn't pass and didn't get approved. After investing in all the repairs and going back to market, they wanted the sure thing with private financing and sold to me.
posted by phunniemee at 10:24 AM on August 29 [17 favorites]
When I was buying a house in 2020 (from a developer), my agent told me that the seller went with me over the other buyers because my competition was buying with an FHA loan. They had already had a sale (on this same house) fall through 6 months prior because FHA required a higher level of inspection, which didn't pass and didn't get approved. After investing in all the repairs and going back to market, they wanted the sure thing with private financing and sold to me.
posted by phunniemee at 10:24 AM on August 29 [17 favorites]
I think this is a great idea for exciting voters. I don't think it will help address the problem.in a fundamental way, though.
As long as landlords, corporate or individual are allowed to gatekeep access to shelter, direct cash infusions amount to a gift to them. They can simply raise prices to absorb any subsidy. It is the same issue as providing a UBI. Ultimately it drives the price of essentials up to match the new availability of cash.
I think the only real long term solution is a housing guarantee, without financial requirements.Or possibly penalizing landlords harshly for having unoccupied units. But we are not going to get either any time soon, I am afraid.
Hopefully this will make some short difference to people, though. And maybe energize some voters.
posted by pattern juggler at 10:24 AM on August 29 [8 favorites]
As long as landlords, corporate or individual are allowed to gatekeep access to shelter, direct cash infusions amount to a gift to them. They can simply raise prices to absorb any subsidy. It is the same issue as providing a UBI. Ultimately it drives the price of essentials up to match the new availability of cash.
I think the only real long term solution is a housing guarantee, without financial requirements.Or possibly penalizing landlords harshly for having unoccupied units. But we are not going to get either any time soon, I am afraid.
Hopefully this will make some short difference to people, though. And maybe energize some voters.
posted by pattern juggler at 10:24 AM on August 29 [8 favorites]
Are FHA mortgages a thing anymore? Those were always the best deal a first-time buyer could get, IME.
From a seller's perspective, can an FHA loan compete with an all-cash, inspections waived, we-can-deposit-the-money-in-your-account-on-Thursday offer?
posted by RonButNotStupid at 10:25 AM on August 29 [10 favorites]
From a seller's perspective, can an FHA loan compete with an all-cash, inspections waived, we-can-deposit-the-money-in-your-account-on-Thursday offer?
posted by RonButNotStupid at 10:25 AM on August 29 [10 favorites]
Are FHA mortgages a thing anymore? Those were always the best deal a first-time buyer could get, IME.
In anything like a seller's market, an FHA mortgage is a hard sell. It means the seller is going to face a particularly intrusive inspection process, and it's a noisy signal that you don't have much in the way of financial reserves and the whole deal might asplode because you need a $2000 car repair a week before closing.
posted by GCU Sweet and Full of Grace at 10:28 AM on August 29 [6 favorites]
In anything like a seller's market, an FHA mortgage is a hard sell. It means the seller is going to face a particularly intrusive inspection process, and it's a noisy signal that you don't have much in the way of financial reserves and the whole deal might asplode because you need a $2000 car repair a week before closing.
posted by GCU Sweet and Full of Grace at 10:28 AM on August 29 [6 favorites]
Until that linkage is severed it feels like true housing affordability will be impossible.
A lot of the unaffordability is rental cost not housing costs. Build a large number of social/non market housing units (and by large I mean keep building until rents drop to less than 30 of income) and rents can go down without affecting tax revenue.
Besides most property taxes are set via millage rates and the value of a property in absolute terms is irrelevant. You could magic wand a 50% cut to property values city wide and as long as you doubled the millage rate at the same time everyone's taxes would stay exactly the same and city revenue would not be affected. In theory anyways. In practice no one seems to understand how millage works and the clown show would say that taxes doubled.
posted by Mitheral at 10:29 AM on August 29 [7 favorites]
A lot of the unaffordability is rental cost not housing costs. Build a large number of social/non market housing units (and by large I mean keep building until rents drop to less than 30 of income) and rents can go down without affecting tax revenue.
Besides most property taxes are set via millage rates and the value of a property in absolute terms is irrelevant. You could magic wand a 50% cut to property values city wide and as long as you doubled the millage rate at the same time everyone's taxes would stay exactly the same and city revenue would not be affected. In theory anyways. In practice no one seems to understand how millage works and the clown show would say that taxes doubled.
posted by Mitheral at 10:29 AM on August 29 [7 favorites]
Texas and Florida do monkey with millage. California can't due to Prop 13 – it's fixed at 1% + approved bond measures etc.
posted by torokunai at 10:31 AM on August 29 [1 favorite]
posted by torokunai at 10:31 AM on August 29 [1 favorite]
Some of these things actually do affect rent, pharmaceuticals and groceries in a real way. Buried in the fine print here is an end to various forms of price-fixing and monopoly.
She's called for an end to RealPage (albeit not by name), which is how landlords have been price-fixing and price-jacking. Like, they aren't even being subtle about it. And hedge funds buying up large amount of properties has been an issue since 2008. The two together have created a perfect storm of ridiculous rent. She is also specifically calling for restrictions on PBMs, which are a big reason why drug costs have skyrocketed. And finally, she calls for a crackdown on grocery store mergers. This is a red flag for the Kroger-Albertsons merger, which has already found to have criminal activity involved.
There is a lot to like here. It alleviates my concern that a Harris administration would pull back on antitrust activity at the behest of Reid Hoffman.
posted by rednikki at 10:39 AM on August 29 [54 favorites]
She's called for an end to RealPage (albeit not by name), which is how landlords have been price-fixing and price-jacking. Like, they aren't even being subtle about it. And hedge funds buying up large amount of properties has been an issue since 2008. The two together have created a perfect storm of ridiculous rent. She is also specifically calling for restrictions on PBMs, which are a big reason why drug costs have skyrocketed. And finally, she calls for a crackdown on grocery store mergers. This is a red flag for the Kroger-Albertsons merger, which has already found to have criminal activity involved.
There is a lot to like here. It alleviates my concern that a Harris administration would pull back on antitrust activity at the behest of Reid Hoffman.
posted by rednikki at 10:39 AM on August 29 [54 favorites]
I'm encouraged to see some vestiges of the pandemic relief programs in this plan. Republicans fought tooth and nail to keep things like the child tax credit and direct payments from becoming the new normal because they know they can't compete with policies that directly help people.
One of the dumbest things Democrats did in the past in the past four years was to allow popular programs to quietly disappear. Considering how difficult it's been to enact any sort of broad-based student loan forgiveness, it's kind of stupid in hindsight that repayments were allowed to resume at all.
posted by RonButNotStupid at 10:50 AM on August 29 [10 favorites]
One of the dumbest things Democrats did in the past in the past four years was to allow popular programs to quietly disappear. Considering how difficult it's been to enact any sort of broad-based student loan forgiveness, it's kind of stupid in hindsight that repayments were allowed to resume at all.
posted by RonButNotStupid at 10:50 AM on August 29 [10 favorites]
Thank you for saying that, Rednikki - I was starting to wonder whether anyone else other than me thought this would be a potential good.
$25k down-payment subsidy: oh cool another Democrat handout to the middle class that completely skips large swaths of the working poor.
Dude, this likely isn't the only thing she's going to do. She's not even a month into her campaign, sheesh.
That $25,000 might help folk with a $40,000 and up income. It certainly won't help the poor purchase a home.
Not everyone in the middle class owns their own home, and not everyone in the middle class has an older relative who can give us the money for a downpayment. This would absolutely help me in a serious and impactful way, and you know what, I'm going to be encouraged about it.
posted by EmpressCallipygos at 10:53 AM on August 29 [44 favorites]
$25k down-payment subsidy: oh cool another Democrat handout to the middle class that completely skips large swaths of the working poor.
Dude, this likely isn't the only thing she's going to do. She's not even a month into her campaign, sheesh.
That $25,000 might help folk with a $40,000 and up income. It certainly won't help the poor purchase a home.
Not everyone in the middle class owns their own home, and not everyone in the middle class has an older relative who can give us the money for a downpayment. This would absolutely help me in a serious and impactful way, and you know what, I'm going to be encouraged about it.
posted by EmpressCallipygos at 10:53 AM on August 29 [44 favorites]
> The last time housing costs went down (2008) every local government nearly collapsed from the loss in tax revenue. Until that linkage is severed it feels like true housing affordability will be impossible.
Wait, US local governments don't use a mill rate formula that is agnostic to general market rate changes?
Let X$ be the total residential real estate in the region, and Y$ be the current taxes levied. Then Y/X is your current mill rate (the fraction of the property value you owe in taxes).
Real estate prices double? The mill rate halves, revenue is stable. Real estate prices tank? The mill rate doubles, revenue is stable.
Y can be set to auto-scale with CPI and population as well, which gives Mill Rate = Taxes per Capita * CPI * Population / Total Property Value, and Taxes Owed = Mill Rate * Your Property Value.
Local government sets a Taxes per Capita, gets CPI and Population from Federal estimates, and updates Total Property Value periodically (along side each property value).
posted by NotAYakk at 11:00 AM on August 29 [4 favorites]
Wait, US local governments don't use a mill rate formula that is agnostic to general market rate changes?
Let X$ be the total residential real estate in the region, and Y$ be the current taxes levied. Then Y/X is your current mill rate (the fraction of the property value you owe in taxes).
Real estate prices double? The mill rate halves, revenue is stable. Real estate prices tank? The mill rate doubles, revenue is stable.
Y can be set to auto-scale with CPI and population as well, which gives Mill Rate = Taxes per Capita * CPI * Population / Total Property Value, and Taxes Owed = Mill Rate * Your Property Value.
Local government sets a Taxes per Capita, gets CPI and Population from Federal estimates, and updates Total Property Value periodically (along side each property value).
posted by NotAYakk at 11:00 AM on August 29 [4 favorites]
I'm going to be encouraged about it
Now waitasec there, don't you know being jaded and cynical is a sign of intellect? Next you're going to tell me you've forgotten that trying to fix any problem without simultaneously fixing every problem automatically means you're worse than Hitler? Good heavens.
posted by aramaic at 11:02 AM on August 29 [30 favorites]
Now waitasec there, don't you know being jaded and cynical is a sign of intellect? Next you're going to tell me you've forgotten that trying to fix any problem without simultaneously fixing every problem automatically means you're worse than Hitler? Good heavens.
posted by aramaic at 11:02 AM on August 29 [30 favorites]
This is a subsidy for real estate developers and property investors so I guess it fixes their problem of not having slightly more money, hooray for neoliberalism.
posted by tovarisch at 11:08 AM on August 29 [3 favorites]
posted by tovarisch at 11:08 AM on August 29 [3 favorites]
>revenue is stable
California property tax revenue is pretty stable since most everybody's paying a ~0.5% effective tax rate due to Prop 13 suppression of taxable valuation increases (limited to +2% pa).
posted by torokunai at 11:10 AM on August 29
California property tax revenue is pretty stable since most everybody's paying a ~0.5% effective tax rate due to Prop 13 suppression of taxable valuation increases (limited to +2% pa).
posted by torokunai at 11:10 AM on August 29
This is a subsidy for real estate developers and property investors so I guess it fixes their problem of not having slightly more money
It's for first-time homebuyers. How does this help developers?
posted by grubi at 11:12 AM on August 29 [4 favorites]
It's for first-time homebuyers. How does this help developers?
posted by grubi at 11:12 AM on August 29 [4 favorites]
The rent is still too damn high.
Any ideas on how to prevent vulture capital from gobbling up loads of housing units?
posted by nat at 11:12 AM on August 29 [12 favorites]
Any ideas on how to prevent vulture capital from gobbling up loads of housing units?
posted by nat at 11:12 AM on August 29 [12 favorites]
It's for first-time homebuyers. How does this help developers?
A home-builder builds a "starter home" - the sort average first time homebuyers would build. It costs them, say, $200K to build (land plus building). Previously, they might put it on the market for $230K, and sell it to someone who has the ability to afford $230K via a mortgage. Now that person has the ability to afford $255K via a mortgage, and the majority of other potential buyers also can afford $255K.
What do you think the sale price of that home will be now? And where do you think the money is going to?
posted by saeculorum at 11:20 AM on August 29 [6 favorites]
A home-builder builds a "starter home" - the sort average first time homebuyers would build. It costs them, say, $200K to build (land plus building). Previously, they might put it on the market for $230K, and sell it to someone who has the ability to afford $230K via a mortgage. Now that person has the ability to afford $255K via a mortgage, and the majority of other potential buyers also can afford $255K.
What do you think the sale price of that home will be now? And where do you think the money is going to?
posted by saeculorum at 11:20 AM on August 29 [6 favorites]
Wait, US local governments don't use a mill rate formula that is agnostic to general market rate changes?
As a lifelong renter I've never paid property tax, but when I was working IT for a large community college in 2009 I definitely remember management reviewing property valuation projections. Probably because the kind of people who get elected in suburbia don't get re-elected by raising taxes 50% and they wanted to get ahead of budget cuts? It was kind of an absurd time, with record enrollments matched by budget freezes and furloughs.
posted by pwnguin at 11:21 AM on August 29 [1 favorite]
As a lifelong renter I've never paid property tax, but when I was working IT for a large community college in 2009 I definitely remember management reviewing property valuation projections. Probably because the kind of people who get elected in suburbia don't get re-elected by raising taxes 50% and they wanted to get ahead of budget cuts? It was kind of an absurd time, with record enrollments matched by budget freezes and furloughs.
posted by pwnguin at 11:21 AM on August 29 [1 favorite]
Not everyone in the middle class owns their own home, and not everyone in the middle class has an older relative who can give us the money for a downpayment. This would absolutely help me in a serious and impactful way
It would be good for me, too, but fundamentally it’s good for people who are just on the minus or plus side of being able to comfortably afford buying a home, and likely bad for people who are not close, so I don’t really think it’s great policy. It is indeed not the only policy proposed.
posted by atoxyl at 11:22 AM on August 29 [2 favorites]
It would be good for me, too, but fundamentally it’s good for people who are just on the minus or plus side of being able to comfortably afford buying a home, and likely bad for people who are not close, so I don’t really think it’s great policy. It is indeed not the only policy proposed.
posted by atoxyl at 11:22 AM on August 29 [2 favorites]
Harris is also proposing to end tax breaks for large property investors, for what it's worth (on the topic of how to prevent vulture capital from gobbling up loads of housing units).
posted by Jeanne at 11:24 AM on August 29 [32 favorites]
posted by Jeanne at 11:24 AM on August 29 [32 favorites]
I refuse to accept any plan that doesn’t include cooking and eating the rich, and I cannot understand why Kamala doesn’t just announce that. I’d even be willing to compromise on the cooking part.
posted by rikschell at 11:28 AM on August 29 [16 favorites]
posted by rikschell at 11:28 AM on August 29 [16 favorites]
Re: mileage rates, Oregon may have the most absurd situation in this absurd country. Assessed values were frozen in 1995, with annual increases capped at 3%/year. Assessments do not reset at sale. Homes built since 1995 are assessed based on their theoretical value in 1995. We have a unique concept of “maximum assessed value” that seems to be understood by no one, including the assessors.
The result of this situation is that most properties have an assessed value far smaller than their market value. Recently commercial buildings in Portland’s empty downtown have been selling at fire-sale prices that still aren’t affecting tax revenue at all, because the commercial real estate bubble drove them to 5x+ their assessed value.
posted by Just the one swan, actually at 11:29 AM on August 29 [6 favorites]
The result of this situation is that most properties have an assessed value far smaller than their market value. Recently commercial buildings in Portland’s empty downtown have been selling at fire-sale prices that still aren’t affecting tax revenue at all, because the commercial real estate bubble drove them to 5x+ their assessed value.
posted by Just the one swan, actually at 11:29 AM on August 29 [6 favorites]
It's for first-time homebuyers. How does this help developers?
saeculorum answered this well, but I'll add that this applies to any sort of price subsidy. The question is not who the check is written to, but who ends up profiting. The jargon for this is that the legal incidence is not the same as the economic incidence.
The economic incidence depends on how sellers and buyers adjust to price changes (known as elasticity of supply and demand.) In this scenario, supply is limited (because of limits on available land, high barriers to entry, and tight regulations), so the subsidy goes to the sellers. If there was a very competitive market, a subsidy could benefit consumers. For example, subsidizing half of the costs of Uber and Lyft rides would probably pull a lot of drivers into the market, and even if the drivers got the payment, riders would probably benefit substantially from lower prices.
posted by Mr.Know-it-some at 11:40 AM on August 29 [5 favorites]
saeculorum answered this well, but I'll add that this applies to any sort of price subsidy. The question is not who the check is written to, but who ends up profiting. The jargon for this is that the legal incidence is not the same as the economic incidence.
The economic incidence depends on how sellers and buyers adjust to price changes (known as elasticity of supply and demand.) In this scenario, supply is limited (because of limits on available land, high barriers to entry, and tight regulations), so the subsidy goes to the sellers. If there was a very competitive market, a subsidy could benefit consumers. For example, subsidizing half of the costs of Uber and Lyft rides would probably pull a lot of drivers into the market, and even if the drivers got the payment, riders would probably benefit substantially from lower prices.
posted by Mr.Know-it-some at 11:40 AM on August 29 [5 favorites]
This is why it's important for them to follow through on both parts of the plan, which does include a substantial boost to supply. Ease the regulations, lower the barriers to entry and encourage higher density to stretch limited land farther, and you get a more buyer-friendly market.
posted by Holy Zarquon's Singing Fish at 11:48 AM on August 29 [2 favorites]
posted by Holy Zarquon's Singing Fish at 11:48 AM on August 29 [2 favorites]
I want to support this!
But I suspect that the only way to execute this (or any other progressive program) is going to involve serious reformation of the Supreme Court. Because they are just going to strike it down as a Major Question or an undelegated exercise of legislative power.
posted by suelac at 11:52 AM on August 29 [2 favorites]
But I suspect that the only way to execute this (or any other progressive program) is going to involve serious reformation of the Supreme Court. Because they are just going to strike it down as a Major Question or an undelegated exercise of legislative power.
posted by suelac at 11:52 AM on August 29 [2 favorites]
Now that person has the ability to afford $255K via a mortgage, and the majority of other potential buyers also can afford $255K.
Is that true though? Can the majority of other potential buyers afford to pay a $25K premium?
One of the weird things I never knew about buying a house is that banks absolutely do. not. want. to finance purchases for much more than the house is worth. If the bank does an appraisal which says the house is only worth $230K, they are not going to stick their necks out very far beyond that amount and will cut you off regardless of your credit rating or what other people are offering. Insane, speculative bidding wars which drive the price well above asking are driven by people who have access to hard money. When actual banks are holding all the purse strings competition is still fierce, but sale prices end up being more reflective of the actual value of the house and the difference between getting your offer accepted or losing out may actually be on the order of a few thousand dollars in down payment.
I'm by no means an expect in this, but I think the play here is that making $25K of cash available to first-time homebuyers, it makes it more likely that they pull ahead of someone else's financing. There are tons of people who aren't first-time homebuyers out there who are also using banks to buy houses in order to flip or AirBnB them. They don't have infinite resources, and all you have to do is get a few thousand dollars over them to win the sale.
posted by RonButNotStupid at 11:54 AM on August 29 [6 favorites]
Is that true though? Can the majority of other potential buyers afford to pay a $25K premium?
One of the weird things I never knew about buying a house is that banks absolutely do. not. want. to finance purchases for much more than the house is worth. If the bank does an appraisal which says the house is only worth $230K, they are not going to stick their necks out very far beyond that amount and will cut you off regardless of your credit rating or what other people are offering. Insane, speculative bidding wars which drive the price well above asking are driven by people who have access to hard money. When actual banks are holding all the purse strings competition is still fierce, but sale prices end up being more reflective of the actual value of the house and the difference between getting your offer accepted or losing out may actually be on the order of a few thousand dollars in down payment.
I'm by no means an expect in this, but I think the play here is that making $25K of cash available to first-time homebuyers, it makes it more likely that they pull ahead of someone else's financing. There are tons of people who aren't first-time homebuyers out there who are also using banks to buy houses in order to flip or AirBnB them. They don't have infinite resources, and all you have to do is get a few thousand dollars over them to win the sale.
posted by RonButNotStupid at 11:54 AM on August 29 [6 favorites]
From my slightly more than basic understanding of this topic, there are a few points of confusion in this thread.
balance my "this doesn't seem like a great plan, functionally" feelings with my "this may really appeal to voters and might help her edge past the authoritarian shitshow" feelings.
I'm also in the camp that wants to 'keep the vibe' and will vote any tuna sandwich on the blue ballot (for now). But it helps if a candidate can convince people they are [good] by showing an ability in at least understanding the problem, even if they don't have a bullet-proof policy proposal. From what I've seen here, the proposal gives the impression that Harris doesn't understand what's going on.
It is being built. New housing isn't high cost. It's high price.
In my market construction costs have gone up 4x ($100ish to over 400/sf). This is five-X as much cost inflation as the CPI over the same period (which is not a low-inflation period for consumers).
every local government nearly collapsed from the loss in tax revenue. Until that linkage is severed it feels like true housing affordability will be impossible...Wait, US local governments don't use a mill rate formula that is agnostic to general market rate changes?
Most (all?) do, but it's kinda complicated. Typically the mill rate is the dependent variable. What this means is that a locality budgets X, it counts up its (expected) property valuations Y, for the period where it expects this budget to be spend and finally it divides and comes up with the tax (mill) rate Z that it will use to charge the next quarter's property tax bills.
There is a lot of local variation and 'fuckery' with this. Some of it is local tax variation and others are just peculiarities of the operation of local government and that it's still a projection. But typically it's still true that (i) higher base valuations drive higher budgets (wealthy places have wealthy schools, nice police buildings, etc) and (ii) if you have a downturn then typically fewer people pay their taxes or seek abatements on their valuation and you have less money than you expected afterwards.
I think the solution to the housing problem is to build housing that (most) people don't want. Build it (i) small (you can still have 2-3 bedrooms, but small SF) and (ii) on small lots and (iii) build it 'smart' next to existing infrastructure and typically near mixed uses in the municipal core.
posted by Reasonably Everything Happens at 11:57 AM on August 29 [4 favorites]
balance my "this doesn't seem like a great plan, functionally" feelings with my "this may really appeal to voters and might help her edge past the authoritarian shitshow" feelings.
I'm also in the camp that wants to 'keep the vibe' and will vote any tuna sandwich on the blue ballot (for now). But it helps if a candidate can convince people they are [good] by showing an ability in at least understanding the problem, even if they don't have a bullet-proof policy proposal. From what I've seen here, the proposal gives the impression that Harris doesn't understand what's going on.
It is being built. New housing isn't high cost. It's high price.
In my market construction costs have gone up 4x ($100ish to over 400/sf). This is five-X as much cost inflation as the CPI over the same period (which is not a low-inflation period for consumers).
every local government nearly collapsed from the loss in tax revenue. Until that linkage is severed it feels like true housing affordability will be impossible...Wait, US local governments don't use a mill rate formula that is agnostic to general market rate changes?
Most (all?) do, but it's kinda complicated. Typically the mill rate is the dependent variable. What this means is that a locality budgets X, it counts up its (expected) property valuations Y, for the period where it expects this budget to be spend and finally it divides and comes up with the tax (mill) rate Z that it will use to charge the next quarter's property tax bills.
There is a lot of local variation and 'fuckery' with this. Some of it is local tax variation and others are just peculiarities of the operation of local government and that it's still a projection. But typically it's still true that (i) higher base valuations drive higher budgets (wealthy places have wealthy schools, nice police buildings, etc) and (ii) if you have a downturn then typically fewer people pay their taxes or seek abatements on their valuation and you have less money than you expected afterwards.
I think the solution to the housing problem is to build housing that (most) people don't want. Build it (i) small (you can still have 2-3 bedrooms, but small SF) and (ii) on small lots and (iii) build it 'smart' next to existing infrastructure and typically near mixed uses in the municipal core.
posted by Reasonably Everything Happens at 11:57 AM on August 29 [4 favorites]
The latest video from City Nerd talks about the problem of housing affordability as an issue of special interest to younger voters. I think Harris has proposed ia good plan to help 1st time buyers and a great strategy for the campaign to court younger voters.
posted by kbar1 at 11:58 AM on August 29 [2 favorites]
posted by kbar1 at 11:58 AM on August 29 [2 favorites]
Personally, as someone nearing 40 who has yet to able to buy a house and pays too much in rent, I'm just excited that we have a presidential nominee who is making clear her economic priority is housing costs. Given how short of time Harris has been the nominee, I'm not actually worried if the precise policies seem a little half-baked (because I agree with those that are suggesting that). Good policies take time, I imagine both Harris and Walz know that, and presumably if they get elected they will put various experts to work in figuring out what sort of policies will best result in making housing affordable again. Again, I see it as a good sign that this problem is finally getting attention from people in high places!
posted by coffeecat at 12:01 PM on August 29 [17 favorites]
posted by coffeecat at 12:01 PM on August 29 [17 favorites]
You cut prices by increasing supply or reducing demand, period.
Giving people $25,000 towards their down-payment as a supposed means of lowering housing costs is so wrong that it just makes you shudder at the cynicism of it, and doubt that any other part of the plan was the result of serious analysis unmolested by political considerations. Trump's proposals to exempt tips and Social Security from income tax are sincere by comparison.
You cut demand through higher interest rates, lower wages, elimination of housing subsidies, or lower net immigration. Progressives support one part of one of these (pulling back on the mortgage interest deduction) and oppose the rest.
You increase supply through reducing land use restrictions (zoning, entitlement, permitting, affordable housing mandates), reducing regulatory risk (safe harbors against future rent or equity appreciation controls), reducing construction wages, and deregulating local manufacture and importation of materials. Progressives support one part of one of these (upzoning) and oppose the rest.
posted by MattD at 12:11 PM on August 29 [4 favorites]
Giving people $25,000 towards their down-payment as a supposed means of lowering housing costs is so wrong that it just makes you shudder at the cynicism of it, and doubt that any other part of the plan was the result of serious analysis unmolested by political considerations. Trump's proposals to exempt tips and Social Security from income tax are sincere by comparison.
You cut demand through higher interest rates, lower wages, elimination of housing subsidies, or lower net immigration. Progressives support one part of one of these (pulling back on the mortgage interest deduction) and oppose the rest.
You increase supply through reducing land use restrictions (zoning, entitlement, permitting, affordable housing mandates), reducing regulatory risk (safe harbors against future rent or equity appreciation controls), reducing construction wages, and deregulating local manufacture and importation of materials. Progressives support one part of one of these (upzoning) and oppose the rest.
posted by MattD at 12:11 PM on August 29 [4 favorites]
Limiting help to only "first-time homeowners" will lock out a lot of people who do need the help, divorce, ill health, forced to move to find work. Not every homeowner is sitting on a fortune in property wealth.
posted by Lanark at 12:14 PM on August 29 [3 favorites]
posted by Lanark at 12:14 PM on August 29 [3 favorites]
Agreed coffeecat. Let's try to do something, as opposed to letting rent-seekers seek.
Sorry you can't buy a house. We were able to buy a house in seattle back in '93. Was trashed. Rented out to a band. But, bought it and fixed it up a bit. Gained enough value to allow us to move around the block to a bigger house, as these children kept appearing. And then able to use that one to move to our current house. We sort of surfed a wave in housing here, and well, now, we are stuck. Our house is awesome, and worth a lot, but that "lot", in the current market isn't actually going to get a lot. At least not as awesome as our house is.
And there has been tons of new construction in Ballard, up 15th, across from the met market. But those are NOT going to be low-income housing. Just more tiny condos in a building for 800K.
posted by Windopaene at 12:16 PM on August 29 [2 favorites]
Sorry you can't buy a house. We were able to buy a house in seattle back in '93. Was trashed. Rented out to a band. But, bought it and fixed it up a bit. Gained enough value to allow us to move around the block to a bigger house, as these children kept appearing. And then able to use that one to move to our current house. We sort of surfed a wave in housing here, and well, now, we are stuck. Our house is awesome, and worth a lot, but that "lot", in the current market isn't actually going to get a lot. At least not as awesome as our house is.
And there has been tons of new construction in Ballard, up 15th, across from the met market. But those are NOT going to be low-income housing. Just more tiny condos in a building for 800K.
posted by Windopaene at 12:16 PM on August 29 [2 favorites]
The number of people on a thoughtful, heavily left-leaning forum who still decide to focus on a single element of this that they don't like and pretend it's the only detail available makes me agree that much more with the argument that releasing any concrete policy proposals whatsoever ahead of an election has become pointlessly optimistic at best and more often outright self-defeating.
posted by Holy Zarquon's Singing Fish at 12:27 PM on August 29 [41 favorites]
posted by Holy Zarquon's Singing Fish at 12:27 PM on August 29 [41 favorites]
You cut demand through higher interest rates, lower wages, elimination of housing subsidies, or lower net immigration. Progressives support one part of one of these (pulling back on the mortgage interest deduction) and oppose the rest.
That's a really simplistic view, MattD. It ignores (among other things) that a huge amount of demand in the housing market today is literal rent seeking where people with more money than they know what to do with are buying up housing stock to force others to become renters.
Reducing wealth inequality dramatically would do far more to resolve demand issues than any of the solutions you propose, which are all solutions that (other than immigration, which is a red herring) result in fewer people being able to own a home, which is the actual point, not lowering prices.
posted by Ickster at 12:58 PM on August 29 [18 favorites]
That's a really simplistic view, MattD. It ignores (among other things) that a huge amount of demand in the housing market today is literal rent seeking where people with more money than they know what to do with are buying up housing stock to force others to become renters.
Reducing wealth inequality dramatically would do far more to resolve demand issues than any of the solutions you propose, which are all solutions that (other than immigration, which is a red herring) result in fewer people being able to own a home, which is the actual point, not lowering prices.
posted by Ickster at 12:58 PM on August 29 [18 favorites]
The number of people on a thoughtful, heavily left-leaning forum who still decide to focus on a single element of this that they don't like and pretend it's the only detail available makes me agree that much more with the argument that releasing any concrete policy proposals whatsoever ahead of an election has become pointlessly optimistic at best and more often outright self-defeating.
Counterpoint: if I had to bet I would bet that the policy is popular regardless of what people here, who are going to vote for her anyway, have to say about it. Which is why “hmm that’s good PR but maybe not the best policy” feels like a worthwhile thought to express.
Do I really have to explicitly state that I do think the supply-subsidizing proposals are good before I say that I think the demand-subsidizing proposals maybe aren’t ideal? There’s an implication here that I find kind of weird and foreign to my idea of what these discussions are even for.
posted by atoxyl at 1:12 PM on August 29 [2 favorites]
Counterpoint: if I had to bet I would bet that the policy is popular regardless of what people here, who are going to vote for her anyway, have to say about it. Which is why “hmm that’s good PR but maybe not the best policy” feels like a worthwhile thought to express.
Do I really have to explicitly state that I do think the supply-subsidizing proposals are good before I say that I think the demand-subsidizing proposals maybe aren’t ideal? There’s an implication here that I find kind of weird and foreign to my idea of what these discussions are even for.
posted by atoxyl at 1:12 PM on August 29 [2 favorites]
If we are in fact, a “thoughtful forum” I think we should be able to contextualize criticism appropriately.
posted by atoxyl at 1:13 PM on August 29 [2 favorites]
posted by atoxyl at 1:13 PM on August 29 [2 favorites]
Australia has real-world experience with a first homeowner's grant, first introduced by the Howard Government as a pork barrelling exercise to influence a byelection in 2001. It fucked our housing market, which remains fucked to this day.
posted by flabdablet at 1:15 PM on August 29 [5 favorites]
posted by flabdablet at 1:15 PM on August 29 [5 favorites]
Agreed Ickster.
I have more money than I know what to do with...
Owning property has made me way more money than my actual employment.
I just hate the thought of trying to make money buying cool properties, tearing them down, and building horrible skinny 4 unit condos. (probably 3M in just sales cost...)
posted by Windopaene at 1:17 PM on August 29
I have more money than I know what to do with...
Owning property has made me way more money than my actual employment.
I just hate the thought of trying to make money buying cool properties, tearing them down, and building horrible skinny 4 unit condos. (probably 3M in just sales cost...)
posted by Windopaene at 1:17 PM on August 29
Limiting help to only "first-time homeowners" will lock out a lot of people who do need the help.
True. It will also not help people who, for whatever reason, prefer to rent than own. Radical idea: Instead of giving subsidies or tax preferences to things that we think people should like, make richer people pay higher taxes, poorer people pay lower (or even negative taxes), and let them choose what to do with their own money.
posted by Mr.Know-it-some at 1:26 PM on August 29 [9 favorites]
True. It will also not help people who, for whatever reason, prefer to rent than own. Radical idea: Instead of giving subsidies or tax preferences to things that we think people should like, make richer people pay higher taxes, poorer people pay lower (or even negative taxes), and let them choose what to do with their own money.
posted by Mr.Know-it-some at 1:26 PM on August 29 [9 favorites]
We barely have enough workers and materials to meet the current residential construction demand. The faster we build the new units, the more that the cost of labor and materials will rise. Can we bring in immigrants to help with the construction? Absolutely! But then THEY are going need places to live while they're building new homes for others, and probably aren't going to be interested in heading back to their country of origin once the work is done.
And this piece provides a lot of background and nuance on corporate homeownership.
posted by Kibbutz at 2:26 PM on August 29 [2 favorites]
And this piece provides a lot of background and nuance on corporate homeownership.
posted by Kibbutz at 2:26 PM on August 29 [2 favorites]
I want to support this!
But I suspect that the only way to execute this (or any other progressive program) is going to involve serious reformation of the Supreme Court. Because they are just going to strike it down as a Major Question or an undelegated exercise of legislative power.
I have amazing news for you about which Presidential candidate is more likely (albeit not guaranteed of course) to bring about SC reformation on any level!
posted by We put our faith in Blast Hardcheese at 2:32 PM on August 29 [7 favorites]
But I suspect that the only way to execute this (or any other progressive program) is going to involve serious reformation of the Supreme Court. Because they are just going to strike it down as a Major Question or an undelegated exercise of legislative power.
I have amazing news for you about which Presidential candidate is more likely (albeit not guaranteed of course) to bring about SC reformation on any level!
posted by We put our faith in Blast Hardcheese at 2:32 PM on August 29 [7 favorites]
releasing any concrete policy proposals whatsoever ahead of an election has become pointlessly optimistic at best and more often outright self-defeating
idk, the other crew has been pretty successful promoting that 2025 thing, no such thing as bad publicity and all that. They don't even have to pay for ads!
posted by credulous at 2:36 PM on August 29
idk, the other crew has been pretty successful promoting that 2025 thing, no such thing as bad publicity and all that. They don't even have to pay for ads!
posted by credulous at 2:36 PM on August 29
People talking like all of these plans won't be DOA when Republicans retake the Senate in November. McConnell might be retiring soon but that doesn't mean his obstructionist strategy will be going away anytime soon. Try to keep that in mind and don't get your hopes up too much.
posted by lock robster at 2:36 PM on August 29 [2 favorites]
posted by lock robster at 2:36 PM on August 29 [2 favorites]
That $25,000 might help folk with a $40,000 and up income. It certainly won't help the poor purchase a home.
40,000 is about 1.25 times the federal poverty level for a family of four.
posted by bq at 2:38 PM on August 29 [1 favorite]
40,000 is about 1.25 times the federal poverty level for a family of four.
posted by bq at 2:38 PM on August 29 [1 favorite]
Now that person has the ability to afford $255K via a mortgage, and the majority of other potential buyers also can afford $255K.
Only if every potential buyer is a first-time homeowner, which I would hazard to guess is not typically the case?
I mean I don't have stats at my fingertips but in a hot market one of the main things you can do to increase the odds of winning the house you want is to be no-contingency. If most people buying in most markets were first-timers this wouldn't be such an effective edge.
Now there are definitely folks who are not CURRENT homeowners but who USED to be, and they would not qualify for this, which is a drag considering there are a lot of unfortunate circumstances that might lead someone to be a "former, hopefully future" homeowner.
In short this is imperfect for sure but way more complicated than "here's more money, rich people".
The number of people on a thoughtful, heavily left-leaning forum who still decide to focus on a single element of this that they don't like and pretend it's the only detail available makes me agree that much more with the argument that releasing any concrete policy proposals whatsoever ahead of an election has become pointlessly optimistic at best and more often outright self-defeating.
Nah the rest of the world is way chiller than Metafilter. I guarantee you every person I actually speak to today will be like "fuck yea, look at them trying to help with these bonkers bullshit housing costs!"
posted by We put our faith in Blast Hardcheese at 2:42 PM on August 29 [1 favorite]
Only if every potential buyer is a first-time homeowner, which I would hazard to guess is not typically the case?
I mean I don't have stats at my fingertips but in a hot market one of the main things you can do to increase the odds of winning the house you want is to be no-contingency. If most people buying in most markets were first-timers this wouldn't be such an effective edge.
Now there are definitely folks who are not CURRENT homeowners but who USED to be, and they would not qualify for this, which is a drag considering there are a lot of unfortunate circumstances that might lead someone to be a "former, hopefully future" homeowner.
In short this is imperfect for sure but way more complicated than "here's more money, rich people".
The number of people on a thoughtful, heavily left-leaning forum who still decide to focus on a single element of this that they don't like and pretend it's the only detail available makes me agree that much more with the argument that releasing any concrete policy proposals whatsoever ahead of an election has become pointlessly optimistic at best and more often outright self-defeating.
Nah the rest of the world is way chiller than Metafilter. I guarantee you every person I actually speak to today will be like "fuck yea, look at them trying to help with these bonkers bullshit housing costs!"
posted by We put our faith in Blast Hardcheese at 2:42 PM on August 29 [1 favorite]
You cut demand through higher interest rates, lower wages, elimination of housing subsidies, or lower net immigration.
I mean sure, if you make more people in economic crisis there will be less demand....not sure how that fixes the problem of affordable housing though.
What I don't get is why I never hear people suggesting interest rates should be (much) higher for people buying a second property, while allowing them to be relatively low for people buying their only property. I understand the value of cooling demand w/ interest rates, but I don't get why it has to be such a blunt tool and more or less consign a lot of people to be forced into paying rents higher than the monthly mortgage they'd qualify for from a bank because of high interest rates.
posted by coffeecat at 2:47 PM on August 29 [4 favorites]
I mean sure, if you make more people in economic crisis there will be less demand....not sure how that fixes the problem of affordable housing though.
What I don't get is why I never hear people suggesting interest rates should be (much) higher for people buying a second property, while allowing them to be relatively low for people buying their only property. I understand the value of cooling demand w/ interest rates, but I don't get why it has to be such a blunt tool and more or less consign a lot of people to be forced into paying rents higher than the monthly mortgage they'd qualify for from a bank because of high interest rates.
posted by coffeecat at 2:47 PM on August 29 [4 favorites]
That $25,000 might help folk with a $40,000 and up income. It certainly won't help the poor purchase a home.
40,000 is about 1.25 times the federal poverty level for a family of four.
$40,000 in annual gross income is $3,333 per month. If that $25,000 allows them to purchase, say, a $250,000 home (the current median home price in America is about $412,000), they would have to get a $225,000 mortgage. A 30 year $225,000 mortgage at, say, 6%, means that the family would have a monthly payment of about $1,349--40% of their gross monthly income. That doesn't include property taxes, insurance, or utilities, or maintenance, or food, or transportation, or clothing.
That down payment assistance is a nice gesture, but people making $40,000 per year still won't be able to afford most homes.
posted by Kibbutz at 2:48 PM on August 29 [2 favorites]
40,000 is about 1.25 times the federal poverty level for a family of four.
$40,000 in annual gross income is $3,333 per month. If that $25,000 allows them to purchase, say, a $250,000 home (the current median home price in America is about $412,000), they would have to get a $225,000 mortgage. A 30 year $225,000 mortgage at, say, 6%, means that the family would have a monthly payment of about $1,349--40% of their gross monthly income. That doesn't include property taxes, insurance, or utilities, or maintenance, or food, or transportation, or clothing.
That down payment assistance is a nice gesture, but people making $40,000 per year still won't be able to afford most homes.
posted by Kibbutz at 2:48 PM on August 29 [2 favorites]
Is the standard to aspire to near universal homeownership? I thought affordable housing was also about state housing, rent control and subsidies with the understanding that everyone is not and will not be able to purchase a home at certain points in their lives. Saying that 25k will not help a poor person purchase a home seems sort of like moved goalposts.
posted by Selena777 at 3:05 PM on August 29 [7 favorites]
posted by Selena777 at 3:05 PM on August 29 [7 favorites]
People talking like all of these plans won't be DOA when Republicans retake the Senate in November.
Even so, there’s still value in the Harris campaign taking the position that housing costs are a problem and putting out a smorgasbord of policies to address it (some more realistic than others, as most of this thread has been spent arguing about). If it swings a few voters, it’s worth it, and we can expect them to at least try to follow through with it if they win.
In contrast, I tried looking up the Trump campaign’s stance on housing costs, and somehow it’s just the sound of jackals howling into an icy wind as democracy crawls bleeding across the landscape.
posted by qxntpqbbbqxl at 3:16 PM on August 29 [8 favorites]
Even so, there’s still value in the Harris campaign taking the position that housing costs are a problem and putting out a smorgasbord of policies to address it (some more realistic than others, as most of this thread has been spent arguing about). If it swings a few voters, it’s worth it, and we can expect them to at least try to follow through with it if they win.
In contrast, I tried looking up the Trump campaign’s stance on housing costs, and somehow it’s just the sound of jackals howling into an icy wind as democracy crawls bleeding across the landscape.
posted by qxntpqbbbqxl at 3:16 PM on August 29 [8 favorites]
People talking like all of these plans won't be DOA when Republicans retake the Senate in November. McConnell might be retiring soon but that doesn't mean his obstructionist strategy will be going away anytime soon. Try to keep that in mind and don't get your hopes up too much.
That's not a done deal yet, though. It's been...interesting and tiresome watching how the right wing is trying to prop up a failed businessman in the race up here in the Treasure State.
I swear, every time I get my mail, there's five more mailers.
posted by NoxAeternum at 3:19 PM on August 29 [3 favorites]
That's not a done deal yet, though. It's been...interesting and tiresome watching how the right wing is trying to prop up a failed businessman in the race up here in the Treasure State.
I swear, every time I get my mail, there's five more mailers.
posted by NoxAeternum at 3:19 PM on August 29 [3 favorites]
I think $25,000 could be a huge help for two groups of people:
First, lower-income families in cheap housing markets. There are plenty of small-to-medium-sized rural cities and towns where the rental options are few and/or bad, but house prices are cheap, but you're paying for braces or brake pads every month so it's impossible to save up a down payment. Median house prices in Marshalltown, IA are $170k. If you can put together a $25k down payment, your mortgage payment would be right around $900. That's a small cost increase from renting, to have a yard for your kids, and not have to deal with 10 other families who want to put their clothes in the washer all at the same time.
Second, middle-class people who are just a little bit away from being able to afford a house. I don't live in an area where housing costs are super expensive, but I do live in an area where most places I'd want to live in are just out of reach unless I can put down a really substantial down payment. (Milwaukee - median listing price is around $225k, but that's skewed a little by how many cheap homes there are that need massive structural work to be livable. There are SO many households here making $60k, $70k, $80k, for whom that amount would be a really big deal.)
I do think it's more important to build more housing and crack down on RealPage and the collusion that causes massive rent increases - I think that there are far better housing policy ideas in Harris's plan than the $25,000 - but I don't think it would be useless, especially to people who are living in cheap-to-medium-priced cities.
Also, programs like FHA define a "first-time homebuyer" as somebody who hasn't owned a home in the last three years - I'm not sure if this program would use the same definition, but it might open it up to people who are back in the market for a home after an extended period of renting, living with family, etc.
posted by Jeanne at 3:40 PM on August 29 [10 favorites]
First, lower-income families in cheap housing markets. There are plenty of small-to-medium-sized rural cities and towns where the rental options are few and/or bad, but house prices are cheap, but you're paying for braces or brake pads every month so it's impossible to save up a down payment. Median house prices in Marshalltown, IA are $170k. If you can put together a $25k down payment, your mortgage payment would be right around $900. That's a small cost increase from renting, to have a yard for your kids, and not have to deal with 10 other families who want to put their clothes in the washer all at the same time.
Second, middle-class people who are just a little bit away from being able to afford a house. I don't live in an area where housing costs are super expensive, but I do live in an area where most places I'd want to live in are just out of reach unless I can put down a really substantial down payment. (Milwaukee - median listing price is around $225k, but that's skewed a little by how many cheap homes there are that need massive structural work to be livable. There are SO many households here making $60k, $70k, $80k, for whom that amount would be a really big deal.)
I do think it's more important to build more housing and crack down on RealPage and the collusion that causes massive rent increases - I think that there are far better housing policy ideas in Harris's plan than the $25,000 - but I don't think it would be useless, especially to people who are living in cheap-to-medium-priced cities.
Also, programs like FHA define a "first-time homebuyer" as somebody who hasn't owned a home in the last three years - I'm not sure if this program would use the same definition, but it might open it up to people who are back in the market for a home after an extended period of renting, living with family, etc.
posted by Jeanne at 3:40 PM on August 29 [10 favorites]
The US population grows by about one and a half million people per year. There's about 2.5 people per household. So if we build 3 million units over 4 years, that's only a net gain of 600k units. Estimates put the housing shortage at between 2 and 5 million units. So it would take a minimum of 3 Harris terms to solve the problem at this rate. New York City alone could easily absorb a million additional units -- maybe 2 million.
Harris just isn't thinking big enough. What needs to happen is dramatic upzoning, as-of-right zoning, and a land value tax.
posted by novalis_dt at 4:44 PM on August 29 [4 favorites]
Harris just isn't thinking big enough. What needs to happen is dramatic upzoning, as-of-right zoning, and a land value tax.
posted by novalis_dt at 4:44 PM on August 29 [4 favorites]
Harris should make the $25K down payment support apply only to states/cities that remove zoning barriers or restrictive code requirements that prevent the creation of low-cost housing. A $25K subsidy for purchasing a home when there's no possible supply increase of those houses will simply increase the cost of new homes by $25K. I want policy makers to determine why low cost housing isn't being built, and then fix that. This policy seems to me to be a continuation of years of government policy dumping more and more government subsidies into the real estate market, and then being surprised real estate prices increase.
I wonder, have you read the set of policy proposals (there's more than one)? They go a long way toward addressing your concerns.
I can only support this if we make it unappealing for builders to keep installing laminate flooring and other awful materials, and if there is some provision for protecting unspoiled land from being turned into toxic lawns and/or parking lots and/or basically lifeless.
I can't tell if this is for real. Because this is Grade A NIMBY tactic. A good way to make you feel less icky while discouraging construction of badly needed housing.
IMO, a far better solution would be to only give the credit to those who are below a credit score of about 650 and the home is less than around $250k, regardless of buyer status (first time or not). You'd put so many lower income earners into properties.
This was kinda tried before and the results were bad. Really bad.
The idea is to encourage home buying among people who are in a good place to take on the risk and begin building wealth. Not to simply get low income earners into mortgages.
As long as landlords, corporate or individual are allowed to gatekeep access to shelter, direct cash infusions amount to a gift to them. They can simply raise prices to absorb any subsidy. It is the same issue as providing a UBI. Ultimately it drives the price of essentials up to match the new availability of cash.
Yes, as long as housing supply remains tight. Which must be why one of the proposals addresses that very issue by encouraging new housing construction.
This is a subsidy for real estate developers and property investors so I guess it fixes their problem of not having slightly more money, hooray for neoliberalism.
Yes, hooray for neoliberalism! We need housing, and developers want to develop. If only we could get those interests together. Hey, there's a part of the proposal that does this! They get more money... by making more housing available. And we get... more housing available.
Housing doesn't materialize out of thin air. And anyone who thinks a plan to encourage more construction is bad because those evil developers have the gall to take money actually doing it, simply not serious about dealing with housing problems.
The goals set out by Harris are outstanding, and are absurd only in that they haven't been enacted decades ago. There is a very good chance they'll all be killed by conservative politicians and courts. However, these are the very real differences between the choices to be made. Good ideas need to be championed even when they face steep barriers.
Build, Baby, Build!
posted by 2N2222 at 5:15 PM on August 29 [10 favorites]
I wonder, have you read the set of policy proposals (there's more than one)? They go a long way toward addressing your concerns.
I can only support this if we make it unappealing for builders to keep installing laminate flooring and other awful materials, and if there is some provision for protecting unspoiled land from being turned into toxic lawns and/or parking lots and/or basically lifeless.
I can't tell if this is for real. Because this is Grade A NIMBY tactic. A good way to make you feel less icky while discouraging construction of badly needed housing.
IMO, a far better solution would be to only give the credit to those who are below a credit score of about 650 and the home is less than around $250k, regardless of buyer status (first time or not). You'd put so many lower income earners into properties.
This was kinda tried before and the results were bad. Really bad.
The idea is to encourage home buying among people who are in a good place to take on the risk and begin building wealth. Not to simply get low income earners into mortgages.
As long as landlords, corporate or individual are allowed to gatekeep access to shelter, direct cash infusions amount to a gift to them. They can simply raise prices to absorb any subsidy. It is the same issue as providing a UBI. Ultimately it drives the price of essentials up to match the new availability of cash.
Yes, as long as housing supply remains tight. Which must be why one of the proposals addresses that very issue by encouraging new housing construction.
This is a subsidy for real estate developers and property investors so I guess it fixes their problem of not having slightly more money, hooray for neoliberalism.
Yes, hooray for neoliberalism! We need housing, and developers want to develop. If only we could get those interests together. Hey, there's a part of the proposal that does this! They get more money... by making more housing available. And we get... more housing available.
Housing doesn't materialize out of thin air. And anyone who thinks a plan to encourage more construction is bad because those evil developers have the gall to take money actually doing it, simply not serious about dealing with housing problems.
The goals set out by Harris are outstanding, and are absurd only in that they haven't been enacted decades ago. There is a very good chance they'll all be killed by conservative politicians and courts. However, these are the very real differences between the choices to be made. Good ideas need to be championed even when they face steep barriers.
Build, Baby, Build!
posted by 2N2222 at 5:15 PM on August 29 [10 favorites]
Or… hear me out… the government could just build some housing and then sell it or rent it without squandering taxpayer money paying fifteen layers of parasitic middlemen and rent-seekers. Oh, wait, that would be socialism.
posted by qxntpqbbbqxl at 5:19 PM on August 29 [11 favorites]
posted by qxntpqbbbqxl at 5:19 PM on August 29 [11 favorites]
Is the standard to aspire to near universal homeownership? I thought affordable housing was also about state housing, rent control and subsidies with the understanding that everyone is not and will not be able to purchase a home at certain points in their lives.
I've been observing mortgage industry actual practices for ten-plus years now, from origination all the way through the cycle, and I simply do not believe that most low-income families' chief investment vehicle should be an illiquid investment in which your entire equity can be lost through economic downturn, a lack of sophistication, and incompetent corporate behavior. The main good argument remaining in favor is the brutal escalation of rents nearly everywhere, and that's where state housing and rent control should come in.
$25K would help me buy, I suppose, but I'm in the weirdo NYC market where you can have $200K+ saved and it not be enough to get you into a reasonably convenient and attractive home without an alarming DTI (the cheaper Manhattan apartments are almost exclusively co-ops and require two years of mortgage and maintenance in liquid funds post-closing, so that a 20% down-payment requirement [nearly universal, unless it's more rigorous] is really more like a 35% requirement, all-in).
posted by praemunire at 5:43 PM on August 29 [7 favorites]
I've been observing mortgage industry actual practices for ten-plus years now, from origination all the way through the cycle, and I simply do not believe that most low-income families' chief investment vehicle should be an illiquid investment in which your entire equity can be lost through economic downturn, a lack of sophistication, and incompetent corporate behavior. The main good argument remaining in favor is the brutal escalation of rents nearly everywhere, and that's where state housing and rent control should come in.
$25K would help me buy, I suppose, but I'm in the weirdo NYC market where you can have $200K+ saved and it not be enough to get you into a reasonably convenient and attractive home without an alarming DTI (the cheaper Manhattan apartments are almost exclusively co-ops and require two years of mortgage and maintenance in liquid funds post-closing, so that a 20% down-payment requirement [nearly universal, unless it's more rigorous] is really more like a 35% requirement, all-in).
posted by praemunire at 5:43 PM on August 29 [7 favorites]
This was kinda tried before and the results were bad. Really bad.
When was it tried? If you mean back in 2008, you are incredibly wrong. It was basically done from 1946-1980 and worked pretty great. I'm not necessarily a fan of the built form (single family houses) that dominated in that period, but the results were pretty positive.
Also just because people have low income and a not great credit score, doesn't mean they can't handle a mortgage. Are you going to deny the same people rent, that is often more than a mortgage?
$25K would help me buy, I suppose, but I'm in the weirdo NYC market where you can have $200K+ saved and it not be enough to get you into a reasonably convenient and attractive home without an alarming DTI
The NYC market is not a good analogue for the rest of the entire US.
I'm actually cool with subsidized building, rent control less so, but neither of those options are even on the table.
posted by The_Vegetables at 6:38 PM on August 29 [1 favorite]
When was it tried? If you mean back in 2008, you are incredibly wrong. It was basically done from 1946-1980 and worked pretty great. I'm not necessarily a fan of the built form (single family houses) that dominated in that period, but the results were pretty positive.
Also just because people have low income and a not great credit score, doesn't mean they can't handle a mortgage. Are you going to deny the same people rent, that is often more than a mortgage?
$25K would help me buy, I suppose, but I'm in the weirdo NYC market where you can have $200K+ saved and it not be enough to get you into a reasonably convenient and attractive home without an alarming DTI
The NYC market is not a good analogue for the rest of the entire US.
I'm actually cool with subsidized building, rent control less so, but neither of those options are even on the table.
posted by The_Vegetables at 6:38 PM on August 29 [1 favorite]
It’s incredible that the overwhelming majority of comments are fixated on just one aspect of her proposal. There is a lot more to it.
• First-Ever Tax Incentive for Building Starter Homes.
• A Historic Expansion of the Existing Tax Incentive for Businesses That Build Rental Housing that is Affordable.
• A New Federal Fund To Spur Innovative Housing Construction.
• Cut Red Tape and Needless Bureaucracy.
• Stop Wall Street Investors from Buying Up and Marking Up Homes in Bulk.
• Stop Rent-Setting Data Firms From Price Fixing To Raise Rents by Double Digits.
• Cap the cost of insulin at $35 and out-of-pocket expenses for prescription drugs at $2,000 for everyone, not just seniors.
• Accelerate the speed of Medicare negotiations over prescription drugs.
• Increase competition and demand transparency in the health care industry, starting by cracking down on pharmaceutical companies who block competition and abusive practices by pharmaceutical middlemen who squeeze small pharmacies’ profits and raise costs for consumers.
• Work with states to cancel medical debt for millions of Americans.
• Advance the first-ever federal ban on price gouging on groceries.
• Set clear rules of the road to make clear that big corporations can’t unfairly exploit consumers.
• Secure new authority for the FTC and state attorneys general to investigate and impose strict new penalties on companies that break the rules.
• Cut Taxes for Middle-Class Families with Kids.
• Add A New $6,000 Child Tax Credit for Families with Children in the First Year of Life.
• Cut Taxes for Frontline Workers.
• Cut Taxes To Help Americans Afford Health Insurance on the Affordable Care Act Marketplace.
posted by NotLost at 7:19 PM on August 29 [25 favorites]
• First-Ever Tax Incentive for Building Starter Homes.
• A Historic Expansion of the Existing Tax Incentive for Businesses That Build Rental Housing that is Affordable.
• A New Federal Fund To Spur Innovative Housing Construction.
• Cut Red Tape and Needless Bureaucracy.
• Stop Wall Street Investors from Buying Up and Marking Up Homes in Bulk.
• Stop Rent-Setting Data Firms From Price Fixing To Raise Rents by Double Digits.
• Cap the cost of insulin at $35 and out-of-pocket expenses for prescription drugs at $2,000 for everyone, not just seniors.
• Accelerate the speed of Medicare negotiations over prescription drugs.
• Increase competition and demand transparency in the health care industry, starting by cracking down on pharmaceutical companies who block competition and abusive practices by pharmaceutical middlemen who squeeze small pharmacies’ profits and raise costs for consumers.
• Work with states to cancel medical debt for millions of Americans.
• Advance the first-ever federal ban on price gouging on groceries.
• Set clear rules of the road to make clear that big corporations can’t unfairly exploit consumers.
• Secure new authority for the FTC and state attorneys general to investigate and impose strict new penalties on companies that break the rules.
• Cut Taxes for Middle-Class Families with Kids.
• Add A New $6,000 Child Tax Credit for Families with Children in the First Year of Life.
• Cut Taxes for Frontline Workers.
• Cut Taxes To Help Americans Afford Health Insurance on the Affordable Care Act Marketplace.
posted by NotLost at 7:19 PM on August 29 [25 favorites]
Did anyone see the interview tonight? I missed it. I am hoping for a good streaming option after the fact.
posted by NotLost at 7:21 PM on August 29
posted by NotLost at 7:21 PM on August 29
It's non-trivial to do, but new, subsidized housing should remain owner-occupied. Otherwise, it may be a pleasant gift that doesn't solve the problem long-term. The existence of large aggregations of capital means that those wealthy people will try to maximize even more. We should not provide more goodies for them and their Real Estate Investment Trusts.
posted by theora55 at 8:43 PM on August 29 [1 favorite]
posted by theora55 at 8:43 PM on August 29 [1 favorite]
If you are proposing government sponsored housing in the US specifically, have you lived in any of the existing examples? If not, would you be willing to move into any of the existing examples? Do you have a plan on how gov't sponsored housing won't be subject to extreme amounts of racist neglect? Do we have to end capitalism AND racism before we build homes for people?
posted by pelvicsorcery at 9:52 PM on August 29 [3 favorites]
posted by pelvicsorcery at 9:52 PM on August 29 [3 favorites]
If you are proposing government sponsored housing in the US specifically, have you lived in any of the existing examples?
Of course not. Almost no one in the US, by proportion, lives in "government sponsored housing," since most public housing has been torn down and replaced by Section 8 and state-subsidized "affordable housing," which can actually tear down existing and far cheaper rent controlled housing, displacing untold numbers of renters.
If you count those other two things, the first subsidizes private sector slum landlords who also discriminate, and the second is mostly defensible except that its scale is dramatically insufficient.
The lack of social housing does not suggest that social housing should not exist. The racist, classist defunding and locally systemic non-maintenance of prior modes of social housing does not suggest that non-racist, non-classist, and sufficiently funded forms of social housing should not exist.
In case that's what this question was intended to imply.
posted by kensington314 at 1:40 AM on August 30 [6 favorites]
Of course not. Almost no one in the US, by proportion, lives in "government sponsored housing," since most public housing has been torn down and replaced by Section 8 and state-subsidized "affordable housing," which can actually tear down existing and far cheaper rent controlled housing, displacing untold numbers of renters.
If you count those other two things, the first subsidizes private sector slum landlords who also discriminate, and the second is mostly defensible except that its scale is dramatically insufficient.
The lack of social housing does not suggest that social housing should not exist. The racist, classist defunding and locally systemic non-maintenance of prior modes of social housing does not suggest that non-racist, non-classist, and sufficiently funded forms of social housing should not exist.
In case that's what this question was intended to imply.
posted by kensington314 at 1:40 AM on August 30 [6 favorites]
I'm actually cool with subsidized building, rent control less so
Please explain before I go on a rent-controlled tenant's self-righteous wordbender
posted by kensington314 at 1:45 AM on August 30 [2 favorites]
Please explain before I go on a rent-controlled tenant's self-righteous wordbender
posted by kensington314 at 1:45 AM on August 30 [2 favorites]
As someone also in a rent-controlled apartment, I fully recognize that it's good for me as an incumbent while at the same time being terrible for people trying to move into my city, and for people in my city trying to move to a more suitable apartment (i.e. it prevents retirees from downsizing and growing families from finding a place with more bedrooms), and generally for other renters not in a place with rent control. So the basic shape of rent control is at least in part "I got mine, fuck everyone else"...except its effect on the non-rent-controlled market means that if anything happens to my grip on this apartment (like the current or future owner asserting their right to move in themselves) I am well and truly fucked.
Rent control encourages hoarding not just because flat owners have far less reason to put their apartment on the open market, but because renters in rent-controlled places who want to travel (or move in with their honey, whatever) create a gross black market of sublets where the subleasing tenants are routinely denied tenant rights, which is a big obstacle for visa paperwork and makes them have to hop from place to place for years on 3- or 6- or 12-month leases.
So: great for incumbents, terrible for the city overall. IMO some form of rent control can be a good idea if it includes gradual increases but only in the presence of aggressively building enough units.
posted by daveliepmann at 3:28 AM on August 30 [6 favorites]
Rent control encourages hoarding not just because flat owners have far less reason to put their apartment on the open market, but because renters in rent-controlled places who want to travel (or move in with their honey, whatever) create a gross black market of sublets where the subleasing tenants are routinely denied tenant rights, which is a big obstacle for visa paperwork and makes them have to hop from place to place for years on 3- or 6- or 12-month leases.
So: great for incumbents, terrible for the city overall. IMO some form of rent control can be a good idea if it includes gradual increases but only in the presence of aggressively building enough units.
posted by daveliepmann at 3:28 AM on August 30 [6 favorites]
I like that Harris is trying to do: 1) ANYTHING that would help the non-rich; and 2) trying to actually win the 2024 election.
Yup a republican Senate will block and instead focus on screwing Ukraine and outlawing transitioning. And yup the Court will absolutely continue its program of preventing a Dem President to do anything while allowing a (puke) maga president to crime crime crime.
But you gotta start somewhere AND get elected.
posted by WatTylerJr at 8:04 AM on August 30 [13 favorites]
Yup a republican Senate will block and instead focus on screwing Ukraine and outlawing transitioning. And yup the Court will absolutely continue its program of preventing a Dem President to do anything while allowing a (puke) maga president to crime crime crime.
But you gotta start somewhere AND get elected.
posted by WatTylerJr at 8:04 AM on August 30 [13 favorites]
I live in the southeast suburbs of the Twin Cities, where more homes are being built than most other places in the US. The problem is, they're almost all HUGE and expensive. I've heard building one big house is more profitable than however many smaller houses that could fit in the same size lot.
posted by LindsayIrene at 8:31 AM on August 30 [1 favorite]
posted by LindsayIrene at 8:31 AM on August 30 [1 favorite]
I suspect that we could improve the housing situation by attaching a steep annual luxury tax to non-primary-residence homes. This would discourage investment firms and wealthy individuals from buying homes to rent out, and level the playing field a bit when it comes to wealthy people owning multiple homes. As is often the case, it seems to be the politics rather than the economics that make this path unlikely.
posted by Hot Pastrami! at 8:50 AM on August 30 [8 favorites]
posted by Hot Pastrami! at 8:50 AM on August 30 [8 favorites]
I'm actually cool with subsidized building, rent control less so, but neither of those options are even on the table.
Living in Florida with its massive rent and home price appreciation of late, I have gone to the dark side and am in favor of rent control. Not like permanently, but with a specified end condition involving a sufficient number of new housing units being built so as to force the landlords (especially the large ones) to actually do something rather than continue to rake in windfall profits.
Of course, what we got instead was the legislature passing a law making any kind of rent stabilization flatly illegal. Even if a hurricane comes through and destroys half the housing stock, cities can't do a damn thing to ameliorate the issue, even temporarily.
posted by wierdo at 10:35 AM on August 30 [2 favorites]
Living in Florida with its massive rent and home price appreciation of late, I have gone to the dark side and am in favor of rent control. Not like permanently, but with a specified end condition involving a sufficient number of new housing units being built so as to force the landlords (especially the large ones) to actually do something rather than continue to rake in windfall profits.
Of course, what we got instead was the legislature passing a law making any kind of rent stabilization flatly illegal. Even if a hurricane comes through and destroys half the housing stock, cities can't do a damn thing to ameliorate the issue, even temporarily.
posted by wierdo at 10:35 AM on August 30 [2 favorites]
This is how the topic is being covered by the New York Times, formerly known as America's newspaper of record.
Harris and Trump both have plans to address America’s affordable housing shortage: Hers include tax cuts and a benefit for first-time buyers, and his include deportations and lower interest rates.posted by Winnie the Proust at 1:37 PM on August 30 [3 favorites]
Gift link to the full article on the topic.
posted by Winnie the Proust at 1:38 PM on August 30 [2 favorites]
posted by Winnie the Proust at 1:38 PM on August 30 [2 favorites]
I seriously thought you were confusing the pitchbot Xitter account for an actual NYT article until I clicked through. It parodies itself so badly that if I were the author I would be so embarrassed to have written it I'd have to go live in a cabin in the woods and be a hermit for the rest of my life.
posted by wierdo at 8:50 PM on August 30 [2 favorites]
posted by wierdo at 8:50 PM on August 30 [2 favorites]
Yeah, good luck finding one of those at an affordable rent. The aspirational hermit market is just exploding and cabins in the woods are airbnb'd out the wazoo right now.
posted by flabdablet at 10:17 PM on August 30 [6 favorites]
posted by flabdablet at 10:17 PM on August 30 [6 favorites]
I seriously thought you were confusing the pitchbot Xitter account for an actual NYT article
Yep, I had the same thought. I couldn't believe it. The post where I saw it on Threads just had a screen grab but I went to the NYTimes and tracked down the actual article. It's real.
posted by Winnie the Proust at 6:01 AM on August 31
Yep, I had the same thought. I couldn't believe it. The post where I saw it on Threads just had a screen grab but I went to the NYTimes and tracked down the actual article. It's real.
posted by Winnie the Proust at 6:01 AM on August 31
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