“Build the American Dream”

What defines the Harris-Walz housing agenda — which prompted the Business Insider headline “Kamala Harris is going full YIMBY” — is a series of primarily supply-side interventions: build an additional three million homes in the next four years, create a tax incentive for the construction of “starter homes,” expand existing tax incentives for developers who build affordable housing, and cut red tape and bureaucracy to facilitate more construction. The plan also pledges to repurpose federal land for housing developments, to provide $25,000 down payment support for first-time homebuyers, to create a $40 billion housing innovation fund, and to take on corporate landlords. 

It’s worth emphasizing upfront that it’s not all bad. The plan urges Congress to pass the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act, which would seek to prevent large landlords from skirting antitrust law and colluding to increase rents, and the Stop Predatory Investing Act, which prohibits investors who acquire fifty or more new single-family homes from deducting interest or depreciation on those properties. Both policies are sensible interventions that, nevertheless, don’t go far enough to qualify as “taking on” corporate landlords.

Last month, Harris also expressed support for a national rent cap, which, although it doesn’t feature in the just-released Harris-Walz housing agenda, is a good idea. For starters, as the Tenant Union Federation recently suggested in a policy memo, the Biden-Harris administration could act now and direct the Federal Housing Finance Agency to require an annual limit of 3 percent on rent increases in Government-Sponsored Enterprise–backed properties, a move that would affect eight million households nationwide.

Building housing on federal land is also theoretically a good idea, provided that the housing is treated as a public good, meaning housing that’s publicly or collectively owned and deeply and permanently affordable. The $40 billion innovation fund, which local governments can use to finance “solutions to build housing,” could be leveraged to develop housing along these lines as well as other forms of decommodified homes. Although there’s little specification as to what regulations will apply for either proposal, such investment in public or social housing is unfortunately likely not what the Harris-Walz campaign has in mind, given the general tenor of the housing agenda.

At the core of the Harris-Walz agenda is a commitment to bringing down housing costs by increasing housing supply. This promises to be achieved through deregulation of zoning and permitting, which would facilitate more and quicker construction, and through subsidies and tax credits, which would incentivize the building of homes both to rent and to own. While increasing housing supply is important, the proposal offers few specifications about what sort of housing will be built, where, and for whom, simply stating that the expansion “will make rents and mortgages cheaper.”

Yet assuming an expansion of any type of housing supply will automatically and significantly lower rents and home prices is an exercise in trickle-down economic logic. It makes little sense compared to directly investing in an expansion of the specific kind of housing that is most desperately needed: rental housing that is permanently affordable and off the speculative market, especially for those with the lowest incomes, for whom there is currently a shortage of 7.3 million homes.

For instance, one plank of the Harris-Walz agenda, the starter homes tax credit, posits that homes are not being built because it’s not profitable enough, requiring further public subsidies. As Matt Bruenig argued on Friday in Jacobin, this is a bad idea. And conditioning the receipt of those subsidies on who eventually purchases the home is nonsensical given that homebuilders typically don’t know the buyer in advance. Moreover, Bruenig writes, the proposed $25,000 subsidy for first-time homebuyers is counterproductive because it’s a “demand subsidy without any corresponding price controls, [meaning] some of the money will also just get captured as higher home prices, negating the affordability goals of the policy.” Ultimately, both of these interventions will serve as vehicles for funneling additional public funds into the for-profit housing market, with no indication that they will meaningfully increase affordability.

Finally, the Harris-Walz agenda proposes a historic expansion of the “existing tax incentive for businesses that build rental housing that is affordable.” Presumably, this refers to the Low-Income Housing Tax Credit program (LIHTC), which is the primary mechanism for acquisition, rehabilitation, and new construction of affordable rental housing in the United States. However, the LIHTC, which provides billions annually in tax credits to private developers in exchange for a percentage of affordable units being folded into for-profit projects, offers only temporary affordability. The program has a built-in eviction clause when affordability covenants expire, and landlords can raise rents to market rate, effectively displacing long-term tenants who cannot afford the resulting rent increases.

With nearly 500,000 LIHTC units set to lose their affordability restrictions this decade, rendering them permanently lost to the market, a historic expansion of the LIHTC offers few solutions to the current crises. One alternative could be to apply the innovation fund to support municipal acquisition of LIHTC properties with expiring covenants to help prevent displacement and preserve affordability. Such units could be managed directly via local public housing authorities, where possible, or converted to community land trusts or housing cooperatives — housing models that voters prefer to doubling down on purely private sector solutions.

An Alternative Path

The popular support for a paradigm shift in housing policy shouldn’t come as a surprise. Voters, especially renters, have long suffered the consequences of a hypercommodified housing system, where primarily supply-side public subsidies line the pockets of developers and landlords, who go on to extract ever-increasing profits from tenants through exorbitant rents.

To meaningfully address the housing crisis, Democrats need to move beyond just the public-private paradigm and invest directly in housing as a public good. Any serious policy to this effect must begin with a repeal of the Faircloth Amendment, which effectively precludes federal funding for an expansion of public housing stock, followed by investment in a massive expansion of public housing and other forms of decommodified homes (core tenets of the recently reintroduced Green New Deal for Public Housing, spearheaded by Bernie Sanders and Alexandria Ocasio-Cortez). It must also include the imposition of an ambitious national rent cap.

Interventions like these are paramount to making a difference in the housing sector. And considering their popular support, they’re also good politics.