If you want more shortages, then artificially stimulate demand. That’s exactly what Harris proposes, following the lead of AOC.
The Kamala Harris Plan
The National Low Income Housing Coalition discusses the Harris Campaign Plans to Lower Housing Costs.
To address the housing shortage and bring down prices for renters and homeowners alike, the Harris campaign’s plan calls for a historic expansion of the Low-Income Housing Tax Credit (LIHTC) and the first-ever tax incentive for homebuilders who build starter homes sold to first-time homebuyers. Building upon the Biden-Harris administration’s proposed $20 billion innovation fund, the campaign proposes a $40 billion fund that would support local innovations in housing supply solutions, catalyze innovative methods of construction financing, and empower developers and homebuilders to design and build affordable homes.
The campaign plan cites the Biden-Harris administration’s ongoing actions to support the lowest-income renters, including its actions to expand rental assistance for veterans and other low-income renters, increase housing supply for people experiencing homelessness, enforce fair housing laws, and hold corporate landlords accountable.
To make homeownership attainable, Vice President Harris’s proposal would provide up to $25,000 in down payment assistance for first-time homebuyers who have paid their rent on time for two years. First-generation homeowners – those whose parents did not own homes – would receive more generous assistance.
A Wall Street Journal Rebuttal
Please consider The Kamala Harris Plan for More Housing Shortages
A signature feature of Kamala Harris’s housing plan is providing first-time home buyers with $25,000 in down-payment support, at a total cost of $100 billion over four years. Absent a severe recession, this policy is all but certain to lead to higher home prices. That’s because the four million program recipients would become price setters for all buyers in their neighborhoods.
According to the American Enterprise Institute’s Housing Center, 77% of all home purchases would be subject to this home buyer “tax,” causing the price of these homes to increase by 3.6%. Over four years the increase in home prices would total $175 billion, more than the $100 billion cost of the program. The price increase would show up in higher revenue for sellers, thus acting as a wealth transfer to them.
The plan’s defects don’t stop there. Ms. Harris’s proposed tax incentive for building starter homes is intended to increase housing supply substantially. This approach has led to significant market distortions on at least two occasions.
The Housing and Urban Development Act of 1968, with its easy credit terms and substantial subsidies, resulted in a surge of housing permits in 1971 and 1972. By 1975 the housing boom had reversed, leaving lasting scars on cities including Detroit, Chicago and Cleveland. Similarly, the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which set affordable-housing goals, combined with Bill Clinton’s National Homeownership Strategy, led to credit liberalization in the runup to the 2008-09 financial crisis. Housing permits doubled, from 1.1 million in 1992 to 2.2 million in 2005, but then collapsed by 73% in 2009. In the aftermath, millions faced foreclosure, and the resulting housing-supply deficit still afflicts us today.
Without such dangerous credit easing, it is likely that Ms. Harris’s proposal would provide incentives largely for new homes that would have been built anyway, with any incremental construction being unevenly distributed across the nation. This would cause further imbalances between supply and demand.
History offers a cautionary tale against such federal interference in the housing market: From the 1930s to 2008, at least 43 housing, urban-renewal and community-development programs were signed into law. Despite these laws’ lofty goals, these initiatives consistently failed to make housing more affordable.
An Idiot’s Proposal
It is economic idiocy to believe that Giving people $25,000 to buy a house will do anything but raise prices.
On the supply side, the houses would either have been built anyway or the new construction will be shoddy.
We have had dozens of “affordable housing” programs over the years and if we include state and local efforts the plans number in the hundreds if not thousands.
Everyone of those plans raised prices or caused an economic crash.
Let’s now discuss the Harris plan to “increase housing supply for people experiencing homelessness“
Harris did not put a cost to that. We can look no further than California for the reason, as well as the likelihood of success.
A New High-Rise Building Will House the LA Homeless in $600,000 Units
Please recall my June 19, post A New High-Rise Building Will House the LA Homeless in $600,000 Units
A grand opening of Weingart Tower will have 278 units to shelter the homeless. Hooray!?
Beyond Insane Math
NBC news reports There are 75,518 people are homeless in the county, and 46,260 in the city of Los Angeles, an increase from the 69,144 in the county, and 41,980 the city from 2022 as of Jan 23, 2023.
$600,000 * 278 = $166,800,000. That’s $166.8 million. And that does not include free property taxes, case workers, maintenance, utilities, insurance, food, police, clothes, doormen, or medical care.
If the county were to shelter the 75,518 homeless, the cost would be $45,310,800,000. That’s $45.3 billion, again excluding free property taxes, case workers, maintenance, utilities, insurance, food, police, clothes, doormen, or medical care.
And it would not stop there. Every homeless person in the state would move their tent to LA to participate.
Affordable Housing
This dear woke fans is what’s known as “affordable housing”.
Taxes have to rise to accommodate such stupidity. It makes me angry just thinking about this. For what? Does the city think this will cure the homeless problem?
Most of these people are some combination of drug addicts, alcoholics, mentally unstable, and physically unfit to ever work. And even if they did work, they would not be living in $600,000 units.
California Proposes Restraining Orders to Stop Thieves
More and more headlines look as if they are from the Babylon Bee.
On June 17,I commented Hoot of the Day: California Proposes Restraining Orders to Stop Thieves
What’s going on in California is beyond insane.
Also see Twenty Percent of California Lives in Poverty, What’s Going On?
On a cost-adjusted basis, California leads the nation in percentage living in poverty. Blame the Progressive oligarchs like Governor Newsom.
Green New Housing Deal
In case case you don’t see where this is headed, let me spell it out for you:
Harris has adopted AOC’s New Green Deal for Public Housing
My hoot of the day is AOC and Bernie Sanders have teamed up for a new green housing deal. I explain where we are and what’s on deck.
How Much Would This Cost?
AOC says the bill would invest up to $234 billion over a decade into “weatherizing, electrifying, and modernizing our public housing”.
Don’t kid yourself, the whole policy would cost many trillions of dollars.
The Harris sucker pitch is to start out small then add trillions of dollars more when she discovers free $25,000 down payments were not quite enough to reduce costs.