In policy speech, Harris calls for $25K tax credit for first-time homebuyers

Vice President Kamala Harris, the Democratic nominee for the 2024 presidential election, included initiatives to deal with surging housing costs in her economic plan announced Friday. She promised, if elected, to reduce “red tape” to build homes and provide tax incentives for first-time homebuyers.

“There’s a serious housing shortage; in many places, it’s too difficult to build and it’s driving prices up,” Harris said during her first major policy speech on Friday afternoon in Raleigh, North Carolina. “As president, I will work in partnership with industry to build the housing we need, both to rent and to buy. We will take down barriers and cut red tape, including at the state and local levels.“

The economic plan also includes a $25,000 tax incentive for down payments for people buying their first homes. This is a higher amount than the one-year tax credit of up to $10,000 for middle-class families who sell their starter homes that President Joe Biden announced during the March 2024 State of the Union address.

At that time, Biden also called for an annual tax credit of $5,000 for two years for middle-class first-time homebuyers. Analysts believe that the credit is unlikely to be approved by current members of Congress. 

“We also know that as the price of housing has gone up, the size of down payments has gone up as well. Even if aspiring homeowners save for years, it often still is not enough,” Harris said. “While we work on the housing shortage, my administration will provide first-time homebuyers with $25,000 to help with the down payment on a new home.”

Housing industry experts believe Harris has the correct diagnosis of the main issues affecting today’s housing market — high mortgage rates and a low supply of listings — but they fear her initiatives would increase demand, making the lack-of-supply problem even more pronounced. 

During the speech in Raleigh, Harris said that, if elected, she will also provide a one-year child tax credit of $6,000 and reduce the cost of prescription drugs.

Rental market

Harris promised to end America’s housing shortage by building 3 million new homes that are affordable for the middle class by the end of her first term. The plan includes advancing a bill on Capitol Hill called the Stop Predatory Investing Act. 

“As you know, some corporate landlords, some of them buy dozens, if not hundreds, of houses and apartments, then they turn them around and rent them out at extremely high prices — and it can make it impossible then for regular people to be able to buy or even rent a home,” she said.

“Some corporate landlords collude with each other to set artificially high rental prices, often using algorithms in price-fixing software to do it. It’s anti-competitive and it drives up costs. I will fight for a law that cracks down on these practices.” 

Regarding the rental market, Harris mentioned in July efforts to ban “hidden fees and surprise late charges that banks and other companies use to pay their profits” while pushing to “take on corporate landlords and cap unfair rent increases.” 

The Democratic nominee’s speech resonates with Americans who frequently cite housing costs as top concerns. Despite some recent trends, America’s housing landscape remains expensive for many, making up about 70% of America’s total household debt, according to Nick Luettke, an associate economist at Moody’s.

Luettke said that in the past decade, the multifamily sector has significantly expanded its inventory by nearly 25% and, despite a 20% increase in effective rents since late 2019, there was a recent 1% year-over-year reduction. 

“When considering income growth, the median-income household now spends 26.8% of their income on an average apartment. While rent levels remain high for many, the national rent-to-income ratio is down 2% since 2022’s peak and down 1% since the pandemic’s start, highlighting the pivotal role of inventory expansion in enhancing affordability,” Luettke said.