Photo: Andrew Harnik/Getty
New Yorkers may not be swing-state voters, but we certainly perk up when we hear anyone promise to make real estate more affordable. Last week, Vice-President Kamala Harris laid out a set of economic proposals designed to capture our attention on exactly this topic; it included measures for first-time homebuyers and renters struggling with hikes, and the builders who might theoretically construct the housing that they can afford.
Among her proposals are a pledge to build 3 million new homes; offer a $25,000 down-payment subsidy and $10,000 tax credit to first-time homebuyers; provide tax incentives for builders constructing affordable starter homes for those buyers; repurpose federal land for affordable housing; and ban algorithm-based price-setting tools that raise the rent. She also supports the 5 percent rent-increase cap proposed by the Biden administration. It sounded ambitious, and some of it was familiar; and we were curious how all of it would work, if at all.
We spoke to NYU Furman Center’s executive director Matthew Murphy on what he’s excited about, what he has questions on, and where he sees hints of YIMBY-ness in Kamala Harris’s housing ideas.
First of all — we don’t have too many details here.
It seems like it’s their strategy to say big things and not rely on policy details. Maybe more will come out after the DNC. In the small housing-policy arena that I run in, the understanding is that she’s just going to try to win the presidency, and then when the transition time comes, that’ll be the time when they hash out the basics of proposals.
Taking what we do have: Which policy ideas in particular excited you the most?
It’s always exciting when housing is on a presidential agenda at all. I look at these and ask, what do they hint at as policy if they don’t say the actual policy? I think that the tax incentive for builders that build starter homes to first-time homebuyers is exciting in particular. Or at least the acknowledgment that there has historically been this pocket of affordability that has just been wiped out.
There’s also a deep curiosity to know what the federal government can do to stimulate supply. This idea of building on federal-owned land to me is straight from New York City. I read all that as expanding those tools and building out supply. They are genuinely thinking, Okay, what do the millennials and first-time homebuyers actually want and how can we finance that? Much in the same way the policy-makers who designed the GI Bill and the investment in the suburbs 70 years ago were thinking — but those have a whole legacy of discrimination and segregation. So what does our generation look like in getting that right? I think that’s an exciting question for a president to be asking.
So is Kamala Harris really “going full YIMBY”? Is she all about upping the housing supply?
She wants to build 3 million homes. She’s saying we have federal land, we’ll make it available to build housing — that on its own is YIMBY. If she was full-blown, it would be even more stepped-up federal involvement. Anybody who acknowledges that there’s a supply issue and that we need to build, I think, is a YIMBY now. The brass tacks are how much political capital are they willing to spend to really address these issues at the scale they need addressing?
I’m sure you still have a lot of questions on how any of it would work.
The vaguest idea to me is the same as the most exciting: the tax incentives for builders that build starter homes for first-time homebuyers. Just thinking about how that actually plays out from a builder’s perspective: Are they thinking about a suburban-style development of a cul-de-sac of homes or something? How would everybody in that development be a first-time homebuyer? And then how does that sync up with the $25,000 subsidy? If you look at the demographics of first-time homebuyers, how do you make sure that’s not a discriminatory thing? And if you’re going to rely on tax incentives, then builders are going to want clarity on how that works. They are not going to risk 10 or 30 years of financing if it’s not clear how the program would actually work. Those are exciting challenges that intersect with ideas about urbanism and townhome development or condominium development, but it’s probably too vague at the moment.
One reaction to the $25,000 subsidy was that it would just increase prices — like, “Oh, great, new houses just went up by $25,000.” Is that fair?
I think it’s simplifying. Policies targeted to what we want to accomplish are a good thing. We do it for electric vehicles and other kinds of policies. And I think this is just probably swing-state politics, too. $25,000 doesn’t go nearly as far in a place like New York. In fact, in New York City, at HPD, they have a home-assistance program that gives $100,000. In other places, it would go further. I think the criticism of it is fair — subsidies like that do get baked into home prices. But at the same time, the tax code is riddled with subsidies that benefit existing homeowners. Mortgage-interest deduction, capital-gains exemption. So this is something to help even that asymmetry out. What is the exact harm in that? And if your complaint is that it benefits existing homeowners — they’re already benefiting.
What about the ban on algorithm-based price-setting tools like RealPage? How would that work?
Logistically, it probably looks like a continuation of legal action against firms that have access to data that nobody else has access to. And against the idea that they are using that data to tell landlords, “Here’s how much you can raise your rent.” There is something about broader curbs of corporate power, which in terms of housing policy is the asymmetry of information, the kind of unfairness, even to home purchasers. Tools to introduce parity are positive in the long run. I would also have a lot of questions, though: How would it play out? What does it actually look like, and who is it targeted to? Most renters in America are not living in corporate-owned buildings with landlords who use this technology. A lot of people live in single-family homes, two-family homes. The majority of renters are living in a much smaller housing stock. How would this create more affordability?
Let’s talk about the renter bait in her proposal: the 5 percent cap on rent increases (previously introduced by the Biden administration). Will this ever happen on a federal level?
This country has enacted rent control before, during World War II. And New York’s legacy of rent stabilization and rent control is an offshoot of that. So there is a history here, but obviously an extremely different kind of policy context. If it’s the same plan as the one Biden announced, the cap is targeted to 50-plus-unit buildings. What are 50-plus-unit rental buildings in America? It’s low-income housing, public housing. Similar to what New York passed where they said, “You’re subject to Good Cause if you’re in a ten-plus-unit portfolio.” But obviously that’s super complicated, anyway: How do you know how many units your landlord owns?
There are just as many complications, if not more, federally than there were in New York, or what any state would go through in passing something like Good Cause. And the ones that have done it in recent years, California, Oregon, Washington, New York — their rent caps have been tied to inflation. Harris probably doesn’t want to talk about inflation, which I totally understand, but the 5 percent reads to me as a very strict cap. It could create the issues that have been documented about rent control — disinvestment, the landlord not being able to keep up with the rising costs and then reacting by not maintaining the housing or cutting stock. It’s extremely delicate, and these policies are hard to pull off.
I saw a lot of people in the real-estate industry reacting negatively to the cap.
I take it that the Harris-Walz campaign is sending a shot across the bow that they are focused on renters and renter issues — and that’s relatively new in federal history and presidential campaigning. So is not thinking of renting just as a low-income issue. We have a low-income housing tax credit, and we have Section Eight. But we spend a lot more in federal dollars via the tax code on homeownership than we do on rental. That’s the conversation it seems like they want to have.
Maybe renters are finally becoming a political bloc.
I’m actually really interested in how that would play out in a question at a debate. You would assume Donald Trump would be extremely opposed to rent control as a landlord. But it’s a pretty populist position. It is a question to ask: What would this look like in more states, and should the federal government intervene? I do think it takes a leader running on a platform to at least say, “This is what we see is possible in the future.” There’s no magic to housing policy. You decide what you’re going to do and you have to put the funds toward it. The potential presidents of America should be laying out how they think about that.
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