Congressman Flood: Harris Housing Plan Makes Housing Crisis Even Worse
WASHINGTON, D.C. – RealEstateRama – U.S. Congressman Mike Flood delivered remarks on the floor of the U.S. House of Representatives laying out the case against Vice President Kamala Harris’ housing plan.
Video of Rep. Flood’s comments can be found here. News outlets are welcome to use the footage for their reporting purposes. A transcript of his remarks can be found below.
Thank you, Mister Speaker. I rise to discuss Vice President Kamala Harris’s housing plan.
First, let’s talk about the broader problem. Housing is less affordable and less available today and it’s bringing costs onto the American people.
Overall, housing underproduction costs the U.S. economy over $1.6 trillion in lost wages and productivity every year.
The U.S. needs to build 4.3 million more apartments by 2035 to meet the demand for rental housing. This includes 600,000 units to fill the shortage from after the 2008 financial crisis.
Underproduction of housing has translated to higher housing costs – resulting in a decline of 4.7 million affordable apartments from 2015-2020.
Housing underproduction also increases cost of living for families, inhibits geographic mobility, burdens both renters and buyers, and stifles economic productivity. According to one estimate, from 1964-2009, our national housing shortage lowered aggregate economic growth by 36 percent.
All of that is to say, there’s no question that we have a housing supply problem in this country. Unfortunately, Vice President Kamala Harris’s plans would make the problem much, much worse.
The Harris plan’s goals are to “lower housing costs for working families and end America’s housing shortage.” The problem is the Biden-Harris policies and Harris plan will actually raise housing costs and worsen the housing shortage. I’d like to break it down piece by piece to demonstrate why.
Let’s start with Harris’s proposal to add tens of thousands of dollars in new downpayment assistance for homebuyers.
Large amounts of downpayment assistance might sound nice, but it is exactly the wrong answer in an environment with housing shortages across the country. More government subsidies won’t bring housing costs down. They will continue to increase demand and drive prices even higher.
The great irony is that this policy would hurt the very people it’s intended to help. Think about a young person who is currently renting but planning to buy a home. He and his wife maybe they’re looking at prices on Zillow and diligently saving up for a downpayment on a nearby house. They’ve financially planned for this goal, and they’ve been working towards it for years.
If the Harris plan’s subsidy were to go into effect, the prices of those homes would increase. They could find themselves further from their goal – even if they were able to receive the promised subsidy themselves.
It’s a classic example of why progressive economic policies fail. Instead of working through a market-focused solution, the Harris plan simply throws money at the problem and hopes for the best. That’s not leadership, and that’s not going to solve the problem.
Next, let’s talk about rent caps. Earlier this year, the Biden-Harris Administration announced their intention to impose rent caps on “corporate landlords.”
Rent caps are a failed policy with a long track record of exacerbating housing shortages by dissuading developers from building new rental units in high-demand areas.
If investors know that future rent increases will be capped, they shift their capital elsewhere. That means less building. Less housing supply. This results in fewer options, driving demand for existing units even higher, which pushes rents up in buildings that aren’t subject to the caps.
We’ve seen how these policies work in New York and San Francisco, where rent control has been in place for decades. According to the American Institute for Economic Research, rent control policies in New York City resulted in more rental units being abandoned than built in the 1970s and 80s. We can expect more of the same under the Harris plan, which will replicate these failures on a national scale.
So, to recap, the Harris plan would implement an expensive downpayment assistance subsidy. It would hamper new development by putting in place rent caps that disincentivize investment. In other words, Harris would both increase demand and limit supply – the exact wrong combination of policies if you want housing costs to go down.
The result is a housing market where both renters and potential homeowners are squeezed, leaving everyone with fewer choices and higher prices.
Vice President Harris has said previously that “Bidenomics is working.” For those that are concerned about rising housing costs, her words should be taken literally and taken as a warning.
Harris plans to continue the inflationary policies of the Biden-Harris Administration. Her housing plan would only exacerbate our housing affordability problems, leaving renters with less options and future homebuyers with ever-higher costs.
If America wants to boost housing supply and end the inflationary policies of the Biden-Harris era, we need to cut red tape, streamline federal housing programs and removing barriers to building new units.
Until we move towards solutions that encourages private investment in new development, we can expect that our country’s housing shortage will persist, leaving the American dream out of reach for everyday working families.
Thank you, and I yield back.
