Vice President Kamala Harris unveiled a controversial plan aimed at making homeownership more accessible if she is elected President.
While Harris’s commitment has been praised by some as a step toward addressing long-standing affordability issues, real estate professionals in Chicago are less convinced that her proposals will be the right fit for the city’s unique market challenges, the Chicago Sun Times reported
Harris’ housing strategy outlines plans to provide $25,000 in down payment assistance for first-time homebuyers, a $40 billion innovation fund to support housing supply solutions, a pledge to build 3 million new homes over the next four years, and a goal to expand tax credits for affordable rental units.
However, the housing market in Chicago, already strained by a lack of available homes, soaring prices and high development costs, has raised concerns among local experts.
“Right now, I’m worried that it’s adding gas to a fire,” said April Baker, an agent at Berkshire Hathaway HomeServices Chicago.
Baker said she fears that the down payment assistance program could boost demand at a time when new home construction is already lagging. For instance, in Chicago, the number of homes for sale in July was 4,955, an 8 percent decrease compared to the same time last year, according to Illinois Realtors.
Jeff Benach, principal of Lexington Homes, echoed Baker’s concerns, noting that the $25,000 down payment assistance might not be sufficient or effective in markets where home prices vary significantly.
“What part of the country is that the right number in?” Benach questioned.
On the other hand, some real estate professionals believe that Harris’s plan could bring much-needed relief to the housing market. Daryl Fairweather, chief economist at Redfin, is one of these professionals.
“If [builders] know that there’s going to be buyers waiting for them with this down payment assistance money, I think that you can have all the pieces move together at the same time,” he said, noting that when combined with incentives for builders and other proposals, the down payment assistance could create a balanced approach.
Typically, in a balanced housing market, there should be enough supply to sustain six months’ worth of home sales. However, there was only a two-month supply in the three markets Baker serves. This scarcity has led to higher overall housing costs, with the median sales price in Chicago reaching $360,000 in July, a nearly 6 percent increase from the same month last year.
Since about 25 percent of Baker’s clients are first-time homebuyers, she was initially encouraged by a proposal targeting new homeowners. However, she now fears it could lead to further price hikes.
“My concern here is that by incentivizing more buyers to come out into the market with these funds … now we’re going to have prices that keep rising,” she said. “Is that really helping affordability?”
Christopher Coleman from Wingspan Development Group suggests that stable fiscal and monetary policies are preferable to Harris’s down payment proposal.
Coleman instead advocates for measures like a Moderate-Income Housing Tax Credit, which gives state and local agencies the equivalent of approximately $10 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation or new construction of rental housing targeted to lower-income households.
Charlton Hamer from Habitat Company appreciates the focus on housing but stresses the need for broader policy discussions to enhance construction efficiency. He points out that building affordable housing is costly, often matching or exceeding market-rate housing costs, as evidenced by the high development expenses of Habitat’s projects.
Despite the challenges, Hamer supports Harris’s focus on addressing the fundamental needs of food, shelter and health, acknowledging the recognition of the ongoing housing crisis.
As Harris’s housing policies continue to be debated, the reactions from Chicago’s real estate professionals highlight the complexity of finding solutions that can address both national and local market needs.
— Andrew Terrell
Read more
National
Kamala Harris’ plan to build homes: reality or fantasy?
Politics
National
Harris says she will build 3M homes, crack down on rental algorithms
Popular
New York
Did Kamala Harris really stare down housing lenders?