How Trump and Harris Could Transform Housing

2024 Election: Housing Policies - Trump vs. Harris

In the 2024 election cycle, housing policy has been thrust into the spotlight as affordability and inventory shortages impact Americans across the board. Both Donald Trump and Kamala Harris are running with distinct ideas on what housing in America should look like. Let’s dive into where each stands on the key issues, with a focus on residential real estate and rental markets.

Donald Trump’s Housing Vision

1. Federal Land for Housing Development
   Trump is all about opening up specific federal lands to residential projects. He sees it as a solution to expand housing supply, targeting areas where demand is high. This could mean new construction on prime federal land, theoretically opening doors for more affordable units.

2. Protecting Single-Family Zoning in Suburbs
   Trump has made his stance clear on preserving suburban single-family zoning. His approach essentially safeguards these areas from being overtaken by multi-family housing developments, aiming to maintain property values and what he calls the “character” of suburban America.

3. Cutting Inflation to Help Homebuyers
   Inflation reduction is a cornerstone of Trump’s economic approach to housing. Lowering inflation, he argues, would directly impact mortgage rates and ease the financial burden for prospective homebuyers. His economic roadmap promises a lighter federal hand in the housing market, betting on inflation control to improve affordability.

4. Avoiding Rent Control
   Trump’s policy avoids rent control measures altogether. He argues that rent caps disrupt market dynamics, proposing instead that boosting housing supply will naturally balance rental prices over time. His plan appeals to landlords and developers who prefer market-driven rent settings.

5. Incentives for First-Time Homebuyers
   Trump supports the idea of tax incentives for first-time homebuyers, but he hasn’t committed to specific numbers or program structures. His overall stance is that more Americans should own homes rather than rent, though his platform leans toward market incentives rather than direct subsidies.

6. Localizing Housing Decisions
   The federal government, in Trump’s view, should have a hands-off approach, letting local governments drive housing decisions. His policy shifts power away from Washington to state and municipal levels, appealing to those who want fewer regulations but also potentially limiting federal support for housing aid.

7. Support for 1031 Exchanges: Trump intends to maintain the 1031 exchange, a tool frequently used by real estate investors to defer capital gains taxes on property sales. His goal is to keep the program untouched, allowing real estate investors to grow wealth tax-efficiently and the real estate market moving fluidly.

Kamala Harris’s Housing Vision

1. $25,000 Down Payment Assistance for First-Time Buyers
   Harris is pushing for a program that offers $25,000 in down payment assistance to first-time homebuyers, aiming to make that first purchase more accessible. She’s focusing especially on groups historically shut out of homeownership, proposing federal assistance that could drive up homeownership rates.

2. Incentivizing Zoning Reforms for Affordable Housing
   Harris sees zoning as a key barrier to affordable housing and has proposed a $40 billion fund to incentivize local governments to reform restrictive zoning laws. Her approach leans on federal funding as the carrot to prompt cities to open up zoning for denser, more affordable housing options.

3. Exploring Rent Caps
   Harris advocates a 5% cap on annual rent hikes for large landlords, aimed at offering more stability to renters facing steep annual increases. This rent stabilization model could mean tighter profit margins for landlords but would benefit renters struggling to keep pace with rising costs.

4. Curbing Corporate Ownership in Single-Family Rentals
   Harris is also backing legislation that would limit the ability of large corporations to own significant swaths of single-family rentals. The proposal targets Wall Street’s push into the housing market, which many argue drives up home prices and reduces availability for traditional buyers.

5. Expanding Low-Income Housing Tax Credits (LIHTC)
   Harris aims to expand LIHTC, a tax credit that developers use to offset costs for affordable housing projects. It’s a tried-and-true policy in affordable housing but requires additional funding and resources to scale effectively. Harris’s support here signals a commitment to more affordable housing units nationwide.

6. Opening Federal Lands for Affordable Housing
   Like Trump, Harris also wants to open up federal land for housing, with a clear emphasis on affordability mandates. Her approach targets underutilized land to create a pipeline for more affordable housing options in areas where private development alone isn’t meeting demand.

7. Limitations on 1031 Exchanges                                                                           Harris seeks to reduce the use of 1031 exchanges for high-value properties, targeting the tax deferral benefits that primarily help large investors and those making over $400,000.00 a year.  An unintended consequence of 1031 restrictions is less movement in the market and properties transacting.

Real Estate Industry Takeaways 

Both platforms have distinct implications for investors, landlords, and developers, with Trump leaning towards minimal regulation and market-driven solutions, and Harris focusing on social equity and sustainability through regulation and federal assistance. The direction each candidate would take suggests very different landscapes for real estate professionals depending on the election outcome.  Whether you’re a landlord, developer, or buyer, these plans signal potential shifts in zoning, affordability programs, and regulatory landscape post-election.