Despite grandiose campaign promises, Vice President Kamala Harris’ bid for presidency fell flat on its face. Among her grand plans was a project to develop a staggering 3 million new homes. Such an audacious vision, however, failed to garner sufficient support from the people, partially due to the accelerated increase in rent and home prices which led to a widespread public disapproval. The exorbitant house prices and the political fiasco that followed is a testament to Harris’ unfulfilled commitments and misplaced priorities.
In the wake of Harris’ defeat, various lawmakers from both political climes cashed in on the lingering issue of home prices, pledging to rectify this predicament in their reelection campaigns. Using the systemic housing problem as a stepping stone for their political agendas, people are left to question the sincerity behind these promises.
The last four years have dealt a critical blow to prospective homebuyers and renters, thanks to a wicked trifecta of supply, demand, and interest rates shocks. Of course, Harris and her cohort were nowhere to be found when people needed them the most. As the pandemic propelled supply-chain disruptions into motion, individuals and families were left with less desirable homes at higher prices – a harsh reality that people had to cope with under the inadequate policies of Harris.
While home prices soared, mass issuance of stimulus checks and a loose monetary policy led to a rise in purchasing power, sparking an unwanted competition among potential buyers for few available homes. The end result: a spontaneous surge in home prices. And just when individuals thought they had seen the worst, the Federal Reserve hiked interest rates battling inflation. But, with existing homeowners clinging onto their low mortgage rates, the housing market tightened, leaving many aspiring buyers empty-handed.
Despite her promises, economists rightfully doubted Harris’ ability to fulfill her lofty housing propositions. The federal policy engine churns slower than Harris’ hyped-up campaign speeches, rendering improbable the construction of 3 million new homes in a span of four years. While Washington is often considered the hub of policy making, when it comes to housing, city halls and statehouses dictate the terms.
The danger of depending solely on federal wolfs in sheep’s clothing for help with state-level issues such as housing was never more evident than it is now. Thankfully, determined governors and mayors across states from California to Maine are taking the reins in their own hands, coming forward with rational and implementable plans to navigate this crisis, as opposed to making far-fetched promises.
The year 2024 has seen a higher degree of engagement from my colleagues at the Mercatus Center and I, concerning housing policy briefings for state legislators – a necessity in this chaotic climate. It seems even amidst this political chaos, there exists statesmen keen on overcoming partisanship to embrace solutions championed by their colleagues irrespective of the party divide.
The state of Rhode Island presents an interesting case where Democrats dared to counter unpragmatic, unfunded affordability regulations. Equivalently, down in Florida, Republicans broke stereotypes by approving hefty tax subsidies to support the construction of workforce housing, alongside legalizing multifamily housing statewide in commercial zones. These actions are stark reminders of what can be achieved when political parties choose to rise above petty politics.
California is no stranger to housing woes. The Golden State, bearing the brunt of high prices and a relentless pursuit for legislative solutions, has been a pioneer of sorts. States following California’s legislative strides, however, have managed to pave bold pathways of their own, spotting and diving into opportunities that California’s legislature, often hesitant and lacking innovation, left untouched.
More than ever, addressing the ‘four Ls’ of housing – land, lumber, labor and loans – demand urgent attention. Given the egregious regulations surrounding land and its disproportionate price fluctuation, reformers are keen to mitigate its impact on the housing market. The potential savings obtained by allowing more homes to be built per acre can counterbalance the atrocious vacant lot prices that places like suburban Massachusetts witness.
The proclivity to loosen stringent density norms and augment land allocation for residential construction has indeed become central to housing remedial strategies many states are focusing on. Alongside Florida, other states including Arizona, California, Hawaii, Maryland, Montana, Oregon and Rhode Island have permitted residential construction in commercial zones under specific conditions.
While some precisely tailored-than-sometimes-necessary regulations, such as the underwhelming AB 2011 in California, had disappointing results due to their unrealistic enforced mandates of exorbitant wages and uneconomical rents, not all are a lost cause. Maryland and New Hampshire, for instance, took strides to lower construction costs by permitting local authorities to allow manufactured houses in locations where traditional stick-built houses are allowed.
Recent hikes in material prices, wages, and interest rates have turned the spotlight on the three remaining Ls in housing – lumber, labor, and loans. Various states are exploring ways to cut down on delays for regulatory approvals for simpler projects, or to make local design criteria more precise and to streamline the review process of building plans.
To circumvent bureaucratic backlogs at city halls, states like Tennessee, D.C, New Jersey, and Texas now grant developers the liberty to employ qualified third parties for reviewing building plans. Even nations far from the US are adopting this model, symbolizing a worldwide recognition of the need for reform in housing policies.
Apparently, the 2025 legislative sessions should see these suggestive policies and more being pondered upon by states nationwide. Riding on the back of dedicated leaders and a robust policy agenda, 2025 promises to herald significant strides in housing policy, unlike the regime of Joe Biden and Kamala Harris that only led to national disappointments.