Vice President Kamala Harris wants to make housing affordable for more Americans, but the realities of the housing market are stacked against any quick fix.
High mortgage interest rates and high real estate prices have made a median-priced home unaffordable for a median-income American household, according to a report from S&P Global, a U.S.-based credit-rating agency.
Harris, 59, has proposed plans to use tax incentives to entice new construction and lower rent and homebuyer costs.
“We will end America’s housing shortage,” she said at the Democratic National Convention last week.
S&P Global said there is no quick fix to America’s housing affordability issues.
“Median income has not kept pace with housing prices (including rent),” according to the S&P report. “Over the last 30 years, housing prices across the U.S. have increased far faster than household incomes.”
The report found that median income has increased an estimated 43% since 1992, while the median home sale price has risen 252%.
Harris has called for building 3 million more housing units in four years, on top of the 1 million or so built annually by the private sector. She has proposed a new tax credit for developers who build homes aimed at first-time homebuyers and a $25,000 tax credit for first-time buyers.
Those in urban areas, especially on the coasts, face the most significant challenges, according to the S&P report.
“Recent moderation in housing price growth relative to incomes provides some level of optimism that this protracted period of acute housing unaffordability in the U.S. may recede, particularly if the Fed starts cutting its benchmark rate in September 2024,” according to the report. “The long-term trends, however, remain intact. Even with interest rates coming off recent highs, without substantial housing cost declines, especially in the most pressed urban areas, demand for assistance from U.S. not-for-profit affordable housing issuers is unlikely to abate soon.”
The report also noted some of the issues around affordable housing.
“Besides providing shelter and security, the availability of high-quality affordable housing can have significant knock-on effects for society, including those related to health, education, crime, and intergenerational poverty,” according to the report.
