Harris to propose up to $25K in down-payment support for 1st-time homebuyers
Harris to propose up to $25K in down-payment support for 1st-time homebuyers
It's part of her economic agenda she will unveil Friday, her campaign says.
How about this: crank up the taxes on houses people don't live in. Make owning empty real estate so unprofitable that it's better to rent it out cheap than to try to screw renters.
Make it a crime to own an empty house.
Fwiw in Florida we have what's called a homestead exemption. You get a big slice of your property value axed for taxation purposes if you live in the home. You have to pay full tax on any other properties. I believe tax rate increases are capped for homes with the exemption as well, but that might be for all homes. I don't remember exactly.
I want to see an exponential property tax so you could have a house and something like a small cabin somewhere but anything more and then your tax multiplier is based on how many properties you own, you'd have to control for businesses trying to own property in an employee's name, this might even help with large chain businesses not becoming a monopoly but hard to say if that's a huge benefit or a monkey paw type thing
That's a terrible idea. The real life effect is that prices will simply go up. You need to force down real estate prices in general, and offer very low interest rates for first time buyers.
They did this in 2008-09 with an 8k payment to homebuyers that wasn't a loan and didn't have to be repaid. This enabled me to but a foreclosed house and make it livable, and I've been living in it since then. It didn't raise prices in my area, because no one was buying houses anyway because regular possible couldn't afford it.
I don't know if I would have been able to get so financially situated if that payment wasn't there. I could've bought the house, but I would not have been able to fix it enough to ever stay on top of the maintenance and bills.
Would this be exactly the same situation? I dunno. But I know a similar push sure worked in the past.
Different situation, as that was after the market crash.
The argument isn’t that this payment won’t help people in the short term, it will. The problem is that if you have an extra 25k to spend and it’s given to every first time buyer, they’ll just shop in a 25k higher price range. And if the sellers know this, they’ll adjust the market for what everyone can afford now.
This is basic economics, you lower the quantity of available housing by allowing more people to afford it and the price will go up. There’s a reason our solution to every affordability problem works this way and breaks things. For student loans for instance, sure we can pay them off for you, but does that bring down the cost? No. It just means the government pays universities. Same thing here, the government is just letting you use your taxes to give to a real estate agent instead of addressing housing costs.
And didn't advertise it well. I bought my house then and didn't know I had this until it was too late.
It does rather sound like proposing an immediate 25k hike in house prices, yeah.
It's not. First time buyers are a small portion of the market.
The fact that it's limited to first-time house buyers will at least help mitigate some of the advantage that commercial real estate buyers have over ordinary folks that are just trying to get a roof over their heads.
At worst, youre partially right. Maybe they'd go up 10K, but certainly not 25K. That's just not how markets work. It's the same argument as saying UBI will increase prices - yes, it will, but not by more than or as much as the UBI is. If everybody else sells their home at $25K more, you can sell yours in a month by going down to $15K more than before.
I agree, and i didn't say it will increase prices by 25k. Still think this can be tackled in better ways. Low interest rates over a 20-25 year loan can save you much more than 25k. Edit: let's ban corporate from buying up blocks of residential areas. It won't cost you any tax money and will immediately drop the prices
Yeah a similar policy in the UK (from 10ish years ago) is one of the biggest reasons for hugely inflated prices among small properties.
Obviously, the only real solution is to work to lower real-estate prices, but that would be unpopular with most home owners (who are a majority in the US).
Most of the housing price increases are driven by investors, not first time home buyers. This will have its intended effect. Obviously we still have to build, but this is like claiming minimum wage causes inflation.
Require that homes that are not homesteads be sold within 6 months as a homestead or they're auctioned off to the highest bidder that will take it as a homestead.
Having experienced this kind of policy in Australia; it’s great in theory - but the issue is that builders/sellers just ended up jacking up the prices of their homes to absorb the grant.
It's the reason colleges here are stupid expensive as well. Greed.
It still shifts the balance of power in favour of first time home buyers. Landlord fucks have to pay extra.
Watched the same thing happen on a smaller scale back when analog TV broadcasting was phased out and we got vouchers for digital TV tuners in America. They all cost around $25 or less. As soon as the vouchers were given out, the prices doubled to $50
Surely this is a well studied phenomenon with a name, right?
Yup, this is just going to put an extra $25k from every sale into the builders’ pockets.
Ya'll are getting newly built homes?
I don’t think this is possible. First time home buyers aren’t buying in cash. They have to get bank loans and banks won’t loan if the appraisal doesn’t match the buying price.
Obviously I don’t know Australian law but at least in Texas this would prevent the house from closing.
What's the exact policy in Australia?
It varies a bit by state, but it usually only applies to new builds now: https://firsthome.gov.au/
can't wait for all homes to go up 25k in response. Without purchase control this is useless
I don't think this will happen so literally but to your point this is a supply issue. All this does is increase effective demand (i.e. the number of people able to purchase a home). This is a band-aid over a hole in a sinking ship.
Well, its only for first time buyers, so that will temper things. I predict homes will only go up about $23k.
more like 60-125k since people will have more for a down payment
"Can't wait for burgers to cost $25 because the minimum wage went up"
I mean we are almost there tbh, it's not due to min wage though it's due to producer greed. Super high cost for producers means super high ingredient cost, plus the shops greed means burgers are now over 4$ for fast food and > 12$ for actual burgers. 16$ for 2 burgers and a thing of fries at McDonald's.
The reason I know it's not the wage but greed, if that was the case the price would be stagnant in states closer to federal min wage, but those states are the similar pricing as well. For example, currently for 2 bacon mcdoubles a large fry and a large lemonade at mcdonalds Huston texas; min wage $7.25; order cost: 12.56 Maine: min wage: $14.25; order cost: $15.76
Yes there is a difference in price but, the fact that one order makes up almost the difference in pay for a single employee at the establishment. The price is marked way higher than wage markup, it's companies using it as an excuse to raise prices
This would be great but you know centrists will fuck it up and it’ll be like, “You can get up to $25,000 as a tax credit if you’re a veteran who owns a small business in an opportunity zone and have a low income but also somehow have a spouse who is a lawyer and can spend 30h finding and filling out the paperwork and tracking down bank statements from when you both were 19.”
On top of that just pumping support money into real estate doesn't fix either of the core problems: people aren't being paid enough to afford homes and we're not building enough homes to keep prices reasonable. The end result of this is that home prices inflate even further. If we treated houses as housing rather than investment vehicles we could actually do something about our housing crisis.
This dude bureaucracys
We had a help to buy scheme in the UK similar to what Harris is proposing. Spoiler warning: it didn't help.
Only thing that will stem the demand is a massive house construction scheme and outright building new cities.
Only thing that will stem the demand is a massive house construction scheme and outright building new cities.
Even this won’t work, because we already have more houses than people. The issue is that corporations bought up all the houses, and are intentionally letting them sit vacant. The end goal is artificially reducing the supply, so they can sell fewer homes at exorbitant rates.
Basically, imagine there are 1000 homes, for 1000 people. Each home goes for an even $100k at fair market value. Big Corporation buys 250 of them, (for a grand total of $25M) and lets 200 sit vacant. Now the remaining vacant homes are going for more than $100k, because the supply has been artificially reduced. Now when they sell those 50 homes, they can do so at $300k each, making a total of $10M (that’s $15M from their 50 sales, minus the $5M they paid for the 50 originally) off of just 50 houses. If they just bought and flipped all the houses, they’d only be making small profits per house. But by sitting on a bunch of them, they’re able to make more per house.
In short, they made absolute bank on those 50 houses, and can now buy more houses to repeat the process. They haven’t made all of their money back (yet) but they don’t care about the short term because they can just repeat the process again and continue driving rates up.
So when they eventually sell those 200 homes they’ve been sitting on, they can do so at those exorbitant prices that the market has come to expect. And when it causes the market to crash (because they’re no longer letting houses sit vacant) it’s the homeowners who are all underwater on their mortgages. So the company is able to get away scot-free by ditching their supply, while the homeowners get fucked.
Landlords are also doing the same thing, where they’ll own 1000 units but only rent 200 of them, so they can charge higher rent on those 200, while the rest sit empty.
What they need to do is implement a scaling tax for vacant homes. The more vacant homes you own, the higher the property tax is on each one. So the upper-middle class people can still own a summer and winter home without getting fucked. But make it unprofitable to buy and sit on hundreds of vacant properties, just to artificially reduce the supply. If a home or apartment is vacant for more than one calendar month in the year, it counts towards your vacant property tax. Incentivize the sale and rental of homes, instead of allowing them to quietly buy up and sit on properties.
I would like to see a tax on third properties and above that sit vacant for more than 6 months a year then 10% of the property value as a fine which would go to a ministry supporting unhoused people.
There would probably have to be some provision that if the property is rented out then for tax purposes the rent must be considered at the market rate -15% at the time the agreement was made. Eg a corpo couldn't rent a bunch of units to a subsidiarity and call them occupied since they are rented arrive they would have to pay income tax on the income.
I'd argue we don't necessarily need more homes. I think what most cities need is really to end zoning.
There is more than enough commercial and industrial vacant properties over the US that could very feasibly be turned into residential housing to house every person ten times over.
Zoning really is the problem because developers are essentially being forced to build unwalkable communities. You're just not allowed in many cities to buy old warehouse space and develop it into housing or to build small businesses (groceries, shops, etc) in areas zoned residential.
Ending/reforming zoning would solve so many issues... (I say /reforming because there are limits, most people don't want to live 10ft from a factory). But I hardly hear anyone talking about it whether on Lemmy or in the media... but it seems like it would fix so many issues.
Incentivizing new construction for homes people actually live in is another facet of her plan.
I agree here. I don't see how anything will help that does not involve buidling more. heck build it till its not profitable rent property. didn't china boost their economy with building housing?
You don’t need more cities when there’s about 7 times the empty, perfectly functional living quarters for the amount of homelessness.
More houses is not the answer. There are plenty. Making more just make greedy capitalists more fuel.
Use what we got more efficiently.
They should give lower interest rates to those with less means instead of the other way around.
Let me preface this with:
I am 100% on board with treating housing as a human right, but this proposal misunderstands the point of interest rates.
Interest rates are a best guess by financial institutions about your likelihood to repay and their expectations for inflation over the course of the loan. Interests rates are higher for poorer people because the risk of them not paying it back is higher. Google the "sub prime lending crisis" which is exactly what crashed the global economy in 2009.
One other commenter notes that an alternative would be to build state owned housing and rent it at reasonable rates. Unless it's mixed income housing, that model has failed everywhere it had been tried-- from Cabrini Green in Chicago to the commie blocks of eastern Europe. Why? because it creates specific areas in a city where a business is essentially guaranteed to have less revenue than anywhere else. This is why urban centers have food desserts and why people who live in the massive public housing blocks in Coney Island have to commute 90 minutes to Manhattan -- why would you open your business in a poor neighborhood rather than the financial district?
Even with the mixed-income model popular across Scandinavia and the Netherlands, it's not like they solved the housing crisis as this does nothing from stopping the investment properties and the airbnb-ifcation of city Centers.
Here's a congressional report on how increases to student grants (Pell grants) are highly correlated with increases in tuition.
https://crsreports.congress.gov/product/pdf/R/R43692/4
Again, I think everyone should be able to afford a home, but this policy is as ignorant of history as it is ineffective at addressing the root cause of the housing crisis.
I understand your point, however it’s flawed from the start in that government interest rates should not be used for a means of risk assessment, in my opinion. Your argument makes sense for private institutions. Bank loads should follow your logic. The government, however, should use interest rates to funnel new money where it’s needed most, and not towards private investors.
Agreed, instead of paying for some of it, enforce a strict 3% interest rate (with the remaining amount being paid for by the gov), this prevents the base cost of the home being raised by the amount of the subsidy
can you explain how that last point follows from the others? First time home buyers with 3% available for a down payment already get subsidized loans from Fannie Mae, which are then packaged into investment products and sold on the open market. When this went bad in 2009, it crashed the global economy. Are you suggesting that we do more risk reduction for multi billion dollar banks? Why not just cap interest at some fixed % above inflation like civilized countries do instead subsidizing predatory lending practices and guaranteeing said loans with tax money mostly raised from working people?
This can absolutely change people's lives. Paying rent can make it impossible to save for a down payment. A 30k windfall (inheritance) helped my wife and I make the down payment on our first house. And then our mortgage payments were cheaper than our rent was. Even if the overall "sticker price" of a home is higher, it's a negligible difference over the lifetime of a loan.
Yeah. Throw more money instead of punishing predatory lenders and speculators. Jesus.
The plan to make housing affordable has been known for years, decades even.
You don't cut prices, because it means cash-rich buyers will buy up the stock as investment in the long-term.
You don't (only) give people money to buy, because you're giving money to people that own property as a portfolio piece.
You:
- Freeze rent so that any increases fall below inflation, making it a long-term loss, but stable in the very short term.
- Provide opportunities for people to buy their rental properties, with tax incentives for those that sell at a cheaper rate.
- Freeze house prices and gradually drop over the long-term, so that they are a slowly depreciating asset.
- Assist those that wish to buy their rental properties.
- (Forgot to add this) Agree a gradual drop over the space of several years to push the price of a house down.
This gives those that own multiple houses the means to sell property with a one-time tax benefit. You'll lose money initially, but in the long term people can afford houses and the market will move on from property as an investment piece. The reason no one wants to do this is because it'll take years to come to fruition, and most leadership terms aren't that long.
You're right this won't help - all it will do is push up the average house price by 25k. Freezing prices won't do anything except drive shortage and lower quality property. Everything you mentioned will work once until people realize they can take advantage of it. We've seen it before - price freezes don't help.
It is well known what we need to do.
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make property a bad investment. Heavily tax vacant properties and ownership of multiple, improve renters rights, increase interest rates for investment purchases. The goal is to drive down Qd quickly, reducing the value of other owned properties.
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significantly drive up quality housing stock - Increase of Qs. Tax breaks for new builds, government rent to own, density and infrastructure increases. No tax on new builds owned for 10 years. Longer plan that solves long term.
Haha, I realised that I forgot the last point!
You're right, freezing won't stop it, because it's still a stable place to keep your money. What needs to happen once frozen is that prices need to be continually dropped over a long period.
Obviously, more housing is key, and helps push current owners towards selling sooner rather than later. The problem with housing stock, which we've seen in the UK and Ireland, is that the quality of "affordable" housing stock is often hilariously bad. Corners are cut, homes are too hot/cold to be considered safe, and issues like cladding that breaks the law is pushed back to the owner to fix instead of those that broke the law. That's why it needs to be gradual and methodological.
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Raise a taxes to extreme an degree for commercial ownership of residential properties and maybe even a 1 time multi-home tax up-front, use the money to support single property owners who end-up upside down in their mortgages. fuck people profiting off blocking out huge swaths of the population from home ownership.
I'd rather have a fix for our broken credit system. Denying someone a loan that will be a 2200$ house payment in an area where they will be lucky to get a 3k apartment is insane.
This will just add to the house price inflation.
This is a band-aid that does nothing to fix the problem. This kind of "solution" was implemented in my country as well. The direct result was an increase in housing prices across the board.
The problem isn't that people are lacking the money for a downpayment. The problem is that volatility in the job market combined with ever increasing prices means you can't commit to buy a place of your own and pay it for the next 30 years, because the first time you lose your job you'll have lost all progress towards owning your home.
The fix you want is government-built housing. Make a neighborhood with government money. Sell the apartment for 1/3 of the price if the buyer is a teacher/fireman/doctor/other high-demand jobs in governmental employ. That way you fill the positions, the housing prices stop going up, and young people get to securely purchase a house before they're 50.
But of course, that's not the end-goal, is it? No the objective is to make more money for those who already own all the land and houses. And there's no need to spend time thinking about it, just make some fucking vouchers. We all know who'll end up cashing them in.
This is a band-aid that does nothing to fix the problem. This kind of “solution” was implemented in my country as well. The direct result was an increase in housing prices across the board.
Does this not apply to student loan repayment as well?
This is a band aid size solution on the gaping wound problem of housing shortage. She should really be putting her time into coming up with an answer to increasing housing supply
Increasing housing supply is explicitly part of her announced plan. Are you under the impression that this was the entirety of her announced economic plan?
Probably.
It's like how Biden's Student Loan plan was longer than the headline of "forgive x% of them" and people wrote paragraphs about how it also needed to do XYZ, without reading enough to see it did.
Are you under the impression that this was the entirety of her announced economic plan?
Welcome to the internet.
Mannnnn I just want a home but it'll take more than this
I'd rather they raise the cap on deductions (mortgage interest, state and local taxes) back to how it used to be Pre-Trump and give additional tax rebates to first time home buyers. His tax bill raised my effective tax rate a shitload. I would never have been able to buy my first house without those provisions.
The current cap really only affects rich people though.
Given that a "starter house" has gone from 150 to 400 grand in my area on the past 4 years, I'm not so sure.
Won't help with high property values, high taxes, and unaffordable home insurance.
It will absolutely help with high property values. It will help them go higher. Same with student debt forgiveness.
For the record, I’m in favor of both
The real solution is probably to build unfathomable quantities of publically owned housing and rent them out at affordable prices. I suspect this won't meaningfully move the needle on the issue.
Agreed. Not everybody can or wants to own a home even with a 25k bonus. Some people want the freedom to move around and explore without being bound for any more than a monthly or yearly term.
The solution is to pump up availability and let the prices correct themselves. Bind pay CEO as a multiple of their employee wages, and address economic shenanigans like stock buybacks and tax loopholes so that people end up with a larger piece of the pie--that way people can do what they want instead of being forced into one option or another.
How long would it take for the sellers to price in those extra 25k they can wring out of buyers?
Well before it's passed. Possibly even if it doesn't pass.
Just build more houses. Costs are out of control. I'm in my 40s, and have a good down payment saved up, but prices and interest rates mean I'm still priced out of buying a home.
She wants to build 3 million more houses too. but that's not exactly as good of a headline as "Hey first time home buyers! Vote for her and you'll get 25k"
Repeal environmental protection laws and build federally owned housing to compete in the market. Otherwise, there isn’t an incentive to increase housing supply.
In this generation helping home buyers is like helping the wealthy. Most of us have no hope in hell of ever coming close to buying.
This isn't fair to people like me, who were fortunate enough to buy their first house without 25k from the government. Won't someone think about how disadvantaged I am!
There are plenty of people that think this way. They'll happily slap a free glass of water out of a thirsty man's hand because they were there thirsty yesterday and no one offered them water.
Instead of being happy for the thirsty man getting some water, they'd rather he suffer the way they had.
Harris is basically become Frodo Baggins and Walz is all about the PO-TAY-TOES
I mean that means if you can find 10 best friends you can all pitch in to put 50% down on a 500 sqft condo in a major city, right? This means its essentially paying a 7x7 ft square of housing at the federal level. Realistically they'd need to start at 90k and state and local govs should pitch in another 90k each to make home buying in most cities affordable.
Am I a first time home buyer if I moved for a job and have been renting at the new location for 3+ years?
I would take it to mean if you've never owned a home
You said this last time when you ran with Biden.
And? Was she some kind of dictator before and I missed it?
Finally, paying your rent on time will have some kind of reward.
this will get all kinds of messed up. I had one of these years ago. It used to be you had to take a home ownership course. Had to earn under X amount and not have owned a home in the prior 9 years. You had I think 10 months to find house.
NOW you have to be of a specific demographic, the sum us larger. and yay need ti already be in close on the house. Which is nuts because if you are already in closing there's a huge chance when you go to apply the funds are gone. Can't afford the house. Before, the grants were limited/. But you knew before CLOSE that they were out of grands for the year.
It’s probably mostly going to be used by people buying second homes for renting out
Edit glad they’re thinking of doing it, but I think qualifying for the program needs to be made strict to ensure against first time home buyer fraud
1st time homebuyers
First time home buyer fraud has been around for a while https://abcnews.go.com/WN/Politics/time-homebuyer-tax-credit-program-subjected-fraud/story?id=8890655
That sounds like an incredibly horrible idea with tons of unintended consequences. I hope almost nothing less than a Trump presidency, so I hope this is not a sign of things to expect from her campaign.
Then again, people are dumb, so if this somehow convinces them to vote for her instead of the orange catastrophe, it might be fine.
Yeah, that money should be going to oil, automotive, and banking/finance oligopolies like the rest of the trillions are!
Then again, people are dumb
The irony is palpable.
What a great comment! Well done you, I am proud of you!
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