Kamala Harris' 3 Million Homes Promise: 'Everything Else Won't Work Unless We Have More Supply,' Says Chief Economist

Vice President Kamala Harris proposed a housing plan that promises to add 3 million new homes to the market. Experts say this could help address America’s persistent affordability crisis.

The proposal, which builds on President Biden’s housing initiatives announced earlier this year, has been both praised and criticized by economists and industry observers.

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Harris’ plan recognizes that the housing shortage is a supply-side issue. “Everything else won’t work unless we have more supply,” Daryl Fairweather, chief economist at Redfin, said in an interview with ABC News. 

Fairweather called it “the boldest housing plan I have ever seen from a modern presidential candidate.”

The plan includes several measures to boost construction, including tax incentives for builders to construct starter homes and a $40 billion fund to promote housing development. It also proposes up to $25,000 in down-payment support for first-time homebuyers and a $10,000 tax credit.

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While economists agree that increasing supply is important, some aspects of the plan have raised concerns, particularly proposals to cap rent increases.

"When [Kamala Harris] starts talking about rent control, I just think that that’s not so effective," the Redfin Chief Economist said.

Joe Brusuelas, chief economist at RSM U.S., told CNN that while the focus on supply conditions is commendable, the effectiveness of rent caps is questionable, noting that market forces are already leading to disinflation in the rental market.

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The plan’s scale reflects the severity of the housing crisis. Fairweather noted that the U.S. has been grappling with a shortage of homes since the 2008 financial crisis, with construction lagging far behind demand.

The shortage has been worsened by the pandemic and rising interest rates, which have made homeownership unattainable for many Americans.

However, turning the proposals into reality will be challenging. Many measures would require congressional approval, a tall order in the current political climate. More than that, local zoning laws and community resistance often pose barriers to new construction.

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“While this is a step in the right direction, let’s wait and see what they can actually implement,” Jeffrey Zabel, a professor of economics at Tufts University, said to CNN. “It is easy to make these proposals and another thing to actually implement them.”

Some experts also worry that certain aspects of the plan, like the $25,000 down-payment assistance, could inadvertently drive up home prices by increasing demand without a corresponding increase in supply.

Despite the concerns, the plan has been welcomed by many as a serious attempt to address the issue. “The housing shortage has been getting worse and worse for the last decade … So I think it’s great that a leader is talking about the housing market in these terms,” Fairweather said.

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