Kamala Harris' economic plan (1 Viewer)

[zztop]

I tried to note some key points, pulled from a few sources, but not sure if I missed some

Harris offers proposals to cut food and housing costs, trying to blunt Trump's economic attacks

Vice President Kamala Harris has announced a sweeping set of economic proposals meant to cut taxes and lower the cost of groceries, housing and other essentials for many Americans.

apnews.com

• proposed for a federal ban on price gouging by food producers and grocers.
• proposed $25,000 in down payment assistance for certain first-time homebuyers and tax incentives for builders of starter homes.
• unveiled her goal of adding three million new housing units during her first term. Additionally, she said, she would "fight for a law that cracks down" on "corporate landlords" that artificially inflate the price of their real estate holdings
• proposed tax breaks for families, as well as middle- and lower-income people, promising to expand the child tax credit to up to $3,600 — and $6,000 for children in their first year of life.
• proposed to enlarge the earned income tax credit to cover people in lower-income jobs without children — which the campaign estimates would cut their effective tax rate by $1,500 — and lower health insurance premiums through the Affordable Care Act
• voiced support for ending taxes on tips for service and hospitality workers last week

 

[Optimus Prime]

In the housing world, we’re in an era of haves and have-nots, or as influential economics writer Noah Smith recently put it, “a direct and inevitable conflict between two large classes of American society: homebuyers versus homeowners.”

The dichotomy is old, stemming from a time decades ago when a home started to be perceived as an investment rather than simply a place to live. It feels extremely pronounced at the moment , however, because the gap between those who own a home and those who don’t has expanded so much in recent years. Homeowners want their homes to appreciate in value, therefore amplifying their wealth, while new homebuyers want prices they can afford. This has sometimes poised a war between baby boomers and millennials.

“It’s basically a zero-sum game,” the former Bloomberg opinion writer and macroeconomics expert Smith wrote on his blog yesterday.

In an election year, it’s always the economy. And by way of that, it’s housing. Democratic presidential nominee and vice president Kamala Harris recently shared her housing plan, and Smith is into it. He likened it to Singapore’s housing policy.

“In Singapore, the government controls the supply of housing, because it owns about 90% of the land, and can decide how much to build,” Smith wrote. “Singapore’s Housing Development Board increases supply slowly and steadily over time, so that everyone has a place to live, and so that housing—at least, theoretically—earns a modest but predictable financial return.”

And “it gives lower-income first-time homebuyers a government grant to help them buy houses,” he said, through a wealth redistribution system. In 2023, the homeownership rate among Singaporeans was close to 90%.

Some key components of Harris’s plan are: up to $25,000 in downpayment assistance for first-time homebuyers and a $10,000 tax credit for first-time buyers; tax incentives for builders who build starter homes and affordable rentals; a $40 billion fund to build housing; a repurposing of some federal lands for housing; a ban on price-setting tools used by landlords; and, a removal of tax benefits for investors buying a substantial number of single-family homes.

There’s a lot there, but Smith focused on the credits to first-time homebuyers, tax incentives for builders, more money to build, and the repurposing of federal lands. He called the latter three “supply expansion,” and labeled the plan for federal lands, “very Singaporean.”

Supply is something the Biden administration has mentioned in its policy announcements and plans, too, which as Smith points out is the basis of the YIMBY, or yes-in-my-backyard movement: the need for more homes and the ways we can build more homes. Harris is beginning to embrace that, it seems.

“The Harris economic program—and the Biden program—are solidly in line with the YIMBY movement that has been winning victories at the state level,” Smith said. “The key to the YIMBY movement is that it emphasizes goals over methods—the idea is to build housing by any means necessary, including deregulation, tax incentives, and government housing construction all at once. Harris’ plan embodies this all-of-the-above approach.”

He continued: “Critics have lambasted Harris’ first-time homebuyer grants as just another demand subsidy that will push up prices. But Singapore does the same thing! And research suggests that the effect on prices won’t be that huge.”...............

MSN

Kamala Harris’s housing plan is similar to a Singaporean strategy

It won’t solve all, but “making the U.S. just a little bit more like Singapore can only be a good thing, and that’s what Harris is trying to do here,” influential economics expert Noah Smith wrote.

fortune.com

 

[MT15]

I don’t understand the assertion that it will raise home prices automatically. It’s not like every single home buyer will qualify. It’s a small subset of home buyers. I guess it could in some few situations, but if it is paired with increasing supply - which she has proposed - it shouldn’t have any effect on home prices, IMO.

 

[Nebaghead]

I don’t understand the assertion that it will raise home prices automatically. It’s not like every single home buyer will qualify. It’s a small subset of home buyers. I guess it could in some few situations, but if it is paired with increasing supply - which she has proposed - it shouldn’t have any effect on home prices, IMO.

Similar to how student loans/financial aid increase costs because the schools know the students get the money.
It really depends on how it is implemented. Credits work better but if it is 25k against a down payment, then it will increase prices.

 

[efil4]

I don’t understand the assertion that it will raise home prices automatically. It’s not like every single home buyer will qualify. It’s a small subset of home buyers. I guess it could in some few situations, but if it is paired with increasing supply - which she has proposed - it shouldn’t have any effect on home prices, IMO.

the problem we have in homebuilding here in my area, is that builders have gotten away from building 1300-1600 sq ft starter homes ( that would run 200-250k ) for larger, higher priced homes ( 2200-2800 sq ft/$330,000-450,000 ) AS STARTER homes.

The profit margins on starter homes is about the same as higher priced homes, but when you do 10% profit margin on 200,000k vs 10% on 400,000k, well you can see the difference and why builders will pivot to larger homes. The money is better for same process, just larger home.

And even if it does raise price, say by $25,000 ( the seller looking to get some of that free $$$ ) it still doesnt translate to a loss for anyone as the home value will increase over years of ownership. Add the fact that there could be tax incentives up to $10,000 for BUILDERS, then you may not see higher prices on new homes.

The MARKET dictates cost. If construction materials pricing starts dropping due to supply, if you get a boon in construction adding to the existing "supply" of homes on market, competition will increase for sellers and the ONLY real way to attract a buyer, is PRICE. ( lower than the next home )

Its simple economics of scale really. IF 5 homes in my neighborhood are for sale, and we all have same 4br/3bath homes with virtually same sq ft and layout - the ONLY difference in the ability to sell that home is if my price is BETTER ( lower ) than the other 4.
Then my neighbor drops his price. Sells. Now you have 2 comps ( comparables ) that are showing "price per sq ft" coming down- so the other 3 have to match ( if they want to sell ) and that starts the downward trend.
Doesnt happen overnight, it takes time, but in 2 years you could very well see this happen.

New listing just went up in my hood- $241/sq ft- they are insane. Home just down street sold AFTER 7 MONTHS on market for $216/sq ft ( which is more in-line )

I suspect they will either come down to around 220 or they will have a hard time selling.

 

[MT15]

Similar to how student loans/financial aid increase costs because the schools know the students get the money.
It really depends on how it is implemented. Credits work better but if it is 25k against a down payment, then it will increase prices.

But homes are more like a market commodity - demand vs supply. If she implements programs to increase supply and the 25k is only available to a few people, I just don’t see it automatically increasing prices. Maybe I’m wrong -

 

[efil4]

Similar to how student loans/financial aid increase costs because the schools know the students get the money.
It really depends on how it is implemented. Credits work better but if it is 25k against a down payment, then it will increase prices.

But a $25,000 increase on a $200,000 is not unheard of nor a back breaker. if you have to put 20% down :

$40,000 on $200,000
$45,000 on $225,000

10% is even less.

Home prices right now are simply a result of market. Supply constraints during COVID upended the construction material sector along with delivery of materials. Couple that with builders moving away from smaller homes ( starter homes ) to larger 2500-3500 sq ft homes, to take advantage of profit margin increase due to price increase on new construction, and you had a perfect storm of "capitalism" ( greed )- i dont blame them. They simply took advantage when the iron was hot.

Problem is they now are "used" to iron hot for last 3-4 years. Not wanting to go back to that $200,000 median priced home because THEIR lifestyle will have to change ( less income/revenue ) So probably will have to wait for a new set of builders to come along and start building smaller homes, happy with their margins/profit on those.

 

[bird]

I am putting this here because it has to do with economics.

Kroger sues US FTC over unconstitutional in-house tribunal

The FTC filed a lawsuit in February 2024 to block the merger, claiming that the deal would lead to higher grocery prices.

finance.yahoo.com

 

[SaintForLife]

She was asked by the reporter how she plans on paying for the economic polices she's calling for. She ignored that question and went into word salad mode and repeated return on investment 4 times. I can't wait to see her 1st press conference.

 

[UriUT]

But homes are more like a market commodity - demand vs supply. If she implements programs to increase supply and the 25k is only available to a few people, I just don’t see it automatically increasing prices. Maybe I’m wrong -

It's working towards demand. The plan opens more folks to housing when before they won't be able to afford homes. That effectively takes them out of the housing market before the credit. The supply of homes is the issue at the moment. Not enough being built, therefore the supply is limited. The feds lowering interest rates will also increase demand as more will then be able to enter the market.

 

[UriUT]

She was asked by the reporter how she plans on paying for the economic polices she's calling for. She ignore that question and went into word salad mode and repeated return on investment 4 times. I can't wait to see her 1st press conference.

So in your infinite wisdom, can you explain how this shrinks the economy? If you don't understand her, just say it, rather than accuse her of word salads. If you want word salads, actually listen to Trump. I'm sure 5th grade level thinking would find him intelligent.

 

[SaintForLife]

So in your infinite wisdom, can you explain how this shrinks the economy? If you don't understand her, just say it, rather than accuse her of word salads. If you want word salads, actually listen to Trump. I'm sure 5th grade level thinking would find him intelligent.

I posted that for the video and not his commentary. It would be nice if she could answer some actual questions. We all know why she avoids them. She's not smart enough to formulate answers on the fly. Trump isn't scared of press conferences, answering questions and speaking off the cuff unlike Harris.

 

[UriUT]

I posted that for the video and not his commentary. It would be nice if she could answer some actual questions. We all know why she avoids them. She's not smart enough to formulate answers on the fly. Trump isn't scared of press conferences, answering questions and speaking off the cuff unlike Harris.

Do you understand her point? Or do you want to pound your chest to make clear that you are smarter than her? An accomplished DA and politician? I mean, you're already the premiere economist and clinician. may as well add public speaking.

And do you actually listen to Trump? Go read the transcript.

Btw, we already had that video posted by MT. Why post it again if you want to pounce on her? You sure that commentary didn't appeal to you without an ounce of thought to it?

 

[efil4]

Do you understand her point? Or do you want to pound your chest to make clear that you are smarter than her? An accomplished DA and politician? I mean, you're already the premiere economist and clinician. may as well add public speaking.

And do you actually listen to Trump? Go read the transcript.

Btw, we already had that video posted by MT. Why post it again if you want to pounce on her? You sure that commentary didn't appeal to you without an ounce of thought to it?

he doesnt understand basic economics, much less macro economics.

Same reason he and his ilk were giddy with excitement on Aug 5 2024.

Only to wake up this week to Wall St having reclaimed ALL its LOSSES and then some.

They are quite obviously intimidated by folks smarter than them. Its why they resort to "chest pounding" because thats the only real offense they have. When that "chest pounding" no longer works, they leave.

 

[bird]

She was asked by the reporter how she plans on paying for the economic polices she's calling for. She ignored that question and went into word salad mode and repeated return on investment 4 times. I can't wait to see her 1st press conference.

I can’t wait for your rapidly declining false god to put together a coherent sentence.

Of course, it is apparent that the window for that has long been closed.

 

[B4YOU]

It's working towards demand. The plan opens more folks to housing when before they won't be able to afford homes. That effectively takes them out of the housing market before the credit. The supply of homes is the issue at the moment. Not enough being built, therefore the supply is limited. The feds lowering interest rates will also increase demand as more will then be able to enter the market.

The combo of falling interest rates and a 25k subsidy will spike prices just when we see markets correcting. Each 1% drop of interest rates will see a 3-7% increase in prices. A subsidy into that price pressure is a terrible idea.

The solution is increasing supply via ending corporate ownership of single family homes and new regulations on short term rentals of SFHs.

 

[coldseat]

The combo of falling interest rates and a 25k subsidy will spike prices just when we see markets correcting. Each 1% drop of interest rates will see a 3-7% increase in prices. A subsidy into that price pressure is a terrible idea.

The solution is increasing supply via ending corporate ownership of single family homes and new regulations on short term rentals of SFHs.

I don't think Harris would be able to get a 25k down payment subsidy passed by Congress, but if she could it wouldn't directly increase the price of the house by 25k. And even if it did, it wouldn't negate the beneficial help of a 25k subsidy for the down payment.

Most people put down anywhere from 3% - 20% down on a conventional home loan. Let's say it's on the lower end of 5% down payment. A 25k subsidy for the 5% down payment would equal out to a $500,000 home. Let's assume that 25k gets added to the price of the home because of "market adjustments", whatever that it. That same home price would then be $525,000. With a 5% down payment, the down payment would be $26,250. Which means that the home buyer would need to come up with a $1,250 out of pocket to add to the $25,000 down payment subsidy to meet the cost of the down payment. That is much more manageable for any prospective home buyers as opposed to $25,000 with no subsidy.

I do think there are 2 main problems with this proposal. One is the amount of money the government would have to fund to make this possible. That would be a lot of money and add a lot to the debt. The second would be that you are making it much easier for people that may have credit problems to qualify for a home loan. Any time you do that, you run the risk of a default crisis down the road if applicants aren't pay their mortgage. So you still need to really consider credit worthiness.

 

[zztop]

I can’t wait for your rapidly declining false god to put together a coherent sentence.

Of course, it is apparent that the window for that has long been closed.

I'm still waiting for their 'better' alternative to ACA, which they claimed....oh, way back in 2009 I believe

 

[MT15]

I posted that for the video and not his commentary. It would be nice if she could answer some actual questions. We all know why she avoids them. She's not smart enough to formulate answers on the fly. Trump isn't scared of press conferences, answering questions and speaking off the cuff unlike Harris.

The video was already posted with a policy person’s take that she had a good answer. It was a good answer and it makes perfect sense. Like what was already posted - if you cannot understand what she is saying, just admit it. It’s not “word salad” because you don’t understand it.