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

 

[MT15]

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

She is also proposing these fixes as well, IIRC.

 

[Nebaghead]

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.

I thought it was mentioned as being a tax credit.

 

[B4YOU]

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.

Agree both of these are issues. She is proposing 25k for 400k household, 10k for 600k or 16B in spending. She also wants a 40B to spur entry-level home construction.

Supply-side policies that get big businesses out of the SFH market can be done with limited costs and much less risk.

I thought it was mentioned as being a tax credit.

"Harris is characterizing her plan as a simplified and expanded version of President Joe Biden’s proposal for $25,000 in down-payment aid explicitly for 400,000 first-generation home buyers and a $10,000 tax credit for first-time home buyers. "

Sounds like she wants to do both. Giving 25k to first generation home buyers is going to be interesting policy. How do you prove eligibility? How do you exclude people whose parent couldn't provide more than a roof? Policies should be need-based not birth-based.

She is also proposing these fixes as well, IIRC.

Not really. She is proposing:

• "A ban on algorithm-driven price-setting tools for landlords to set rents.
• To remove tax benefits for investors who buy large numbers of single-family rental homes."

That's not the same as putting the large SFH rental companies on a clock to sell or split into smaller entities resulting in competition. These companies are out-competing buyers and creating price-fixed markets.

Source: https://www.cnn.com/2024/08/16/business/harris-housing-plan/index.html

 

[efil4]

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 really consider credit worthiness.

Addressing the last few points- from my understanding, you would have to qualify. I would imagine that the $25k wont be handed out to every applicant.


Furthermore, i would imagine that your ability to qualify for a first home purchase will not take into consideration the $25,000 subsidy. Mortgage companies already DONT take "gifts" as evidence of down payment worthiness, so i doubt they would make exception for this.

But more importantly, your scenario. If your scenario is the current state of the marketplace, then we all have a problem. If you are having to shell out $500,000 for a STATER HOME, then something is broken in the system. And the break is greed/profiteering

anecdotal here- 20 years ago i insured many home builders locally. 3-4 of them were builders who built nothing but 1250-1500 sq ft starter homes. Then the market began to change here- Katrina, then the 2008 Financial crisis, interest rates dropping to 2.75% on 30 yr loans all combining to make it much more attractive ( and profitable ) for builders to STOP building $175,000-$220,000 homes and start building $300,000-400,000 homes. It happened over time, but i dont have a SINGLE HOME BUILDER ( i insure about 12-15 true builders ) that build homes under $300,000. They just wont.

We MUST return to that price point where young folks are able to afford a starter home that doesnt overwhelm them, cause massive financial stresses, or leave them working just to pay mortgage. Its totally doable.

But the issue is capitalism.
20 years ago you could buy an ACRE in ST Tammany for $2500.
15 years go it went to $10,000
10 years ago it went to $20,000

Now, if you are a developer having to pay $2,000,000 for 100 acres to put 200 1/2 acre home sites, you must start your price at $10,000 a lot just to break even. But breaking even JUST ON THE LAND. you also have to pay for the infrastructure ( drainage, sewer, water, electrical, studies, drawings, engineers, grading/dirt work etc etc ) So now that same .5 acre lot is costing $30,000 ( if you include just 10% profit ) Which ISNT BAD - but now add that 1500 sq ft home that costs $175/sq ft to build, ($262,500 ) and you are just shy of $300,000 for that home.

I think its a multi-pronged approach here.

1- have to reduce material costs. They must come down - it shouldnt cost more than $130/140 ( high end ) to build a starter home. I know what i paid in 2004 ----$102/sq ft with hardwood floors in all rooms/tile in bath.

2- as @B4YOU mentioned- gotta start unwinding corporate housing ownership. Home ownership is not a business. Its a citizens goal ( and dream ) that we have propped up for a century. But that has been overrun by corporate greed.

$25,000 subsidy may NOT work- BUT IT GETS THE conversation going on how to address this issue that is hamstringing the young folks here.

The same young folks that are our future.

Its insane.


15

 

[Optimus Prime]

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’m not not going to lie

I’d be fine if her answer was “Tax the bejesus out of billionaires and billion dollar companies”

 

[coldseat]

Addressing the last few points- from my understanding, you would have to qualify. I would imagine that the $25k wont be handed out to every applicant.


Furthermore, i would imagine that your ability to qualify for a first home purchase will not take into consideration the $25,000 subsidy. Mortgage companies already DONT take "gifts" as evidence of down payment worthiness, so i doubt they would make exception for this.

But more importantly, your scenario. If your scenario is the current state of the marketplace, then we all have a problem. If you are having to shell out $500,000 for a STATER HOME, then something is broken in the system. And the break is greed/profiteering

anecdotal here- 20 years ago i insured many home builders locally. 3-4 of them were builders who built nothing but 1250-1500 sq ft starter homes. Then the market began to change here- Katrina, then the 2008 Financial crisis, interest rates dropping to 2.75% on 30 yr loans all combining to make it much more attractive ( and profitable ) for builders to STOP building $175,000-$220,000 homes and start building $300,000-400,000 homes. It happened over time, but i dont have a SINGLE HOME BUILDER ( i insure about 12-15 true builders ) that build homes under $300,000. They just wont.

We MUST return to that price point where young folks are able to afford a starter home that doesnt overwhelm them, cause massive financial stresses, or leave them working just to pay mortgage. Its totally doable.

But the issue is capitalism.
20 years ago you could buy an ACRE in ST Tammany for $2500.
15 years go it went to $10,000
10 years ago it went to $20,000

Now, if you are a developer having to pay $2,000,000 for 100 acres to put 200 1/2 acre home sites, you must start your price at $10,000 a lot just to break even. But breaking even JUST ON THE LAND. you also have to pay for the infrastructure ( drainage, sewer, water, electrical, studies, drawings, engineers, grading/dirt work etc etc ) So now that same .5 acre lot is costing $30,000 ( if you include just 10% profit ) Which ISNT BAD - but now add that 1500 sq ft home that costs $175/sq ft to build, ($262,500 ) and you are just shy of $300,000 for that home.

I think its a multi-pronged approach here.

1- have to reduce material costs. They must come down - it shouldnt cost more than $130/140 ( high end ) to build a starter home. I know what i paid in 2004 ----$102/sq ft with hardwood floors in all rooms/tile in bath.

2- as @B4YOU mentioned- gotta start unwinding corporate housing ownership. Home ownership is not a business. Its a citizens goal ( and dream ) that we have propped up for a century. But that has been overrun by corporate greed.

$25,000 subsidy may NOT work- BUT IT GETS THE conversation going on how to address this issue that is hamstringing the young folks here.

The same young folks that are our future.

Its insane.


15

I agree totally on the cost of a starter home. I was just using the 500,000 as an arbitrary number to make a point about the down payment assistance.

While I may see some difficulty in getting something like this passed, I'm glad Harris has bought it up because we're talking about it. It's a real issue and you don't get real problems solved without bold proposal and the force of an administration behind it. Harris putting it out there in way that she did starts the conversation in earnest, and that can only lead to good things.

 

[UriUT]

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

Isn't this more of suppressing demand? This does sound like it will reduce prices though.

 

[SaintForLife]

I’m not not going to lie

I’d be fine if her answer was “Tax the bejesus out of billionaires and billion dollar companies”

And you still wouldn't even come close to paying for the far left policies Harris supported in the past.

 

[Nebaghead]

And you still wouldn't even come close to paying for the far left policies Harris supported in the past.

It would cost less than the 2 trillion deficit from the tax cuts that netted nothing for anyone below the 1%.

 

[efil4]

Isn't this more of suppressing demand? This does sound like it will reduce prices though.

Demand will rise as interest rates continue to fall. As more inventory hits the market, it will cause competitive pricing, which will then drive selling prices lower.

Still have to address employment and wages, but small family of 3, earning 100,000 or so combined, should have no problem paying a 1200/mo (incl tax and insurance est at $250 per mo ) note on a 175,000 30 yr mortgage at 4 to 5% with a 10% down payment.

And my numbers are prolly high end. Maybe a bit lower per month.

 

[UriUT]

Demand will rise as interest rates continue to fall. As more inventory hits the market, it will cause competitive pricing, which will then drive selling prices lower.

Still have to address employment and wages, but small family of 3, earning 100,000 or so combined, should have no problem paying a 1200/mo (incl tax and insurance est at $250 per mo ) note on a 175,000 30 yr mortgage at 4 to 5% with a 10% down payment.

And my numbers are prolly high end. Maybe a bit lower per month.

Right, I get that lowering interest will likely increase prices as it'll spur demand. I was being a bit pedantic by suggesting eliminating corporations from purchasing private homes would reduce demand. Thereby, the price would decrease.

I wouldn't know what's the cause of declining housing builds...I did see that possibly that the high interest have builders hesitant to invest. Or supply issues? Maybe zoning laws. I am uncertain.

 

[efil4]

Right, I get that lowering interest will likely increase prices as it'll spur demand. I was being a bit pedantic by suggesting eliminating corporations from purchasing private homes would reduce demand. Thereby, the price would decrease.

I wouldn't know what's the cause of declining housing builds...I did see that possibly that the high interest have builders hesitant to invest. Or supply issues? Maybe zoning laws. I am uncertain.

Interest rates.

Builders borrow $$$ to build. With the idea that they will build, finish and sell before that construction loan (usually 12 months ) starts hitting them in the pocket.

Higher rates means higher costs when that construction loan comes due and further hampers sales due to the higher mortgage costs for buyer.

And when builders foray into 500,000 homes that sit for 18 months, unsold, it's a problem. It spooks them. Instead of dropping down to affordable builds, they just stop and wait for the next upswing.

 

[IndependentSoul]

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.

This. Also, just like how section 8 vouchers for apartments increase the costs of apartments. I have seen it personally in my area. Whenever there are guaranteed federal funds involved the prices go up. Steady stream of income with much less administrative costs for the real estate transactions. It’s maybe a win but only for those that are first time home buyers, those in real estate, or whatever percentage under the poverty level.

 

[zztop]

I guess I'll put this here since theres talk about housing prices etc

Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters

The Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit today against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment...

www.justice.gov

 

[MT15]

I guess I'll put this here since theres talk about housing prices etc

Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters

The Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit today against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment...

www.justice.gov

Under a GOP admin this never happens. In fact the GOP would enable price fixing.

 

[MT15]

This is the second time I’ve seen economic analysis of proposals. Both times Harris was more fiscally responsible. By a lot.

 

[Optimus Prime]

Kamala Harris’s wealthy backers are urging her to ditch a proposed tax on ultra-rich Americans, a new report reveals.

Harris said she supports a plan that would require Americans worth at least $100 million to pay taxes on unrealized gains. Currently, the government only taxes profits from stocks — known as capital gains — once they’re sold.

Under her proposal, these assets would be taxed as they gain value, regardless of whether they’ve been sold.

An estimated 10,000 ultra-wealthy Americans would be impacted by this tax, NBC News reports. The plan would only apply to individuals with at least $100 million in wealth who do not pay at least a 25 percent rate on their income.

Those ultra-wealthy Americans would also only pay taxes on unrealized capital gains if at least 80 percent of their wealth is in tradeable assets.

Now, some donors are urging Harris to drop the proposal, the Times reports, citing seven sources familiar with the situation.

Several donors have complained about the plan to top allies and campaign staffers. At least one of these top donors has spoken with Harris personally, encouraging the vice president to consider alternate proposals — such as taxing ultra-wealthy Americans on borrowing against their wealth, according to the Times.…….

Donors urge Kamala Harris to ditch a proposed tax on ultra-wealthy Americans

One major donor has even met with Harris personally about the tax proposal, the report reveals

www.independent.co.uk

 

[MT15]

Kamala Harris’s wealthy backers are urging her to ditch a proposed tax on ultra-rich Americans, a new report reveals.

Harris said she supports a plan that would require Americans worth at least $100 million to pay taxes on unrealized gains. Currently, the government only taxes profits from stocks — known as capital gains — once they’re sold.

Under her proposal, these assets would be taxed as they gain value, regardless of whether they’ve been sold.

An estimated 10,000 ultra-wealthy Americans would be impacted by this tax, NBC News reports. The plan would only apply to individuals with at least $100 million in wealth who do not pay at least a 25 percent rate on their income.

Those ultra-wealthy Americans would also only pay taxes on unrealized capital gains if at least 80 percent of their wealth is in tradeable assets.

Now, some donors are urging Harris to drop the proposal, the Times reports, citing seven sources familiar with the situation.

Several donors have complained about the plan to top allies and campaign staffers. At least one of these top donors has spoken with Harris personally, encouraging the vice president to consider alternate proposals — such as taxing ultra-wealthy Americans on borrowing against their wealth, according to the Times.…….

Donors urge Kamala Harris to ditch a proposed tax on ultra-wealthy Americans

One major donor has even met with Harris personally about the tax proposal, the report reveals

www.independent.co.uk

I don’t care how she does it as long as they figure out a way to do it. Whether it’s a tax on unrealized capital gains, or a tax on borrowing against unrealized capital gains, doesn’t matter. As long as they start paying more than they are right now.