Kamala Harris seeks $25k homebuyer subsidy, but some are skeptical

Vice President and Democratic presidential nominee Kamala Harris wants to increase the accessibility of homeownership with a $25,000 subsidy for first-time homebuyers who pay rent on time.

"While we work on the housing shortage, my administration will provide first-time homebuyers with $25,000 to help with a down payment on a new home," she said during a policy speech in North Carolina in mid-August.

But mortgage industry stakeholders are skeptical about the likelihood of such an initiative actually getting implemented if Harris is elected this November.

The proposal could be a difficult item to push through in a gridlocked Congress and some home finance professionals have expressed concerns about how such a program would impact housing inventory.

"If Kamala Harris wins the election, but the Democrats lose the house and/or Senate then these proposals will have a very difficult time being approved and implemented," said Tim Rood, founder of Impact Capitol, LLC and a former director at Fannie Mae. 

"The Harris proposal for down-payment assistance — because that is spending, not tax policy — is very difficult in a tough budget spending environment," another industry source added.

Similar proposals have been floated that have had no traction. Specifically, President Joe Biden announced a mortgage relief credit that would provide middle-class first-time home buyers with an annual tax credit of $5,000 a year for two years during the March 2024 State of the Union address. Biden also called on Congress to pass a one-year tax credit of up to $10,000 to middle-class families who sell their starter home to another owner-occupant. 

Then there is the issue of housing supply.

Bill Dallas, former president of Finance of America, notes there are "a multitude of affordable housing policies and over 2,400 bond programs that offer all kinds of assistance to homebuyers." 

What is needed are more homes, he said.

"What we don't have is housing inventory! So, focus on lowering interest rates and easing restrictions on homeowners, builders and investors to provide solutions – i.e., ADU's, remodel, prefabricated, modular, new home construction," Dallas wrote in an email. "Turn one home into two or find opportunities in communities to revitalize areas that were once cast aside."

Joe Ventrone, housing and mortgage industry veteran, said the focus on the first-time homeowner subsidy is "clickbait." More attention should be given to the homebuilder's subsidy that Harris mentioned during her speech, which would address the supply problem, he said.

"The homebuilders subsidy is a marquee provision because that will help with supply," Ventrone added. "We have to build housing and there's proposals in Congress, like the Neighborhood Homes Improvement Act, that have 100% bipartisan support, but they can't get them out because there's legislative constipation." 

Nonetheless, some trade groups and industry stakeholders have expressed optimism that Harris is focused on housing.

Scott Olson, executive director of  the Community Home Lenders of America, said he is pleased to "see proposals that address homeownership affordability challenges arising from skyrocketing mortgage rates."

Tai Christensen, president of Arrive Home, said Harris' incentives are "legislative responses to the harsh realities facing today's housing market for many low- to middle-class Americans."

"By incentivizing builders to construct three million more starter homes via tax incentives and offering additional down payment assistance to those who've paid rent on time for two years, these proposed programs seek to help more American families achieve the American Dream of homeownership," Christensen said in a written statement.