Vice President Kamala Harris is scheduled to accept the Democratic Party’s nomination for president on Thursday, and housing is becoming a key issue she is seeking to address in her campaign for the highest office in the land.

Last week, Harris and running mate Tim Walz unveiled a proposal calling for $25,000 in down payment assistance for first-time homebuyers, which could be increased for first-generation homebuyers. A lack of specific detail in the proposal has led to some confusion over whether this would be a tax credit or some form of direct monetary assistance, with policy experts telling HousingWire it would most likely be the latter.

HousingWire contacted the Harris-Walz campaign but did not receive a response.

Industry viewpoints

In a document laying out the proposal, the Harris-Walz campaign said that the $25,000 assistance will roll out once certain housing supply issues are sufficiently addressed.

“As the Harris-Walz plan starts to expand the supply of entry-level homes, they will, during their first term, provide working families who have paid their rent on time for two years and are buying their first home up to $25,000 in down payment assistance, with more generous support for first-generation homeowners,” the campaign said.

The current administration led by President Joe Biden initially proposed this amount only for 400,000 first-generation homebuyers, with a $10,000 tax credit planned for a wider swath of first-time buyers.

Harris aims to take things further by “providing on average $25,000 for all eligible first-time home buyers, while ensuring full participation by first-generation home buyers,” her campaign said. “It will expand the reach of down-payment assistance, allowing over 4 million first time-buyers over 4 years to get significant down payment assistance.”

David Dworkin, president and CEO of the National Housing Conference (NHC), said that he understands the proposal to be in the form of direct monetary assistance.

“In the past, she supported a tax credit, but the general understanding now is that you can’t actually apply a tax credit to closing costs,” Dworkin said in an interview. “Because the money comes in after the closing, there’s no way to apply those funds except as a reimbursement, and that does not help people who actually need the money to close.”

Broadening the scope in this way would allow the money to go further, he said, and would also echo a down payment assistance program in Minnesota put in place by Walz, the state’s governor. That program, however, was targeted to first-generation homebuyers.

Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association (MBA), said that there appears to be some “widely shared” confusion about the mechanism of this assistance. He attributed that to the speed with which the Harris-Walz campaign has had to come online, following Biden’s decision to not seek reelection.

“They’ve made the point that they want higher amounts available for first-generation homebuyers,” Killmer said. “That calls into question proposals that Rep. Maxine Waters and Sen. Raphael Warnock have put on the table, which MBA has been supportive of, as long as lenders would be given a safe harbor and people that are attesting make that necessary for lenders to want to utilize the program.”

Dworkin sees this as a potential vehicle for growth in the U.S. homeownership rate, he said.

“My view is that down payment assistance is a critical component of any effort to expand homeownership, and if it’s properly targeted, it will not contribute to a further increase in home prices,” he said.

Level of detail

Some political observers have levied criticism at the Harris-Walz campaign for being too light on the details of certain policy proposals. Killmer said that the historic novelty of this moment — in which the nation has not seen an eligible, sitting president forgo reelection since Lyndon Johnson in 1968 — has led to less upfront detail that will need to be expanded upon by the candidates later.

“This is such a unique situation that we’re all living through,” Killmer said. “Of course, they’re going to build off some of the policy proposals that were probably in the works and being developed by the Biden administration and campaign. And I think there’s a little bit more detail at a high level but still a lot of specifics that need to be added to the framework.”

Dworkin believes that the level of detail shared on this housing proposal outshines such details from prior presidential campaigns, as well as current competing campaigns.

“The level of detail in the housing plan actually exceeds what you would normally expect from a campaign and is significantly more detailed than the Republican Party platform,” Dworkin said. “I would caution anyone to avoid becoming too prescriptive of details in a proposal before they’ve had the opportunity to thoroughly vet all the potential unintended consequences. So, frankly, I think they got it right.”

Killmer said he agrees with the idea that this proposal has more detail when comparing it with prior White House campaigns, but a lack of certain detail at this stage opens up more political possibilities depending on the electorate.

“This proposal is more detailed than what we sometimes see, not just in the housing arena but in economic policy proposals in general,” Killmer said. “It puts it in a better position to be acted on if the political landscape allows for it to be pursued aggressively.”

Republican response

Daryl Fairweather, chief economist at Redfin, said she’s curious about how Republicans will aim to position their presidential campaign on this issue now that Harris and the Democrats have introduced their plan.

“I’m just curious to see what move the Republicans make on this,” Fairweather said. “Are they going to come out with their own policy? How will they pose themselves against what the Democrats are calling for? I think housing is a bipartisan issue, but at least at this moment, there’s only one party that’s nationally coalescing around the issue.”

Had the Republicans elevated a different nominee, things might be more predictable, she said.

“Donald Trump is just a wild card,” she said. “If it was Ron DeSantis, I know his track record on housing. He actually has liberalized a lot of zoning in Florida, allowing for more new construction. But with Trump, it’s a little bit harder to know what position he’s going to take. There isn’t as much of a record to go off of.”

Both Killmer and Dworkin agree that the quickest, easiest path to get this proposal over the finish line would be for Harris to be elected alongside fresh Democratic majorities in both the U.S. House of Representatives and the U.S. Senate. But this is a tall order in a narrowly divided country where control of both chambers hangs in the balance.

“Monolithic control by Democrats would probably be the best scenario to get a direct monetary assistance program like this enacted,” Killmer said. “You’ve got some people on the Democratic side of the aisle that are committed to it, and clearly you would have a Democratic administration, if she were to win, that would be committed to this.”

Potential market reactions

When asked whether homes could simply be priced $25,000 higher to account for the direct monetary assistance, if it was enacted, Fairweather was clear that market forces are the key determinant.

“As any real estate agent would tell you, it’s not the seller who sets the price for a home. It’s the market and buyers who set it,” she said. “Sellers can list homes for whatever they want, but they still have to get an offer that meets that price. I guess the idea is that buyers have this extra money and sellers will get all of it. That’s not really how it would work.”

Importantly, she said, the assistance would only go to first-time buyers, not to everyone shopping for a home.

“If it was going to get passed on to home values, it would be by some amount less than $25,000 just because it’s not going to affect all homes,” Fairweather said. “Existing-home sellers are having to compete against new construction too. So, if a seller jacks up their price by $25,000 or whatever the amount would be, the buyer just has the alternative to go with new construction.

“And since the plan is specifically trying to build new construction for homes affordable to first-time homebuyers, theoretically, that competition would be there in that segment of the market.”

Dworkin added that supply will be the key element in the overall equation.

“The market doesn’t work like that,” he said when asked about sellers adding $25,000 to their asking price. “Certainly, means testing would ensure that it’s not going to have that impact at all. Without means testing, the money doesn’t go very far, and so that’s not going to have a material impact on housing prices.

“The housing market is being driven by a shortage of supply. The demand side of the equation right now is already incredibly high, because so many people can’t afford the homes that are out there. I think that housing prices are going to be driven by housing supply and not by increased demand.”

Fairweather also addressed the supply dynamics. She pointed out that the full set of housing proposals from the Harris-Walz campaign aim to address both supply and demand problems.

“The biggest problem in the housing market is the lack of supply, and a demand subsidy on its own doesn’t help — it actually makes the problem worse,” she said. “However, [Harris] is not proposing it on its own; she’s including it as part of a larger plan to increase the housing supply by 3 million homes by the end of her first term in 2029, and she’s pairing it with subsidies for new construction.”

By pairing builder incentives and new-construction subsidies with a demand subsidy, a potential issue that could result in lower home prices is mitigated, she said.

“Builders can be confident there will be demand for the homes they build because first-time homebuyers will have this credit,” Fairweather said. “Additionally, the home values of first-time homeowners likely won’t decrease because of the added demand from these buyers looking for both existing homes and new construction.”

Fairweather thinks that real estate and mortgage professionals should take notice of this proposal.

“Apart from the housing affordability aspects of the plan, this would theoretically be an injection into the real estate industry to have both more supply and more demand at the same time, coming off of two years of record-low home purchases,” she said. “So, I think that is something this group might want to think about.”

Larger portion of the debate

Dworkin, Fairweather and Killmer each expressed encouragement about the idea that housing is taking up more oxygen in the political conversation going into the presidential election, which is typically the time at which most Americans are engaged in political discourse.

“I feel optimistic,” Fairweather said. “I used to feel pessimistic because I thought that politicians wouldn’t take on a problem that might not yield results until after their term of office expires. But the problem has gotten so large and has become, actually, a liability to any incumbent that they have to do something about it, or they will be held accountable.”

Dworkin added that there is bipartisan recognition of this issue, and he is encouraged that this will lead to more housing solutions coming to the proverbial table.

“I think the focus on housing has been driven by the reality that so many Americans are struggling,” he said. “It’s a complicated issue because about two-thirds of Americans already own their homes, and they’re seeing an increase in their home values. But their kids, on the other hand, are struggling to buy a home at all. That has become a great equalizer and has broadened the perceived need for housing policy changes.”

Despite much of the conversation being driven primarily by Democrats at the moment, Dworkin said that Republicans are experiencing just as many calls for action from their constituents.

“Housing is one of those areas where the political lines aren’t as clearly drawn as they are with many other issues,” Dworkin said. “We see a lot more crossover. For example, JD Vance has been as been as outspoken against corporate landlords as any Democrat. The increasing role of populism in both parties also blurs the lines, particularly in housing.”