Anyone wondering who would take Joe Biden’s spot on top of the Democratic presidential ticket should he drop out got an answer within mere hours of Biden’s long-anticipated withdrawal — Kamala Harris.
Democrats in office and the party’s elder statesmen and stateswomen quickly endorsed Harris, including those who were seen as possible challengers to her for the Democratic nomination. It appears the vice president has all but been anointed.
“While President Biden has dropped out of the 2024 race, we look forward to continuing to work with the administration on homeownership affordability issues over the remainder of his term,” said Taylor Stork, president of Community Home Lenders of America and COO of Developer’s Mortgage.
For the housing and mortgage industries, the question is how Harris will approach housing issues should she win the election, and whether she will hold to recent proposals from the Biden campaign that rankled some housing industry professionals and policy wonks.
Most notably, Biden unveiled a proposal last week that would cap rent hikes at 5% nationally for two years, which would apply to landlords that own more than 50 units. The policy would grant exceptions to new construction and rehabilitation.
This was met with swift condemnation from the real estate industry, though it was acknowledged that the proposal has very little chance of passing through Congress.
“The recent announcement on rent caps is an example of a policy that is broadly understood to be counterproductive,” said David Dworkin, president and CEO of the National Housing Conference. “It’s a short-term solution that ultimately leads to higher housing costs in the long run. I’m hoping that the Harris campaign will put all of their policies through the filter of what’s going to result in the most affordable housing, because that’s what we need right now.”
Harris gained experience in housing finance after the financial crisis in 2008, leading the effort on settlements with mortgage servicers during her time as the Attorney General of California. This experience theoretically granted her an intimate understanding of how the industry works.
Top of mind for the mortgage industry is what happens with “Basel III” and its proposed increase in capital requirements for large depository banks active in residential mortgage lending, a push that was reinvigorated by the failures of regional banks in 2023. The proposal would be particularly impactful on the jumbo mortgage market (loans of more than $766,550).
Eric Hagen, an analyst at BTIG, doesn’t believe housing or housing finance would be a priority for her administration, which would be focused on consumers. Hagen said that presidential candidates often talk a big game on housing during stump speeches, but they rarely follow up once elected. He believes this would apply to Basel III.
“I feel Basel III is more disconnected from the presidency and the Oval Office,” he said. “It’s more like an interagency task. I’d be surprised if her administration started commenting on bank capital, with so much going on in the world. We don’t expect the election to delay regulators trying to finalize Basel.”
Much of what the Biden administration has done during its four-year term, however, more directly addresses what industry and policy experts say is the underlying cause of soaring rents and home prices — the shortage of affordable housing.
The Biden administration massaged rules and deadlines around the Low-Income Housing Tax Credit (LIHTC) program that it believes will make it easier to build mixed-income housing. It created new grant programs administered by the Department of Housing and Urban Development (HUD) aimed at removing barriers to housing production. It’s taken steps to repurpose federal land for the construction of affordable housing and it’s addressed commercial-to-residential conversions.
The federal government has few levers at its disposal to directly address housing production because the policies that have the most impact are administered at the state and local level. Past initiatives tying block grant funding to local zoning changes can end up making it harder to build new housing, especially when it comes to single-family zoning.
“[The Biden administration] has been trying to think about what they can do around the housing finance side because that’s really where they have more of the levers,” said Jenny Schuetz, senior fellow at Brookings Metro. “So thinking about things like the FHA mortgage insurance premium: can you bring that down and make entry into homeownership a little cheaper for marginal homebuyers? They’ve been creative about what you can do, but those are just going to be relatively small policies around the edges.”
Notably, Harris’s housing policy during the 2020 Democratic primary campaign did not include anything that addressed the housing shortage. Her policy focused primarily on boosting Black homeownership and giving tax credits to rent-burdened tenants.
Given how much housing has changed since she released that proposal — as a result of the COVID-19 pandemic, high mortgage rates, and significantly higher rents and home prices — it may be unlikely that her 2024 campaign proposal would look much like her 2020 one. Still, these issues are key Democratic principles that make a cameo in every election.
“Addressing the demand side would probably be more politically aligned with what we’d expect,” Hagen said.
