There is an affordable housing crisis in the United States and several 2020 Democrats think they have the big-government solution to solve it.
Many politicians — including those in the Trump administration — are looking to come up with a solution to ease the financial burden of renting a place to live. The issue is quickly becoming a top priority for 2020 Democrats, as several candidates announce their affordable housing policy prescriptions.
From tax credits to cutting regulations, here are five things to know about the affordable housing crisis and the 2020 candidates’ plans to address the issue.
The Affordable Housing Crisis
While the affordable housing issue gets a lot less air time than issues like immigration and health care, it is still a serious problem that is impacting millions of Americans.
The National Association of Home Builders/Wells Fargo Housing Opportunity Index shows that, in 2018, only 56% of home purchases were considered affordable given the homeowner’s income. That percentage is expected to fall below 50% in 2019, but it wasn’t always this way. As recently as 2012, 78% of home purchases were considered affordable.
Beyond home ownership, rentals have become unaffordable, too. Department of Housing and Urban Development notes that those who spend more than 30% and 50% of their income are considered “cost-burdened” and “severely cost burdened,” respectively.
The average millennial is spending 45% of their income on rent.
This can impact the entire economy because more Americans are paying for rent instead of using their discretionary money as a consumer. Beyond the surface level of discretionary spending, this crisis has also resulted in homelessness issues, as well. From 2016 to 2017, homelessness jumped 0.7%, a change that has been attributed to the shortage of public housing and the rising price of rent in major cities.
Since this is a major problem, several 2020 candidates have announced their plans to fix it.
A Tax Credit for Renters
Senator Kamala Harris (D-Calif.) is championing a tax credit for renters that would allow them to write off their rent expenses over that total more than 30% of their income. She also plans to expand grants from the Department of Housing and Urban Development (HUD) to offer up to $25,000 to help low-income homeowners provide a down payment, specifically aiming to assist minority families who are disproportionately impacted by the affordable housing crisis.
Homeownership has historically been one of the most powerful drivers of wealth, which is why I announced a plan to shrink the racial homeownership gap, helping up to four million families with down payments and closing costs.https://t.co/C9GoIuyVA7
— Kamala Harris (@KamalaHarris) July 6, 2019
While Harris’s plan could help some get their foot in the door of homeownership and cut some of the burden for renters, her plan does little to address the price of housing itself.
But she argues that this is an immediate problem that must be addressed now, not after a battle on rent prices.
“Right now, nearly half of Americans couldn’t afford an emergency $400 expense – these families need help now,” Harris wrote of her Rent Relief Act. “This is about more than just economics—it’s about the basic security and dignity that every American deserves to have in their own home.”
Baby Bonds and Legal Aid
Senator Cory Booker’s (D-N.J.) plan to address affordable housing focuses on the systemic issues of poverty. He sees homeownership as a key part of reducing the racial wealth gap in the United States.
To address this, Booker’s plan is to hand out “baby bonds.” As IJR previously reported, “baby bonds” are government funded bonds of $1,000 given to every single child in the United States when they are born. If the child comes from a low-income family, the government will add additional funds to the bond each year.
Depending on the growth of bond, a child from a low-income household could have a bond worth as much as $50,000 by the time he or she is 18 years old to put toward housing or education. Booker plans to pay for these baby bonds using a tax on capital gains.
There’s overwhelming evidence connecting access to safe, affordable housing to better health and quality of life. From coastal cities to rural America, we need to be doing more to help families keep a roof over their heads—and I have a plan to do that. https://t.co/3aJIpq8xzs
— Cory Booker (@CoryBooker) July 8, 2019
This is more of a generational plan than a quick fix, but Booker also plans to offer a renter tax credit like Harris, as well as expanding legal aid to those who cannot afford to fight their landlord on legal disputes.
Similar to Harris, Booker’s plan does not do much to address the costs of housing.
Housing as a Human Right
While many of the 2020 Democrats are looking to address affordable housing for low-income Americans, former HUD Secretary Julián Castro takes it one step further to claim that housing is a “human right” for all American citizens — and those who are undocumented.
Castro noted that he wants to offer housing protections for everyone, regardless of their “race, gender, sexual orientation, legal status, or disability,” with his inclusion “legal status” being a clear breaking point from the Trump administration.
As IJR previously reported, HUD Secretary Ben Carson recently announced that he would be banning undocumented immigrants from accessing public housing in the U.S., as many American citizens are waiting for a spot.
To meet his goal of housing as a “human right,” Castro plans to drastically expand a “fully-funded entitlement program” to fund housing vouchers — which only 25% of applicants receive under today’s system.
Increasing the Supply of Housing
For any of these 2020 candidates to implement their plans, they must first defeat President Donald Trump. His administration has a different approach to addressing the cost of housing. In an op-ed to the Washington Post, Carson explained his focus on increasing the housing supply rather than turning to solutions like a renters tax credit, writing:
“For far too long, federal policy has focused solely on helping people through increasing spending on rental assistance. As a doctor, I can tell you: These are the symptoms of a patient who needs a different prescription — one that focuses on the reason housing costs are increasing.”
The Trump administration, under the leadership of Carson, has focused on cutting back bureaucracy and changing zoning laws in hopes that it will increase the amount of available housing.
As IJR previously reported, Carson blamed bureaucracy for many of the problems with affordable housing. He noted that alternative housing options, such as manufactured homes, face more regulation that on-site homes. He also explained that zoning laws can limit the types of homes that are built in some areas, limiting the potential for multi-family housing units.
The Trump administration is attempting to address the issue of affordable housing from the supply side, hoping that more housing will drive down prices. Sen. Elizabeth Warren (D-Mass.) has also proposed increasing the supply of housing, albeit in a less free-market approach.
Warren’s plan would dump $500 billion over 10 years into building affordable housing. Both she and the Trump administration are focused on the supply-side of the affordable housing equation, but Warren’s plan provides for government-funded construction of new housing while Trump’s team hopes the market achieves that goal without taxpayer dollars.