The American Enterprise Institute (AEI) analyzed Vice President Kamala Harris‘s proposed housing plan and calculated the total cost to American taxpayers.
To appeal to Americans who have only been able to rent a home, Harris is pitching a program to provide $25,000 down payment assistance (DPA) to 4 million first-time buyers over four years. If Harris’ plan sounds too good to be true, several analysts would affirm that the plan will not only fail to achieve its goal, but will actually impede potential first-time homebuyers. Several publications and organizations, including AEI, scrutinized the plan and uncovered major flaws.
Floridians know that the limited housing supply has been one of the ongoing factors keeping home prices high. According to AEI, increasing FTB purchasing power through down payment assistance (DPA) will ultimately drive up home prices for all buyers in affected census tracts. AEI’s expert analysts insist that the millions of FTB program recipients would become price setters for all buyers in the neighborhoods where the recipients buy.
Specifically, the AEI analysis estimates:
- Over the 4-year DPA period, 75% of all home sales nationally will be in census tracts affected by the proposed DPA program.
- For the homes in these tracts, constant-quality home prices is expected to increase by an average of 4.1%.[2]
- Over four years, the total boost in home prices paid by expected homebuyers in these tracts will be $177 billion. Thus, the total cost to homebuyers outweighs the proposed subsidy benefit of $100 billion ($25,000 each for 4 million homebuyers).
- The total inflationary boost to the entire stock of homes in the affected census tracts (not just those expecting to transact over a 4-year period) is estimated at $1 trillion.
“The proposed DPA policy will also have disparate impact on home prices across different regions,” an excerpt from AEI’s report reads. “This is because home price levels vary significantly across metros. In San Jose, CA, homes purchased by FTBs had a median price of $902,500 in 2024:Q1. The $25,000 down payment assistance is estimated to boost the buying power there by 3%. In Lexington, KY, median home price for FTBs was $280,000. The same $25,000 subsidy is estimated to boost the buying power there by 9%. Months remaining inventory also varies tremendously by metro, ranging in August 2024 from a high of 8.3 months in Myrtle Beach to 1.5 months in Boston. The interplay of these factors, along with FTB shares, results in a wide variance in estimated home price increase due to DPA in each market (from 0.9% to 6.1%).”
Click HERE to see AEI’s full report in a PDF. You can also see the full data interactive in Tableau, HERE.
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