Kamala Harris’s Housing Plan:
Kamala Harris’s plan would create a 100-billion-dollar US Housing and Urban Development (HUD)-administered grant to provide recipients with up to $25,000 in down payment assistance and closing costs. This $100 billion investment would provide at least 4 million families/individuals living in federally-supported or renting housing in historically red-lined communities with down payment and closing cost assistance. In order to qualify for the program the recipients must be purchasing a principal residence and have lived for at least the preceding 10 years in a historically red-lined community that remains low-to-moderate income. The maximum grant is capped at either $25,000 or 20% of the loan value plus closing costs. The maximum home price to qualify for the grant is $300,000 for consideration of high-cost areas. Household income limits apply and recipients would still need to demonstrate an ability to pay the mortgage with the lender. For more details on the Plan, see the link below. What follows are some arguments for and against the Plan.
A sign of economic justice in our country is the distribution of wealth. Wealth makes it easier for people to move between jobs and places, handle an emergency financial situation, and retire with dignity. Lack of wealth perpetuates poverty and undermines social mobility. Homeownership is the main source of household wealth in the US. Today, nearly three-quarters of white households (73%) are homeowners, while under half of Black households (45%) and Latinx households (47%) are homeowners. The percentage of Black homeowners has remained basically unchanged since 1968. Government policy and widespread discrimination are responsible for this gap in homeownership. The main causes are historic redlining, flaws in the GI Bill, and unfair lending practices. If we eliminate racial disparities in homeownership rates, the wealth gap between Black and white households would shrink 31% and the wealth gap between white households would shrink 28%.
Subsidized mortgages sound like a great way to increase homeownership. However, the US government has been subsidizing mortgages for low-income and black families for over 50 years and it has been an unmitigated disaster. Consider that black home ownership increased 20% from 1950 to 1970 – and since then it’s been flat, at around 42%. What happened? Subsidized mortgages followed by a jump in foreclosures followed by declining home values in historically black neighborhoods is what happened. Here’s the process: when your neighbor defaults on his mortgage and their house is repossessed by the bank, nearby home values—the cornerstone of household wealth—decline. Vacant houses are magnets for crime and vagrancy. The key protection against foreclosure - which Harris wants to remove from the equation - is a down payment, based on thrift and savings, traits that typically make for successful homeownership.
So what do you think? Is the Kamala Harris Housing Plan a viable way to address historic wrongs and close the racial and ethnic wealth gap? Or is it a road to hell paved with good intentions? Or something in-between?
Join us at the next SFDebate to explore and debate these and other questions. Note that $5 will be charged at the door for all attendees (to offset room rental costs).
In Favor of the Housing Plan: https://kamalaharris.org/homeownership-gap/
Against the Housing Plan: https://www.city-journal.org/kamala-harris-housing-plan