Zoning reform got a shout-out at the Democratic National Convention, and Kamala Harris has vowed to build millions of new homes. But the GOP wants to own the issue, too and in the run-up to the presidential election, housing has emerged as a hot issue, but a blurry one.
Zoning reforms championed in California have proven to be popular in some red states led by Republican lawmakers, even policies that are still controversial in major blue cities run by Democratic majorities. Lawmakers have found success by crossing the aisle to build coalitions in order to ease land-use restrictions and approve more housing. Affordable housing is a big tent. But with the election at hand, the two major national parties are working to draw bright lines around the issue — with mixed results.
“We need to build more units, and clear away some of the outdated laws and regulations that made it harder to build homes for working people in this country,” said President Barack Obama, speaking about Vice President Kamala Harris’s agenda on night two of the Democratic National Convention. “That is a priority, and she’s put out a plan to do just that.”
Harris has only begun to outline what a housing agenda would look like in her administration. So far, she has endorsed and expanded upon several executive actions taken under President Joe Biden, including calls for a rent cap on corporate landlords and down-payment assistance for first-time homebuyers. Several Harris campaign proposals — although not all of them — are geared toward ramping up US production, with a goal of building some 3 million new homes during her first term.
Yet Republicans, too, are eager to own the housing issue. On the campaign trail President Donald Trump and his running mate, Ohio Senator JD Vance, talk about the housing crisis as downstream from immigration: The influx of migrants over the southern border with Mexico is crowding out other renters for the limited supply of affordable homes, they say. Trump has also spoken about the burdens that regulations put on builders.
Recent efforts in Montana and Texas as well as California and New York show that housing affordability is a bipartisan cause — a potentially potent one. Yet the national campaigns are framing the issue in broad narrative strokes to maximize partisan appeal, whether it’s cracking down on corporations or migrants. The presidential race may risk muddying a concern that stands to unite Americans: The rent is too damned high.
Targeting Wall Street
Some experts say that one of the Harris campaign’s bolder proposals could in fact subtract from the supply of rental homes.
On the campaign trail, Harris has endorsed measures to punish corporate investors who buy single-family homes. She has specifically called for Congress to pass the Stop Predatory Investing Act, a bill introduced by Ohio Senator Sherrod Brown in 2023 that would deny interest and depreciation deductions for landlords that own more than 50 single-family homes.
“Some corporate landlords buy dozens, if not hundreds of houses and apartments, then they turn around and rent them out at extremely high prices,” Harris told supporters at a rally in Raleigh, North Carolina, on Aug. 16. “It can make it impossible then for regular people to be able to buy or even rent a home.”
But in most US cities, the number of homes owned by Wall Street is vanishingly small. The share of houses purchased each year by investors is a mere fraction of those bought by mom-and-pop landlords. Critics say that big investors are a populist bogeyman. A January report by Alexei Alexandrov and Laurie Goodman at the Urban Institute, a nonprofit think tank, describes institutional investors as a “scapegoat.”
“The opposition to investment in single-family homes is often misguided,” says Tawan Davis, CEO and founder of the Steinbridge Group, an employee-owned real estate investment firm. “Only 2 to 3% are owned by Wall Street; 95% are second homes, inherited homes, or small real estate owners.”
Corporate Landlords Buy Only a Tiny Sliver of US Homes
It’s true that in specific areas — namely Sun Belt markets such as Atlanta or Memphis — investors own a far higher share of single-family homes than they do nationwide. In those markets, the interests of single investors can transform entire neighborhoods. Lax tenant protections and feverish speculation in Atlanta has resulted in higher eviction rates, predatory flips and abandoned properties.
But even in fast-growing markets with rising prices, investor interest is a symptom of a lack of housing, not a cause of it. As the Urban Institute report notes, corporate investors do not generate new demand, nor do their purchases take homes out of the local supply (barring some other problem). Investors often buy properties that require upgrades, improving the supply, and first-time homebuyers rarely have access to the same capital required for significant upfront costs.
“These private investors are making a capital investment in the existing housing stock,” says Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute. “Many are moving to build-to-rent, which is creating supply.”
Local markets also benefit indirectly from investors, according to Davis. “Increased professionalization, better technology, lower prices for maintenance also impact small investors,” he says. “There was no software available nationally to rent single-family homes and collect rents until the large investors got involved.”
A Biden proposal to issue rent caps for large landlords has drawn wider criticism from some economists. Even a short-term rent control program such as the two-year cap proposed by Biden and Harris is unlikely to help many tenants, says Scott Lincicome, vice president of general economics at the Cato Institute. “In rent control literature, one of the ways that landlords avoid rent control regulation is by boosting amenity fees,” he says. “The other way is by avoiding maintenance and upkeep.”
It’s difficult to truly institute short-term rent caps, he adds, as policymakers will face pressure from tenants to extend the caps or make them permanent. While rent control can work out great for incumbent renters, tenants who come along later may face higher rents. Such policies could discourage investors from buying in the first place — possibly a feature, not a bug — or they could spur apartment conversions into condos.
Putting the screws to corporate landlords isn’t Harris’s only plan to address affordability. Tax credits for affordable housing will be a major focal point in the debate over the tax code overhaul next year. And the Biden administration has delivered millions in grants for local governments that pledge to ease barriers to housing construction. Partisans from across the political spectrum agree about the need to shake up local zoning codes, even using the power of the purse to do so. “Bully for them,” Lincicome says.
Yet in cities in Georgia, Ohio and other states, corporate landlords have left an enormous footprint in disinvested neighborhoods. Ratcliffe says that the federal government has to set the tone to solve especially thorny problems at the state and local level. “There’s a risk in brushing it off,” says Ratcliffe, speaking about institutional investors. “On the national scale, it’s not that big a deal. But in some markets, it really is having a huge impact.”
She adds, “To the extent that you equip local jurisdictions to deal with situations that are more acute in their particular market, you can have more success.”
The GOP Prescription
Before he became the vice presidential candidate, Vance also regularly sounded the alarm about corporate landlords. “When these hedge funds take special government privileges and go and buy up all the single-family homes, what they’re doing is destroying wealth in this country,” Vance told broadcast news in Columbus, Ohio, in October 2023.
Vance criticized investors for their access to capital and lower interest rates (the same qualities that supporters say enables them to improve properties). He drew short of supporting legislation from his fellow Ohio senator, telling reporters that he wasn’t familiar with Sherrod Brown’s bill.
On the campaign trail, Vance has continued to hammer housing affordability. But he has largely pivoted to another culprit: immigrants. At the Republican National Convention, for example, he said that Democrats were responsible for millions of people entering the US illegally. “Citizens had to compete with people who shouldn’t even be here for precious housing.”
Research on the connection between newcomers and housing supply tells a somewhat different story. According to the international business organization Americas Society/Council of the Americas and the nonprofit bipartisan research organization New American Economy, immigration contributed $3.7 trillion to US housing wealth between 1970 and 2010, largely by adding residents to disinvested neighborhoods and stabilizing them. (New American Economy was founded by Michael Bloomberg, who owns Bloomberg LP.) Immigrants who lack permanent legal status are also a critical source of construction workers — a labor force facing a shortage of half a million workers.
It’s true that Americans of all stripes are competing for scarce housing. Between 2012 and 2022, some 15.6 million new households formed in the US, according to an analysis from Realtor.com. During the same time period, just 11.9 million housing units were completed. Migration can exacerbate a mismatch that’s so imbalanced, but the supply of homes is the fulcrum driving high housing costs. In high immigration areas that have made it legal to build apartments, such as Dallas and Austin, rents have begun falling. Rents remain stubbornly elevated in the high immigration areas that don’t build, namely New York and California.
President Donald Trump hasn’t released his housing agenda for a second term, but his campaign has nevertheless sought to highlight housing as an issue to contrast with Biden’s record. In an interview with Bloomberg Businessweek, Trump identified restrictive zoning as a problem (a “killer,” even) and said that regulations account for 50% of the costs of housing construction. (In 2021, the National Association of Homebuilders said that government regulations account for 23.8% of housing costs.) Without going into specifics, Trump pledged to take aim at these restrictions.
That puts him at odds with some other elements in the Republican Party, who aim to strengthen local control over neighborhoods.
“Localities rather than the federal government must have the final say in zoning laws and regulations, and a conservative Administration should oppose any efforts to weaken single-family zoning,” reads a section on housing in Project 2025, the transition planning document from the conservative Heritage Foundation. This section was written by Ben Carson, who as Trump’s former housing secretary once sought to use fair housing rules to undo exclusionary zoning codes.
To win over bipartisan coalitions, leaders across the US have found purchase by focusing narrowly on regulations that can keep homebuilding rates low. Housing supply is a cause that can bring together die-hard environmentalists and free-market enthusiasts. Both the national tickets for Democrats and Republicans say they want to keep the momentum going by making it easier to build. But at least for now, they’re more focused on casting blame for the housing crisis, and they’ve found very different targets.
Read the full article at Bloomberg.