With home prices having long since surpassed their pre-financial crisis peaks, many Americans can’t afford to buy a house. And in urban areas, where jobs are often concentrated, Americans are struggling to make rent.
The affordable housing crisis is squeezing the middle class and the poor alike. And while the Trump administration has targeted rental-assistance and public housing programs for drastic cuts, putting low-income Americans at risk of eviction, Democratic presidential primary candidates have made housing policy a major issue in the 2020 election. Many have already released plans or proposed legislation to address it, most notably Senators Elizabeth Warren, Amy Klobuchar, Kamala Harris, Cory Booker, and Bernie Sanders.
Curbed will follow where the candidates stand on housing issues throughout the election and update this post as candidates’ positions shift or they propose new ideas. While all the candidates have not released housing plans at the time of publication, we’ll provide information on the ones that have.
Renters tax credit
A renters tax credit would give taxpayers a credit for the amount they pay in rent above 30 percent of their income. So, if you paid $15,000 in rent in a year and 30 percent of your income was $10,000, you’d get $5,000 from the federal government in the form of a tax credit.
This idea was introduced in legislation proposed by Sen. Cory Booker and Sen. Kamala Harris in 2018, and it’s in former HUD secretary Julián Castro’s housing plan. It does not appear in Sen. Elizabeth Warren’s housing legislation, nor have any other candidates directly endorsed the idea.
If enacted, a renters tax credit could have a dramatic effect on low-income renters and renters in high-cost metro areas, like New York and San Francisco. Affordable housing advocates consider someone “rent burdened” if they pay more than 30 percent of their income in rent, which affects nearly half of the country’s renters. A renters tax credit could effectively end this.
But critics of the plan, including the Wall Street Journal editorial board, say the cost of the proposal would be astronomical (the Booker campaign estimates it would cost the federal government $134 billion annually) and that the tax credit would essentially be a handout to landlords that would drive up rents. If the federal government covers anything above 30 percent of a renters income, what’s to stop landlords from arbitrarily raising rent, knowing it won’t have an impact on tenants?
Booker’s plan would cap the tax credit at a fair market rent, meaning low-income renters couldn’t lease a luxury apartment and have the federal government pay for it. In Harris’s Rent Relief Act, the credit would be available to families earning up to $100,000, and only a portion of the rent above 30 percent of income would be reimbursed, depending on the taxpayer’s income. Castro’s plan covers people who make between 50 and 100 percent of the area median income—and it would take into account area market rents.
States across the country have enacted forms of a renters tax credit, but they come with income restrictions and caps on the size of the credit.
Kobuchar proposes setting up savings accounts called UP Accounts that could be used for retirement or emrgencies like a lapse in earnings, car accidents, or family accidents. Under the plan, employers would set aside 50 cent per hour worked for the accounts.
Baby bonds are an idea that have floated around over the last 20 years, notably making an appearance in Hillary Clinton’s 2007 campaign for president. The idea has surfaced again in Booker’s housing plan, and aims to iron out inequalities, particularly among people of color.
In Booker’s plan, each new baby born in the U.S. would be given a $1,000 bond, with up to $2,000 in annual additions depending on the income of the child’s family. The money would be invested in a low-risk fund managed by the Department of Treasury, and the child could have access to the money at age 18.
This seed money could later be used for a downpayment on a house, which is often a barrier to homeownership for low-income Americans. Given that homeownership has historically been used to build wealth over time, baby bonds could, theoretically, lift low-income families out of poverty.
Former congressman Beto O’Rourke has proposed a similar program in his housing plan. Leaning on the banking history of the U.S. Postal Service, O’Rourke would direct the USPS to offer checking and savings accounts as part of a program he calls Kickstart Savings Accounts.
In this plan, the federal government would provide a 2-to-1 match of savings deposits up to $1,000 for an individual and $2,000 for a couple. To be eligible, adults have to be below the Social Security retirement age, not be homeowners, and make less than 400 percent of the federal poverty line. So if a couple deposited $2,000 a year in the savings account for three years, their account would have $18,000. This would be in the ballpark of a downpayment on a modest home on a mortgage issued by the Federal Housing Administration.
Investments in federal housing programs
Affordable housing advocates have long lamented stagnant federal funding for rental assistance programs, public housing, and the various block grant programs that help build and preserve affordable housing.
The National Low Income Housing Coalition called for increases in funding to various federal housing programs to address the affordable housing crisis in its annual Out of Reach report, and the continued deterioration of public housing conditions, particularly in New York City, is an ongoing concern.
Sen. Elizabeth Warren’s plan includes almost $500 billion in additional investments in various federal housing funds, with the goal of building 3.2 million new housing units, which Warren’s camp believes will bring down rents for low- and middle-families.
Most of that money is a $445 billion investment in the Housing Trust Fund, an affordable housing production and preservation program run by the Department of Housing and Urban Development (HUD). It also allocates $25 billion for the Capital Magnet Fund to build housing; $4 billion for what would be a newly created Middle-Class Housing Emergency Fund, and $3 billion for the Public Housing Capital Fund for maintenance and improvements to public housing complexes.
Castro has proposed increasing the Housing Trust Fund (HTF) and the Capital Magnet Fund by “at least $45 billion per year.” Sen. Michael Bennet would fund the HFT at $40 billion per year and the CMF at $3 billion per year. O’Rourke’s plan invests $40 billion per year in the HTF and $6 billion per year in the CMF. He also would put $50 billion toward rehabilitating public housing units.
Castro wants to reform and expand the Low Income Housing Tax Credit (LIHTC) program by $4 billion per year. Klobuchar also proposed expanding LIHTC but hasn’t provided a specific dollar amount. Bennet would increase LIHTC allocations to states by 50 percent. O’Rourke proposes making affordable housing units in LIHTC projects that receive the maximum tax benefit permanently affordable; currently, units return to market rate after 15 or 30 years, depending on the tax benefit.
Castro and Klobuchar’s plans both calls for an expansion of the Housing Choice Voucher program to cover all families under 50 percent of the area median income, and Castro proposes expanding eligibility to take student loans into account. Sanders would go the farthest and proposes turning housing assistance into an entitlement, guaranteeing it to every American, and eliminating the long wait times associated with getting access to the program. Bennet would “fully fund” the program and implement that funding in phases. O’Rourke would expand vouchers so that any family making less than 50 percent of the median income in their area would receive it.
Klobuchar proposes increased investment in a number of other federal housing programs, although not specific dollar amounts. They include rural housing assistance grants, aid to people with disabilities, and aid to people with AIDS. She also proposes using Fannie Mae and Freddie Mac to provide mortgage liquidity in rural housing markets.
Sanders would invest $70 billion to rehabilitate the nation’s existing public housing stock. build 2 million mixed-income units, and expand the National Housing Trust Fund to help construct, rehabilitate, and preserve 7.4 million housing units for seniors and those with low-income or disabilities.
Yes In My Back Yard (YIMBY)
Empty lots available for development are becoming increasingly scarce, particularly in high-cost urban areas like New York, Los Angeles, and San Francisco, and Democrats and affordable housing advocates have identified local zoning lows as a barrier to building more housing in areas starved for more supply.
Limits on how high a building can be and minimum parking requirements are often called “Not In My Back Yard” policies, or NIMBY. The movement to roll these policies back is aptly called YIMBY policies.
Because these laws are administered at the local level, federal policy can’t do much to directly change these laws and instead attempts to incentivize—or punish—local governments to change them. Castro has proposed a Presidential Commission on Zoning Reform to establish federal guidelines on land use and zoning. O’Rourke would direct HUD to come up with a model for setting zoning and land use policies that let formerly restrictive communities to allow more housing production.
Warren’s plan puts $10 billion into a new grant program communities can use to build infrastructure, but local governments have to reform land-use laws to be eligible.
Booker’s plan uses a similar mechanism by tying more than $16 billion in federal block grant money—including Community Development Block Grants (CDBG)—to local governments reforming zoning laws that serve as barriers to building more housing units. Castro also wants to expand CDBG and rural development programs by $2 billion per year and tie the money to zoning reforms. O’Rourke would double CDBG funding and provide new grants to communities that eliminate restrictive zoning laws.
Klobuchar proposes “prioritizing” local governments that reform local zoning laws when allocating federal housing and infrastructure funds, but doesn’t specify which ones.
Bennet would create a one-time $10 billion competitive grant program for state and local governments that reform zoning laws to allow for more housing density, in addition to increasing the funding of transportation grant program BUILD to $4.5 billion and make it eligible only to local governments that allow for more housing density near transportation hubs. Eligibility for New Starts, a grant program for fixing rail infrastructure, would also be deployed in this manner.
O’Rourke has a zoning-related proposal that’s unique among the candidates. He would allow people to deduct more in state and local taxes from their federal tax returns if they live in areas without restrictive zoning. There’s currently a $10,000 cap on SALT deductions, and that cap affects mostly coastal cities where restrictive zoning is a major issue. He would also pass a $1 trillion infrastructure package to repair transportation lines that would be tied to eliminating exclusionary zoning.
However, it’s an open question whether these proverbial carrots and sticks will have an impact in the places where zoning reform is needed most—wealthy communities. Zoning barriers and NIMBYism are usually prevalent in areas that have high property values, and, thus a strong tax base, meaning they aren’t as reliant on federal funding for infrastructure needs, or they don’t get that money to begin with. Those local governments may just forego the federal funding rather than reform zoning laws.
Entrepreneur Andrew Yang tweeted his support for “relaxing zoning laws” but provided no specifics on how he would do it.
Matthew Desmond’s landmark book Evicted: Poverty and Profit in the American City has raised awareness of the devastating effects of eviction have on families. Eviction can make it harder to find another place to live and hold down a job, and it can interrupt a child’s education if they have to switch schools as a result.
Booker’s plan would guarantee legal representation for people facing eviction and ban landlord blacklisting of people who have gone to court over eviction (regardless of whether they won or lost their cases), and reverse Trump administration policy on fair housing protections. Kobuchar proposes doing the same. Booker and O’Rourke propose creating a “National Eviction Right to Counsel Fund” that will give federal funds to states that enact laws guaranteeing low-income people the right to legal counsel in eviction proceedings.
South Bend Mayor Pete Buttigieg has voiced support for expanded federal protections for tenants against eviction but hasn’t provided specifics.
Affordable housing advocates believe homelessness became official policy of the federal government when President Richard Nixon put a moratorium on the construction of public housing and then President Ronald Reagan enacted drastic cuts to rental-assistance programs. With housing costs rising since the financial crisis of 2008, the problem has only gotten worse, particularly in California.
Booker wants to more than double funding for the Department of Housing and Urban Development’s McKinney-Vento Homeless Assistance Grants program to $6 billion annually. O’Rourke has proposed $5 billion annually. Castro has proposed funding it to $7.5 billion. Buttigieg has stated he wants to “end homelessness for families with children,” but hasn’t provided specifics. A Sanders administration would invest $32 billion over five years to combat homelessness, including support for outreach services for those experiencing chronic homelessness.
Klobuchar calls for increased investment in homeless assistance grants but doesn’t specify by how much. Bennet calls for a grant program of $7.5 billion per year to expand programs available to the homeless.
O’Rourke has one of the more robust plans when it comes to homelessness and mental health. He proposes tripling the funding of Projects for Assistance in Transition from Homelessness (PATH) grants to $194 million, and he wants to strengthen counseling options for children, veterans, and LGBT people who experience homelessness.
Discrimination and fair housing
HUD secretary Ben Caerson has spent most of his term attempting to roll back Obama-era civil rights regulations aimed at strengthening provisions of the Fair Housing Act of 1968. Both Booker and Warren have proposals to advance fair housing among people of color who’ve historically faced discrimination. Sanders said he’ll promote robust legal protections for fair housing and take steps to eliminate racial discrimination and gentrification. O’Rourke would reinstate the Affirmatively Further Fair Housing (AFFH) rule, an Obama-era regulation that provides local governments tools to root out housing discrimination. The Trump administration suspended the rule in 2017.
Warren’s plan provides down payment grants to first-time homebuyers who live in areas that were previously redlined or officially segregated. It also puts $2 billion toward supporting people with negative equity on their mortgages caused by the financial crisis, and it restructures the Community Reinvestment Act (CRA) of 1977—which requires banks to invest in the communities where they have branches—to give it stronger enforcement mechanisms. Klobuchar also calls for “strengthening” the CRA.
Harris made a proposal on July 6, 2019, that puts $100 billion into a HUD-administered grant program that provides assistance with down payments and closing costs for low- and middle-income borrowers who have lived in redlined neighborhoods for at least 10 years. To be eligible for the grants, a family’s annual income has to be less than $100,000; for an individual, annual income must be less than $50,000. The maximum grant amount is either $25,000 or 20 percent of the loan value. The Harris campaign believes this program would benefit 4 million people. It’s unclear if the home must be in a redlined neighborhood.
Harris and Klobuchar also proposed changing credit score parameters to include rent payments, phone bills, and utilities so that people of color have more options for building strong credit and thus have a better chance of qualifying for a mortgage. O’Rourke proposes doing the same through a new agency under the Consumer Financial Protection Bureau.
Booker, Klobuchar, O’Rourke, and Warren all propose to ban discrimination against people using housing vouchers to pay for rent.