Democratic presidential candidate Kamala Harris recently proposed a plan to offer first-time homebuyers $25,000 in down payment assistance. But could this help or hurt the housing market? This plan is part of Harris’s broader economic policy designed to lower costs for middle-class families and create an “opportunity economy.”
“We should be making everything to make it more affordable to buy a home, not less,” Harris said during a recent speech in Raleigh, North Carolina.
The Harris-Walz administration plans to provide up to $25,000 in down-payment assistance to address housing affordability. The assistance would be available for families who have paid their rent on time for two years and are buying their first home. “More generous support” would be available for first-generation homeowners.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
This plan expands and simplifies a proposal from the Biden-Harris administration that offered $25,000 in down payment assistance only for 400,000 first-generation homebuyers. Under Harris’s plan, all eligible first-time homebuyers will receive an average of $25,000, “allowing over 4 million first-time buyers over 4 years to get significant down payment assistance.”
The Harris-Walz Administration has also called for the construction of 3 million new housing units to end the housing supply shortage, as well as numerous housing tax credits.
Here’s what the experts say about whether this would benefit the housing market. Many believe that while it could help first-time buyers, it could also inflate housing prices.
Is Harris’s proposed down payment assistance good or bad for homebuyers?
“Giving first-time homebuyers $25,000 to put down would put further pressure upon historically low inventory levels, resulting in increased appreciation of starter homes where affordability matters the most. I believe Vice President Harris' initiative would greatly benefit sellers, real estate agents and investors at a direct detriment to first-time home buyers. We need more inventory for families, not more families competing for the same houses.”
— Ryan Dossey, co-founder at SoldFast
“It will increase access to homeownership, which is a good thing. With that said, it will also create an increased demand for homes, which could contribute to further price inflation, especially in markets where current inventory isn't able to meet the current demand.”
— Jeff Klotz CEO at The Klotz Group of Companies
"I believe the next question (if it is passed) is not if it will impact the economy but if sellers will work with homebuyers that use such downpayment assistance. Historically, the answer is some will, but a lot more will not, especially if the downpayment program is structured like existing programs, which may require extra time for home-buying classes, inspections and additional financial verifications.
Thus, before forecasting the impact on the economy, we really need to hear how this down payment program will be administered in a more seller-friendly way and circumvent the hurdles that other programs have documented in detail. Otherwise, the economic impact will likely be inconsequential if it becomes more a token of goodwill rather than a substantive and widely adopted program."
— Dr. Lee Davenport, strategic Coaching Advisor at PropertyCashin
"Down payment assistance is essential for increasing homeownership, which has historically been a key driver of wealth creation. If managed carefully, such a program can avoid inflating home prices. However, without a corresponding increase in housing inventory, increased purchasing power could drive prices up further, worsening affordability.
Ultimately, the success of this plan hinges on resolving the ongoing inventory shortage. The Harris-Walz administration has addressed this issue in their proposal, but it's crucial to see real progress in terms of concrete targets for increasing supply, particularly in segments accessible to first-time buyers."
— Luca Dahlhausen, Founder & CEO of Realfinity.io
"This assistance may make homebuying easier for first-time buyers, which in turn could increase demand for more affordable homes. This is probably most noted in entry-level home markets or even those in which demand already surpasses supply.
With greater demand and no immediate supply growth to match, prices may be driven upwards, especially in competitive housing markets. Sellers also could increase the prices since buyers have more money in their pockets."
— Daniel Cabrera, owner and founder of Sell My House Fast SA TX
Related Content
-
Twilio Stock Soars on Strong Profit Forecasts: What to KnowTwilio stock is one of the best-performing stocks Friday after the tech company revealed its three-year profit forecast at an investor event.
-
Novo Nordisk Stock Surges On Weight Loss Drug Data and Analysts Say It's Still a BuyNovo Nordisk stock is paring its year-over-year deficit on positive early stage trial results for the company's new weight loss drug. Here's what you need to know.
-
Five Reasons You Might Hate Your Insurance Company (and Why You Shouldn't)Stories about insurance companies letting down their customers are easy to come by, but there's another side to many of those stories.
-
Are You Really Prepared for a Financial Emergency?High inflation and interest rates have impeded the ability of many people to save more. How do you save more with less? We'll show you a few options.
-
Listed: Two Dream Houses to Retire in Puerto RicoSee three dreamy real estate listings of homes in Puerto Rico for a wonderful retirement.
-
Best Cold Weather Places to RetirePlaces to live Some like it hot; others not so much. Here are the 12 best places to retire if you can't stand the heat.
-
All-You-Can-Eat Buffets: Can You Get Kicked Out for Eating Too Much?Don't plan on practicing your competitive-eating skills at an all-you-can-eat buffet. You can definitely get kicked out. Plus, don't be a jerk.
-
Do Wildfires Have You Worried About Your Insurance Coverage? Here's What to DoWith the California wildfires causing billions of dollars in damage, now is a good time to assess your homeowner's insurance and ensure it covers disasters.
-
Women, What Is Your Net Worth?Many women have no idea what their net worth is, or even how to calculate it. Many also turn to social media finfluencers for advice. Here's what to do instead.
-
Medicare’s 2025 Drug Negotiation List Includes Ozempic and WegovyThe Centers for Medicare & Medicaid Services wants to lower the cost for 15 more drugs including Ozempic and Wegovy.
