Housing and Homeownership Among the 34 Key Issues of Election 2024

Trump and Harris have very different views 

Ric Edelman: It's Wednesday, October 9th. We're continuing our conversation of the presidential campaign, the 34 separate issues and topics that I've identified in my efforts to figure out: Who am I going to vote for?

I remain undecided. And, we've only got 19 podcasts to cover these 34 topics. So, we're combining a few of them. Today however, a single topic, housing and homeownership. I've gotten a lot of emails, as I had mentioned, and I've been sharing many of them with you over the past couple of days. On the topic of housing and homeownership, I only had one comment. And that was from Mike. Here's what he said.

Mike: “I don't like that Kamala Harris supports Biden's policy of prohibiting landlords from evicting tenants who don't pay rent. She also supports Biden's policy of issuing restrictions on what type of appliances we can have in our homes”.

Ric Edelman: Well, Mike, thank you for your, observation there.  Let me share with you my thoughts on housing and homeownership. For some big statistics, Freddie Mac says that we need 4 million more homes than we have in this country. There are a lot of people who would love to buy a home. A lot of people would love to move into better housing. They can't because literally, the houses don't exist.

Homelessness is at a record high. 650,000 people. We also have a record high in the number of households who spend more than 30% of their income on housing. 22 million households are doing this. Just in 2019, only 2 million were in that situation.

Obviously, you know the predicament.  If you're spending too much of your money on housing, that means you don't have money for other expenses: healthcare, clothing, food, insurance, savings. This is why we've got a retirement crisis in this country. A huge savings gap because people are spending so much of their money on housing because the costs of housing have skyrocketed over the past several years.

And yes by the way, to some degree, I blame Joe Biden. So, we not only need more houses, we need more affordable houses. The average price of a house in America right now is $420,000. This way prices housing out of the reach of most first-time home buyers, because most first time home buyers tend to be younger.

They tend to be lower income. Where are they going to get $85,000, which is what you need to make a 20% down payment. That's the percentage that financial advisors like me recommend to folks, because if you make a 20% down payment, you avoid the cost of PMI private mortgage insurance. It also reduces your monthly mortgage dramatically making the home more affordable on a monthly basis. We're talking over $80,000.

So, this is why so many homebuyers go with a 10% money down or a 5% money down. There are now loan programs allowing you to go in with only a 3% money down. Well, that's great. Little money down means you only need $10,000 or $20,000 for the down payment, but it means your monthly payment is going to be dramatically higher. Well, are these people going to be able to afford that? I don't think so. That's part of the problem.

So now let's turn to the candidates. First, taking a look at Donald Trump, he opposes the idea of multi=family housing. He doesn't like apartments. He doesn't like big buildings. He wants single-family zoning but here's the issue.

Doesn't matter whether you agree with that issue or not. It doesn't matter how you feel about single-family zoning versus multi-family zoning. It doesn't matter what Donald Trump says for the simple reason that zoning is a local issue. The federal government doesn't control it, so I don't really care what Donald Trump or Kamala Harris has to say about zoning. They have limited ability to influence this.

And for what Washington does control, we need Congress to pass the legislation, and then appropriate the funding to implement it. Let me give you an example here. Take a look at Kamala Harris's proposals. She says that she's going to get 3,000,000 million new homes built over the next four years.

Well, that's a pretty big number. 3,000,000. Remember, I told you Freddie Mac says we need 4,000,000 new homes. Kamala wants to build 3,000,000 of them. It's going to take her four years to do it. Okay, that's fine. She's going to build 3,000,000 new homes. She hasn't really said how she's going to do that yet.

I'll get to that in a moment, but here's the thing. How are those homes gonna get purchased by anybody, with the incredibly high cost of this housing. Well, as you well know, as we've talked about, Kamala wants to give first time homebuyers $25,000 toward the down payment. Now, we've talked about this before.

I'll reiterate it to a degree. If that house is $420,000 and the average person only makes a 5% down payment, they don't need $25,000 as a down payment. But that's what Kamala wants to give them. And besides, do the math on this. 32% of all homebuyers are first time homebuyers. There were 4,000,000 homes sold in America last year.

A third of them were sold to first time home buyers. We're talking one and a quarter million homes. If every one of those people got $25,000 each, which is what Kamala wants to do if she wins the election, that's gonna cost $31,000,000,000. By the way. if that number itself isn't crazy, where are the houses that Kamala wants all these people to move into?

We've got a housing shortage, right? So, what does she want to do? She wants to give another $31,000,000,000 to home builders to build more houses. She'll give the money to local governments to make that money available for local construction and development. But wow, $31,000,000,000 directly to first time homebuyers, another $40,000,000,000 directly to local jurisdictions to make those houses available, $71,000,000,000?

Congress would have to vote on this, and they would have to appropriate the funds. Do you really think our splintered Congress would do that? I'm not so sure. What we really need to do is not come up with the money to pay for the housing. What we really need to do is lower the cost of housing. Too often, the Democrat solution to things is throw money at it to fix it.

We know that that doesn't really work. Look at the money they throw at education. We know that just throwing money at a problem doesn't make the problem go away, and if you throw money at housing, you're not gonna make the housing problem go away.

You're gonna make it worse. Because if you give these first-time home buyers $25,000 to buy a house, guess what the price of the house is gonna be. It's now gonna be $25,000 more than it was before. Hey, if I'm selling my house and I know you just got a check from Kamala for $25,000 toward that house, guess what?

My $420,000 house is now $445,000. I'm not dumb. Neither is any other home seller, so. What we really need to deal with is lowering the cost of housing. It's the same thing in higher education. Why do colleges cost so much? Because the government, decades ago, provided student loans to any student without any limitation.

So, colleges said, gee, if students are getting all this loan money, let's just increase the cost of tuition and fees, because the students can get the money from the government in loans. Throwing money at a problem doesn't solve the problem. What we need to do is lower the cost of housing. And we all know that one big part of the cost is the cost of the land.

So how about making the land free? Well, how on earth do you do that? Well, the federal government owns a lot of land. 650 million acres to be exact. About 30% of all the land in this country is owned by the federal government. So, both of these candidates say that they want to use some of our federal land, make it available for the construction of affordable housing. If builders and developers don't have to pay for the land, they'll be able to dramatically lower the cost of the price of the house. Sounds pretty good, right?

There are two problems with this. First, neither Trump nor Harris have explained how they're going to make that federal land available, and worse, the land that the federal government owns is mostly in the middle of nowhere.

Forget about government giving land in the city. They don't have land in the city. All that's privately owned. The land the government owns is nowhere near cities. So, forget about being anywhere near where the jobs are.

It might sound good, theoretically: “Oh, let's just use federal land.” You know, this past summer, I went on a 26 day, 5,800 mile road trip. I drove from Arizona to California, to Idaho, to Montana, across the Dakotas, down to Kansas city, over to Nashville, through Kentucky, Tennessee, North Carolina, West Virginia, ending in Virginia.

It was 26 days, 5,800 miles. I saw massive amounts of land in this country, and almost all of it is devoid of people. I traveled through towns where there were hundreds of people living in these towns, where the only thing I typically found, was a gas station, a post office, a bar, and a Dollar General store. You really think there are going to be a lot of jobs in a lot of the areas where the federal government owns land? No. It's a great idea…it's not very realistic.

There's also a thing called the Low-Income Housing Tax Credit that we can look at. Kamala Harris wants to expand this, which means more money on top of the $71,000,000,000. But like every other policy issue, she pretty much hasn't given any details.

And where does Trump stand on this? Well, he was president for four years, so we do have some history that we can look at. He gave a bunch of proposals to Congress while he was president, and almost all of them were shot down. In all four of his presidential budget requests, he wanted to increase the cost of housing for four million low-income households.

He wanted to eliminate the funding that helps local governments build affordable housing. He wanted to reduce the money given to low-income households that help them pay for heat. Congress killed all of Trump's proposals.

Nowadays, Trump is focusing on regulation. He says that if we make the building permit process simpler, it'll reduce construction costs, bringing down the cost of housing. I'm not so sure how much cost of a house is tied up in the permitting process, but what do I know? Trump also says that he wants to do mass deportations of millions of immigrants who did not legally enter the country, and by doing so, will increase the supply of housing. By kicking all these people out of the country, other Americans get to move into where they were living. I'm not sure how much I like that entire concept. We'll talk about immigration in another podcast.

So where do I come down on all of this? I don't believe that Trump or Harris are going to be able to implement many or even any of their ideas to improve the housing crisis because anything they're going to want to do is going to require the consent of Congress and we are all anticipating a split Congress as a result of this election. That may not be the case. We may have a total sweep by one party in Congress

We'll have to wait and see but if that doesn't occur, I’m not so sure we're going to see them accomplish any of their policy initiatives But, what I do have to conclude is that Kamala Harris clearly has more of a genuine interest in paying attention to the needs of low-income households. Americans who are not earning very much money and who are struggling to have a decent place to live. I really don't think Donald Trump cares at all about low-income households. Other than perhaps to the extent he can make money by renting expensive properties to them. So I have to say, I favor Kamala Harris on these issues.

Is it a tax and spend scenario? Is Kamala just simply wanting to spend $70,000,000 or $80,000,000 billion dollars to throw at low income housing issues? Well, maybe. But quite frankly, too many rich people pay too little attention to the fundamental needs of a huge portion of the American population.

So, my personal preference is for the policies on housing offered by Kamala Harris. But like I said, I really don't think it's going to matter a whole lot because I don't think Kamala is going to get her policies implemented. I don't think Trump is going to be able to either. So, I really don't think it matters which one of them wins in terms of solving America's housing shortage.

And I'll take it a step further. I had mentioned to you that I created a tool for myself to figure out who I ought to be voting for. It's an Excel spreadsheet. I described it to you on Monday. I hope you're downloading that spreadsheet and using it for yourself. It's a pretty nifty little toolkit. A single-page spreadsheet that lists the 34 topics that we're talking about on these programsvand allows you to say, here's whose policies I favor. Here's how strongly I feel about the issue. And here's how much of an agreement I have with the candidate that I prefer. The spreadsheet does the math for you and tells you based on the sum total of these 34 issues, who you like more than the other, because this isn't an absolute, right?

I don't think anybody totally loves one on every single issue and totally hates the other on every single issue. I think you're going to prefer like me, you got to admit, kind of like Trump for some stuff, kind of like Kamala for other stuff.

But where does it all shake out? And on the issue of housing and home ownership, I really don't view these subjects as important to me, at least as some of the others. We've already talked about national security. That to me on a scale of one to 10 is a 10. And we talked yesterday about the economy on a scale of one to 10. That's a 10. I really don't think on a scale of one to 10, housing and home ownership reached the level of a 10.

I think these issues are a little bit lower than that. Besides, I think if you solve the economy problem, you're going to solve the housing problem. Because if you get Americans earning more money, and saving more money, and having more money, they'll be able to afford the houses that the builders will be only too happy to build for them.

So, I give this one to Kamala Harris, but I don't think it's going to be a terribly huge mover of the needle, at least not for me. Tomorrow, a fun conversation, education, critical race theory, evolution vs. creationism in the classroom, school vouchers, charter schools, higher education, and my favorite…student loans. That's tomorrow on the podcast.

Meanwhile, this afternoon 1:00pm EDT. Join me for my free webinar: Crypto for RIAs. I'm going to show you what's beyond the spot bitcoin and Ethereum ETFs. We're going to talk about yield, staking, lending, and custody. Joining me will be Abra founder, Bill Barhydt, who gave the very first TED talk on Bitcoin way back in 2012.

You're going to really enjoy this conversation. You get one CE credit, register for free. See you today at 1:00pm EDT. Use the link in the show notes to sign up.

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Links from today’s show: 

Click here for Ric's worksheet to help you evaluate the candidates

Kamala Harris Official Campaign Website Policy Page: https://www.kamalaharris.com/issues/

Donald Trump Official Campaign Website Policy Page: https://www.donaldjtrump.com/platform

10/9 Webinar - Crypto for RIAs: Yield, Staking, Lending and Custody. What’s beyond the ETFs? https://dacfp.com/events/crypto-for-rias-yield-staking-lending-and-custody-whats-beyond-the-etfs/

10/23 Webinar - How to Factor Longevity into Your Financial Planning: https://www.thetayf.com/pages/october-2024-webinar-how-to-factor-longevity-into-your-financial-planning

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