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Election Day is inching closer, and for one presidential candidate housing is on top of mind.

Vice President Kamala Harris, the Democratic nominee, has rolled out a series of initiatives focused on making housing more affordable. Her campaign has promised to introduce legislation to Congress that would create $25,000 first-time homebuyer down payment assistance grants and take steps to add 3 million new homes to the nation’s inventory by 2029. She has also proposed tax incentives for builders of starter homes.

A prominent advocate for increasing home ownership among minority and working-class Bay Staters said he is pleased that housing is on the top of mind of presidential candidates.

“This is pretty historic that the presidential candidates are talking about housing,” said Partnership for Financial Equity Executive Director Tom Callahan. “The presidential campaigns very rarely have housing on their short list of issues that they talk about. It’s heartening on one level, hear the candidates talk about housing and affordable housing. On the other hand, it’s just a reminder how serious a problem this is throughout the country so that’s why they’re talking about it. It’s been a long time coming to try to get presidential candidates to actually campaign on housing, and that seems to be happening this year.”

MassDREAMS Opened Doors

Callahan pointed to the success of the MassDREAMS homebuyer assistance grant program from MassHousing and the Massachusetts Housing Partnership as a sign Harris’ plan will help more first-time homebuyers enter the market.

Since 2019, MassHousing has issued 10,761 mortgages to first-time homebuyers. Of those borrowers, 55 percent utilized down payment assistance – some of which was covered by $84,503,699 in MassHousing down payment assistance loans.

“That was a really positive and successful program that definitely made a difference for a lot of first time homebuyers, and helped them get into the market when they otherwise might not have,” he said.

Greater Boston Association of Realtors President Jared Wilk also believes that the $25,000 would help first-time homebuyers enter into the market and get into homes. Even if that isn’t the case, Wilk, a Compass Realtor, said it will make more homeownership more attainable than it currently is.

“I would expect there would be some first-time buyers who hear about this, and whether or not it moves the needle enough for them to ultimately buy the home that they want, I think what it can do is it can bring people into the marketplace, and start that process,” he said. “Even if it’s not enough money to help them, it might make people realize that homeownership is more attainable than they realized.”

If the state’s housing supply doesn’t also get a significant boost, some worry that a pulse of new aspiring homebuyers might only send demand – and thus prices – higher and higher. iStock illustration

Fears Grants Could Push Up Prices

But when more demand enters a market with limited supply like Massachusetts’ housing markets, prices typically rise, said Batterymarch Group broker and owner Andrew Haigney.

“It just seems to me that the grants are probably going to drive prices higher,” he said. “It has the potential to make housing less affordable, because you have these blocks of people who are in that first-time homebuyer camp, and all of a sudden they’re going to have an extra $25,000 to spend. So, I see that as probably inflation of assets, asset inflation, asset price inflation. It’s not consumer price inflation. I think it’s just going to kind of contract prices higher.”

Still, Callahan argues the plan would help level the playing field for buyers who would otherwise be left out of the market. He also added that the targeted nature of the program will help prevent inflationary home price gains.

The median single-family home within the Interstate 495 belt sold for $795,000 last month, according to The Warren Group, publisher of Banker & Tradesman. A Harris down payment grand would cover 3.14 percent of that, or 4.03 percent of the median condominium sale price in the same region.

In Worcester County, it would go much further – 5.43 percent of August’s median single-family price – and further still in Hampden County, home to Springfield, where it would represent just under 8 percent of the median single-family sale price in August.

Many traditional first-time homebuyer mortgage products only require the borrower to put 5 percent down, and some products like the Massachusetts Housing Partnership’s ONE Mortgage require as little as 3 percent of the purchase price down.

Put another way, Harris’ proposed grants would represent 22.58 percent of the median household income in Greater Boston, 26.56 percent of the Worcester-area median household income and 37.31 percent of the Springfield-area median household income.

Feds Have Limited Power Over Land Use

While the plan to handout $25,000 to first-time homebuyers might seem appealing, Brookings Institution senior fellow Clifford Winston said that, on its own, down payment assistance doesn’t tackle the main drivers behind the nation’s housing problems.

“If the new administration wants to stimulate reductions in the cost of housing, then rather than subsidize people I think they could increase supply by reducing regulations, land use regulations that have limited supply of housing,” he said.

Sam Minton

The imperative to reform land-use regulations underscore the difficulties of trying to increase housing inventory by three million homes nationwide. The president can oversee federal land use regulations but states and localities hold nearly all lot of power over land use in their own backyards.

Callahan admitted that reforming land use enough to generate more housing will be a tall order if Harris wins, but that setting the nation a goal of permitting 3 million new homes in four years and using the presidency’s bully pulpit might help her plans come to fruition. He added that setting goals for housing production is not something that is normally seen.

Wilk added that while there aren’t many parcels of undeveloped land to build on close to Boston, there are opportunities across the commonwealth.

“As you get closer to Boston, closer to the city, there’s less land, there’s less opportunities, less space to do larger developments than there might be in other parts of the country that are a little more spread and less dense,” he said. “But they’ll be able to find places in Massachusetts, and it can only help [adding more inventory].”

If the goals of Harris’ plans are to increase homeownership opportunities, Winston believes that there are better ways to go about achieving that goal.

“I think there are more efficient ways of doing it,” he said. Start out with being able to reduce the cost of housing, improve the supply and focus really on the constraints that we’ve had in this country.”