In the housing world, we’re in an era of haves and have-nots, or as influential economics writer Noah Smith recently put it, “a direct and inevitable conflict between two large classes of American society: homebuyers versus homeowners.”
The dichotomy is old, stemming from a time decades ago when a home started to be perceived as an investment rather than simply a place to live. It feels extremely pronounced at the moment, however, because the gap between those who own a home and those who don’t has expanded so much in recent years. Homeowners want their homes to appreciate in value, therefore amplifying their wealth, while new homebuyers want prices they can afford. This has sometimes led to a war between baby boomers and millennials.
“It’s basically a zero-sum game,” the former Bloomberg opinion writer and macroeconomics expert Smith wrote on his blog yesterday.
In an election year, it’s always the economy. And by way of that, it’s housing. Democratic presidential nominee and Vice President Kamala Harris recently shared her housing plan, and Smith is into it. He likened it to Singapore’s housing policy.
“In Singapore, the government controls the supply of housing, because it owns about 90% of the land, and can decide how much to build,” Smith wrote. “Singapore’s Housing Development Board increases supply slowly and steadily over time, so that everyone has a place to live, and so that housing—at least, theoretically—earns a modest but predictable financial return.”
And “it gives lower-income first-time homebuyers a government grant to help them buy houses,” he said, through a wealth redistribution system. In 2023, the homeownership rate among Singaporeans was close to 90%.
Some key components of Harris’s plan include up to $25,000 in down payment assistance for first-time homebuyers and a $10,000 tax credit for first-time buyers; tax incentives for builders who build starter homes and affordable rentals; a $40 billion fund to build housing; a repurposing of some federal lands for housing; a ban on price-setting tools used by landlords; and a removal of tax benefits for investors buying a substantial number of single-family homes.
There’s a lot there, but Smith focused on the credits to first-time homebuyers, tax incentives for builders, more money to build, and the repurposing of federal lands. He called the latter three “supply expansion,” and labeled the plan for federal lands “very Singaporean.”
Supply is something the Biden administration has mentioned in its policy announcements and plans, too, which as Smith points out is the basis of the YIMBY, or yes-in-my-backyard, movement: the need for more homes and the ways we can build more homes. Harris is beginning to embrace that, it seems.
“The Harris economic program—and the Biden program—are solidly in line with the YIMBY movement that has been winning victories at the state level,” Smith said. “The key to the YIMBY movement is that it emphasizes goals over methods—the idea is to build housing by any means necessary, including deregulation, tax incentives, and government housing construction all at once. Harris’s plan embodies this all-of-the-above approach.”
He continued: “Critics have lambasted Harris’s first-time homebuyer grants as just another demand subsidy that will push up prices. But Singapore does the same thing! And research suggests that the effect on prices won’t be that huge.”
But will America become the next Singapore where housing is concerned? Probably not. Still, it’s encouraging to see housing take center stage, and to see it being discussed in a way that recognizes fundamental issues, such as a massive shortfall of homes. But so much of housing policy happens at the local level, from governors to mayors to wealthy neighborhood associations. Not to mention, the Singaporean government controls much more land than our government.
“Harris’s YIMBY plan won’t fix all that’s wrong with housing in America,” Smith wrote. “Our state and local laws are too fragmented, and our NIMBYs too entrenched, for any federal plan to make the housing shortage go away. But making the U.S. just a little bit more like Singapore can only be a good thing, and that’s what Harris is trying to do here.”