Be home by 30
Simple but Not Easy
This week, the House of Representatives will pass a housing bill. Tucked away in quiet Congress, the 21st Century ROAD to Housing Act is a good bipartisan bill. It’s a modest but meaningful step towards building more housing in order to address America’s most severe economic challenge: high housing prices. In 1950, the median American home price was 2.5 times median income. By 2025, that ratio had doubled to five times median income – and closer to 10 times in some blue states.
Democrats should now double down on this momentum with a bolder, bigger pledge: Be Home By 30.
Be Home By 30 is a commitment to young Americans that if they are working, obeying the law, and giving back, then the government will help them buy a home by age 30. It’s a pillar of the New American Dream, my conception of the compact between Americans that hard work and fair play should grant you an excellent education by 18, the chance to own a home by 30, and a dignified retirement by 65.
Be Home By 30 could be established as a federal-state partnership. States structure and run the program. They can unlock federal matching funding via an approved plan of action submitted to the Department of Housing & Urban Development. These plans of action can be varied, because homeownership obstacles vary across states. All plans, though, must include:
Zoning, land-use, and regulatory reforms to unlock housing production, with objectives and key results tied to actual, annual building permits issued. Building housing is states’ ticket to entry in this program
a state funding source for homeownership assistance that is sustainable across budget cycles
eligibility criteria for homeownership assistance that encompasses employment, lawfulness, and community service
The nature of the federal funding match may change across states, depending on how State Houses want to structure the homeownership assistance. To pay for the federal match, Congress should amend tax deductions for mortgage interest. Ending the tax deduction for second homes would raise ~$100 billion over 10 years. Capping the annual amount of mortgage interest claimed, for all properties, at progressively lower ceilings for higher-wealth households would raise between $150 and $500 billion over 10 years. The political economy is simple: the federal government should help younger families buy their first home before it helps wealthier people buy their second home.
As states submit and execute against their plans, policy makers can iterate on what’s working and what’s not. Congress should build that flexibility into the program. What persists should be the promise of homeownership for those who are working, obeying the law, and giving back.
Need a new senate leader, Schumer is pathetic!
I am a big fan of Jake, and accept the premise, but I have a bad reaction to the "Be home by 30" headline claim for this particular policy proposal. Why? I don't think most Americans would agree that something as valuable as a house ought to be guaranteed to all. Politicians in the past have promised a chicken in every pot, but a house? It just sounds unrealistic. For centrist voters, it's going to play right into the worst fears about the Dems being foolish with money the same way they hated the school debt forgiveness. For rural voters, it will play into their worst fears that people in surburbs and cities (where housing is more expensive) will get some bigger assistance than they do. Basically, this position is going to backfire at the polls.
It is also not so clear that the main reason houses are expensive is that there is undersupply. Right now all assets are expensive, including stocks. The rich have so much extra cash, if we build 5-10% more houses they will just get bought up by PE firms and the price will stay remain high. Try to invert the problem. Perhaps it is not the undersupply of houses that is causing the high prices, it is the abundance of capital.
Third, the issue of income inequality is larger than housing. If your issue is wealth inequality then raise the tax rate on the rich full stop. Why should we punish rich people who buy houses and not rich people who buy paintings? It skews the market artificially.
-> Basically, it would be simpler and less distorting to just raise the tax rate. Use that to balance the budget and our interest rates will drop. Then more people can afford a mortgage.
The part of the proposal that I do think has merit is the focus on NIMBY as a constraint on supply that helps existing homeowners at the harm of prospective homeowners.