On Friday’s CNN International broadcast of “First Move,” CNN economic and political commentator The Washington Post Columnist and PBS NewsHour special correspondent Katherine Rampell said a tax credit for first-time homebuyers proposed by Vice President and 2024 Democratic presidential candidate Kamala Harris “would likely be passed on in higher prices” because of limited supply.
“Unfortunately, the problem is the federal government doesn’t have much power over the obstacles that have prevented housing construction,” Rampell said. “At the state and local level, we see issues like red tape, permitting issues, zoning, NIMBY-ism. So what we really need is more effort at the state and local levels to make it easier to build housing. She has said she wants to work with states and localities, and she would like her to, but again, she doesn’t have many tools at her disposal. She said today, and in materials she sent to reporters earlier, that she would push for another tax credit, a new kind of tax credit to encourage first-time homebuyers to build homes. I’m not sure how that would work, but at least it’s a step in the right direction.”
She continued, “I’m more concerned about another policy she announced on housing, which is a $25,000 tax credit for first-time home buyers. It sounds nice, but demand is already so strong. If supply is limited, that tax credit is likely to get passed on in the form of higher prices. Home prices will be more expensive, maybe not the full $25,000. That’s going into sellers’ pockets. So subsidizing demand isn’t going to help much, but it will help supply, if they can do it.”
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