Kamala Harris is going full YIMBY — and housing experts are optimistic

• Vice President Kamala Harris shared a plan to build 3 million new homes in her first policy speech.
• Housing experts told Business Insider that targeting America's housing supply shortage is critical.
• The experts were more lukewarm on some of the other housing proposals and want to see more details.

Vice President Kamala Harris' newest housing proposal is giving YIMBY — and that's great news for the housing market, where supply has been unable to keep pace with demand, forcing prices up and buyers out.

The Democratic presidential candidate revealed the first details of her new economic agenda on Friday, which she hopes to implement during her first 100 days in office. A key part of her proposal involves building 3 million new homes over a four-year period.

It slots neatly into the YIMBY movement , which stands for "Yes, In My BackYard," and is a pro-development movement focusing on increasing high-density and affordable housing supply by targeting barriers to new building. (It's a counter to the NIMBY, or "Not In My BackYard" movement.)

Harris said Friday that her administration plans to build 3 million units by working in partnership with workers and the private sector to go after obstacles in the way of new construction at both the state and local level.

"There's a serious housing shortage ," Harris said on Friday. "In many places, it's too difficult to build, and it's driving prices up. As president, I will work in partnership with industry to build the housing we need both to rent and to buy."

Housing policy experts say that's the most crucial aspect of her multi-pronged plan, because what the market needs most right now is greater supply .

Jung Hyun Choi, principal research associate at the Urban Institute's Housing Finance Policy Center, said the lack of supply "is the root cause of the current problem" with the housing market, adding that Harris' proposal to build more homes is "really the key solution of the housing market problem."

Four housing policy experts Business Insider talked to all agreed.

"The strongest aspect I see in this proposal is that it recognizes the key issues with housing right now and that it is very explicit on trying to improve the number of homes being built — and not just the number of homes but the number of affordable homes ," John Walsh, a research analyst at the Urban Institute's Housing Finance Policy Center, told Business Insider.

Homeownership is one of the most reliable ways to create stability in Americans' economic lives and should be a priority, according to Christopher Mayer, a professor of real estate at Columbia Business School who praised Harris' emphasis on supply.

"I think most people should be homeowners," Mayer said, noting the falling homeownership rate among young people. "Owning a home is a proven way of building wealth. It creates stability for households."

Addressing the housing shortage

However, with the low supply of starter homes, those making the jump from renting to owning often have to contend with both high prices and steep mortgage rates.

America is facing a significant housing shortage, with the country between 4 and 7 million homes short, NPR reported in the spring of this year . Builders have cited supply chain issues, among other reasons building has stalled. Zoning also remains a large barrier to homes being built.

COVID-19 only exacerbated the issue, Mayer said, as more people started working remotely. With her proposal to build 3 million new starter homes, Harris is aiming to address that critical gap.

Harris' housing proposals expand on policies President Joe Biden has attempted to implement since taking office, including loosening regulations that restrict construction. Former President Donald Trump also urged states and cities to pursue some zoning reform while he was in office.

The vice president's plan to build millions of new housing units depends on several novel methods. She intends to provide the nation's first tax incentive for builders who construct starter homes and sell them to first-time buyers. Harris also intends to create a $40 billion federal fund to incentivize local housing construction, an expansion of Biden's proposed $20 billion fund . To top it off, she vowed to expand existing tax incentives for businesses that construct affordable rental housing.

"The answer is more supply, and also the answer is more supply at the sweet spot, which is first-time ownership," said Susan Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania.

She thinks Harris' commitment to building 3 million homes is the strongest part of her plan, as it will address what she called a "generational crisis" of rent and housing prices. The increase in home supply needs to correspond with an increase in available land, Wachter added.

Part of Harris' proposed federal fund to encourage housing construction would make some federal lands eligible to be repurposed for new, affordable developments — something Trump recently promised to do as well.

Both Choi and Walsh were quick to caution that while Harris' proposal is a great start to alleviating housing burdens and reducing wealth disparity, more details are needed to determine its ultimate effectiveness.

"The devil is really in the detail of where these homes would actually be used," Walsh said.

Targeting down payments and Wall Street

Harris' other flagship proposals — offering $25,000 in down-payment assistance to new homeowners and preventing investors on Wall Street from buying up starter homes — drew more mixed reactions from the experts that spoke to Business Insider.

In Mayer's view, the down-payment policy is rooted in good intentions but may not be particularly cost-effective. Many first-time homeowners traditionally rely on their families for help with a downpayment, Mayer said, meaning lower-income buyers often don't have access to generational wealth, and the $25,000 could significantly help them. Yet, he would rather find ways to lower down payments across the board than distribute money as Harris is proposing.

Wachter, meanwhile, said she supports the effort to aid potential homeowners with their down payments but is not confident the proposal would garner broad political support.

While Wachter declined to comment on Harris' proposal to limit Wall Street's ability to buy single-family homes, Mayer is less enthusiastic about it.

"The vast amount of single-family rentals are not owned by people on Wall Street, they are owned by people who own small numbers of houses," he said of the plan. "Institutional investors bring efficiencies to management of that, and those efficiencies generally result in better opportunities for renters."

Despite lingering doubts about some aspects of Harris' proposal, the experts agreed that the basic premise of building more affordable, first-time homes is what the country needs.

"This would be a huge impact," Wachter said. "Right now, what's threatened is the ability to get onto that ladder to achieve housing security. And housing security where there are markets, where there are jobs, is the key issue for young Americans today."