My Initial Take on Harris & Walz Housing Policy Plans, While We Take a Trip To Corbières to Visit the Domaine De Fontsainte.

As I always tell my kids, in order to know that one is deviating from a plan, one first needs to actually have a plan. Thus, while we all know that the pre-election "programs" are rarely realized in the post-election reality, I am still paying very close attention to emerging details. At this point, I am especially interested in the policy ideas of the "New Kids on the Block", Harris & Walz, with respect to the housing market and housing finance.

Additionally, I am planning to invite you to travel to France with me... Again!

And If you're itching for a travel tip to France, let me steer you in the right direction: go to Corbières! Nestled in the southern hills, this charming spot is like a hidden gem where life is just…well, better. Picture this: artsy villages that look like they popped out of a painting, locavore restaurants serving up dishes that make your taste buds do a happy dance, and B&Bs so cozy you might just forget to go outside. And speaking of outside, there's plenty to do—from hikes that make you feel like an intrepid explorer to historical sites that transport you to another time. But let’s not kid ourselves; the real reason you’re here is for the wine. Oh, the wine! It’s plentiful, it’s affordable, and at its best, it’s downright divine.

Now, let me introduce you to the local legend who are practically the embodiment of this laid-back, wine-soaked paradise: Bruno Laboucarié, who has been holding down the fort in the northern part of Corbières at Domaine de Fontsainte for the past four decades. Bruno is so full of life and joy that if he smiled any wider, he’d need a bigger face (don't tell him I said that if you happen to run into him). Yes, for four decades, Bruno has been crafting wines that are not just drinks—they’re experiences, bottled up pride, joy, and a dash of that southern French soul.

Domaine de Fontsainte might be best known for its Gris de Gris rosé, but let me let you in on a little secret—their Demoiselle rouge is the real treasure. These vines, which have been hanging around for well over a century, crank out a strawberry, spice, and chocolate-toned red that’s both rich and balanced, like a decadent dessert that somehow doesn’t count as cheating on your diet. And if you’re ever in doubt about what wine to serve, their black label Corbières rouge is your “Old Reliable.” It’s the wine equivalent of that friend who’s always up for anything—fun, fruity, and always a hit with the crowd. And this is what we are drinking today:

2021 Corbières Rouge “Réserve La Demoiselle”

Blend: 60% Carignan, 30% Grenache Noir, 10% Mourvèdre

Appellation: Corbières

Region: Languedoc-Roussillon

Winemaker: Bruno Laboucarié

Soil: Silica, clay, limestone (gravelly with large galets, or rounded stones)

It’s really hard not to get a bit poetic when you open a bottle of Domaine de Fontsainte’s Corbières “La Demoiselle.” The scent of garrigue, spices, dark fruit, and olives wafting from the glass is like a love letter from the Languedoc, where century-old vines are still showing the young’uns how it’s done. This bold red comes from the vineyard’s most prized parcel, “La Demoiselle,” which has been in the Laboucarié family’s care since the early 1970s.

This year, the Carignan vines in that vineyard turned 120—yes, you heard right, 120! Thanks to winemakers like Bruno and wines like La Demoiselle, Carignan is making a comeback in the Languedoc, finally getting the respect it deserves. Many of the region’s ambitious winemakers now see it as the unsung hero of the area, and one taste of La Demoiselle will show you why. It’s full of character, soul, and sheer deliciousness—perfect for pairing with anything fresh off the grill, just in time for summer. And I say - Cheers to that!

Now, having been well-fortified with this French drinkable beauty, lets talk about Housing policy, subsidies, supply & demand, KH, and the best product of Minnesota (and Nebraska) Mr. Tim Walz.

What do we know so far? Well, we do see an overemphasized attention to above-mentioned issues from them. Indeed, from what we have seen thus far, housing is front and center of the proposed economic programs (or rather rough outlines of them). Among the typical election-year rhetoric, we clearly see a special focus on first-time homebuyers.

Harris's plan isn't just ambitious; it's a full-on rally cry for anyone who's ever been sticker-shocked by a down payment. Harris is planning to roll out a $25,000 tax incentive for a down payment for first-time buyers, blowing past the $10,000 credit President Biden proposed in his last State of the Union.

In addition to housing, Harris also promised to hand out a one-year child tax credit of $6,000 and slash prescription drug costs, which would indirectly impact the budget allocation to cover the housing costs.

To ne, this looks like a return of the good old days, when the goal was to promote the idea of homeownership with a vengeance, yet, the current environment of limited housing supply will hardly be able to withstand yet another round of demand that these subsidies are likely to spur. Thus, the housing market will go into another round of "HPA madness", which is likely to undo much of the efforts to resolve the affordability issue.

To be fair, the Democratic nominee did acknowledge the existence of a "supply problem", but we have yet to see a concrete plan as to the solution for it.

In a recent speech, Harris said, "There’s a serious housing shortage 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. We will take down barriers and cut red tape, including at the state and local levels.” We clearly, would like to see more policy details, when it comes to the supply side of the housing question.

On the rental front, the invocation of the "Stop Predatory Investing Act" to deal with unfair rent hikes, as well as the focus on the hidden fees and late charges, makes us doubt that the democratic administration will be terribly friendly to investment property buyers.

Thus, we expect that an increasing number of investor borrowers in the agency (as well as non-agency) space may chose to reduce the size of their real estate investment portfolios, especially if they see HPA as nearing the top. This supply from investors will undoubtedly slow HPA down and create a powerful turnover speed boost in discount coupons.

That being said, much more work is ahead of us, as we dig into the policy specifics on both sides of the aisle, yet we felt compelled to share our initial thoughts with our readers.

Thanks for reading, drinking & dreaming with me!

Sincerely Yours,

Kirill A Krylov, CFA, PHD