The Biden administration on Wednesday unveiled a plan to expand housing affordability through a slew of policy shifts projected to create and rehabilitate more than 2 million housing units, including 1 million rental units, nationwide as millions of people continue to find themselves priced out of the market, which surged throughout the COVID-19 pandemic.
In July, the median home price was $359,900, an 18% increase from a year earlier, according to the National Assn. of Realtors. According to Freddie Mac, a federally backed mortgage buyer, the United States is 3.8m homes short of the demand.
The Biden administration announced moves that would create, preserve and sell nearly 100,000 affordable homes over the next three years.
Officials also said the administration would move to make more single-family homes available to individuals, families and nonprofit groups, rather than large investors who often convert units into rental properties. It would also expand mortgage availability through Fannie Mae and Freddie Mac for certain units.
The administration also announced plans to use federal tax credits and subsidies to increase construction in economically-vulnerable neighborhoods.
The White House said it would use incentives to reduce exclusionary zoning at the state and local levels. These zoning ordinances often require minimum lot sizes and prohibit single-family homes from residential lands. This drives up housing prices because it limits the supply. Experts say this disproportionately discourages Black and Latino homeowners from purchasing homes. The federal efforts echo those in California. Lawmakers on Monday gave final passage to a bill that would allow more units in neighborhoods now zoned only for single-family homes. State agencies are also purchasing buildings in hopes of plugging the state’s affordable housing shortage.
The Department of Housing and Urban Development also announced a plan to revive a program with the Treasury Department through its Federal Housing Administration to help states, which would provide low-cost capital through state housing financing agencies for the development of affordable rental housing.
Officials anticipate about 20,000 affordable rental units will be created or preserved through 2027, according to a HUD news release.
Biden “promised to dramatically expand our nation’s supply of affordable rental housing, and today we are delivering on that commitment,” Housing Secretary Marcia L. Fudge tweeted Wednesday. “We will continue to pursue bold actions to create and preserve affordable homes for all Americans.”
One consequence of the COVID-19 pandemic is a shift in housing preference. Many people moved from cramped apartments to more spacious homes in suburban areas because they hoped to spend more time at home and avoid the coronavirus.
But, the White House Council of Economic Advisors warned that the housing crisis existed long before the pandemic.
“[While the] pandemic may have transformed preferences and caused supply chain disruptions, it did not create the underlying supply constraints in the housing market, which have decreased the stock of rental homes and homes for sale,” according to a blog post by the council Wednesday.
Diane Yentel, president of the National Low Income Housing Coalition, a Washington-based advocacy group, lauded the administration’s announcement. “The country’s affordable housing crisis requires multifaceted solutions — there is no silver bullet solution,” she said in a statement, adding that Wednesday’s actions taken together “can have a meaningful impact on the housing affordability challenges of lower-income people.”
The Associated Press was used in compiling this report.