Housing prices have continued to soar and now the Biden administration is taking steps to level the playing field and make housing affordable again. The goal of President Joe Biden and his administration is to close the “housing supply” gap over the next five years. Here’s what you need to know.
On Monday, May 18, the administration released its “Housing Supply Action Planwhich describes the measures that will be taken to increase the availability of housing and reduce costs for tenants and landlords. The plan highlights what will be done to produce more affordable units and more housing supply over the next five years.
“When aligned with other policies aimed at reducing housing costs and ensuring affordability, such as rental assistance and down payment assistance, closing the gap will result in more affordable rents and more accessible ownership for Americans in all communities,” the White House said in an outline of the plan.
Affordable housing has been an issue for some time. However, with the pandemic, mortgage rates, inflation, and supply and demand issues, it has become virtually impossible for anyone to enter the housing market. And people in the market can’t afford the costs of rising mortgage interest rates that have seen people owe 28% more for their payments. Plus, for the first time ever, the median house was making homeowners more money than their labor – and that’s bad for everyone.
To address these concerns, the Biden administration outlined the steps it is taking immediately and the plans it has in the works to send to Congress. These include:
- Reward jurisdictions that reform zoning and land use policies: higher scores will be assigned for specific large federal processes
- Develop and launch new financing to preserve and build housing where there are financial deficits: This will include new manufactured housing, small multi-family buildings and 2-4 unit properties.
- Improve new and existing financing to include affordable options for multi-family options: This will include different loans, tactical credit reforms for low income housing and the Home Investment Partnership Program to finance a wider range of housing activities.
- Ensure government-owned home supply goes where it’s needed: To ensure that properties and housing supply will go to the people who will live there or to non-profit organizations instead of large institutional investors.
- Troubleshoot supply chain issues: Focus on resolving supply chain issues and improving construction techniques to complete construction sooner.
The Housing Supply Action Plan notes that the problems we are seeing in the market have been developing for a long time and are not just related to the pandemic. The plan also says President Biden believes the best way to solve the problem is to boost the supply of quality housing.
Flooding the market with more affordable housing, including multi-unit homes, seems like a good first step on paper. But as outlined in the plan, construction of new affordable homes must be done at a faster rate than converted, demolished or dilapidated homes.