White House pledges to close affordable housing gap in 5 years
The Biden administration announced that it will work to ease the affordable housing shortage over the next five years. (iStock)
The Biden administration announced a new plan to ease the cost of housing in the U.S. and close the affordable housing gap in the next five years.
The Housing Supply Action Plan will ease the cost of housing by boosting the supply of homes available in every community, Biden said in a statement on May 16. It includes legislative and administrative actions that they said will correct the housing supply shortage in the U.S. in five years.
The plan starts with the creation and preservation of hundreds of thousands of affordable housing units over the next three years.
"When aligned with other policies to reduce housing costs and ensure affordability, such as rental assistance and down payment assistance, closing the gap will mean more affordable rents and more attainable homeownership for Americans in every community," the White House said in the statement. "This is the most comprehensive government effort to close the housing supply shortfall in history."
The plan focuses on affordable rentals, as well as building and preserving affordable multifamily development for low-income and moderate-income families. It also seeks to make homeownership more accessible in communities where there is a lack of affordable homes.
Inflation rose 8.3% annually in April, slightly lower than March's 40-year high of 8.5%. The housing costs portion of the Consumer Price Index (CPI) also increased, making up about one-third of the spending market, according to the Department of Labor.
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Biden administration plans to increase affordable housing supply
Home prices saw double-digit increases in nearly 75% of metros in the first quarter of 2022, according to the latest data from the National Association of Realtors (NAR).
"Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022," NAR Chief Economist Lawrence Yun said when the report was released. "Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months."
The administration's plan to bring more affordable housing includes making several changes:
- Reward areas that have zoning and land-use policies with higher scores in certain federal grant processes.
- Use new financing mechanisms to build and preserve more housing for manufactured housing, accessory dwelling units, 2-4 unit properties and smaller multifamily buildings.
- Expand and improve existing federal financing such as affordable financing for construction loans.
- Ensure that more government-owned homes are given to those who will live in them.
- Partner with the private sector to address supply chain challenges and improve building techniques to finish construction in 2022 for the most new homes in any year since 2006.
Currently, the housing supply is short by more than 1.5 million homes nationwide, according to a report from Moody’s Analytics.
"As his Action Plan reflects, President Biden believes the best thing we can do to ease the burden of housing costs is to boost supply of quality housing," the White House said in the statement. "This means building more new homes and preserving existing federally-supported and market-rate affordable housing, ensuring that total new units do not merely replace converted or dilapidated units that get demolished."
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Some say Biden’s plan doesn’t reach far enough
Despite Biden’s pledge to fix the affordable housing shortage in the next five years, the National Fair Housing Alliance (NFHA) expressed concern that the plan doesn’t reach far enough.
"Affordable housing on its own does not create housing choices that are free of discrimination, nor does it even provide equitable access to housing opportunities," NFHA President and CEO Lisa Rice said. "The same is true for changes to zoning and land-use controls. Throughout our history, plans that tackled affordability, but fell short on fair housing oversight and compliance, exacerbated residential segregation and racial homeownership and wealth gaps.
"Centuries of race-conscious policies created the inequities in housing and wealth that persist today, and only policies based on fair housing principles can rectify those injustices," Rice continued. "Without fair housing enforcement and compliance, the affordable housing challenge will remain a factor in the lives of millions of consumers, and we will not make any progress at all in mitigating the persistent debilitating impacts of residential segregation and discrimination."
The NFHA called on the Biden administration to ensure its plan included measures such as dedicating funds to fair housing initiatives or down payment assistance.
If you are struggling with your monthly mortgage payments, you may want to consider refinancing to a lower interest rate. To see if this is the right option for you, you can visit Credible to speak to a home loan expert and get all of your questions answered.
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