The Biden administration on Wednesday announced a slew of policy maneuvers meant to expand the supply of affordable homes amid a record-breaking rally in housing prices.
The White House said Wednesday that the Department of Housing and Urban Development (HUD), the Treasury Department, and Federal Housing Finance Agency (FHFA) would expand and reimpose several incentives and grants for the construction of roughly 100,000 additional homes over the next three years.
The administration is also seeking to limit the amount of new homes bought by investors and asset managers by expanding exclusive purchasing windows for individuals, families and nonprofits.
“While Congress works toward passing the Build Back Better Agenda, which includes an historic investment in building new homes and making existing housing safer, healthier, and more energy efficient, the President knows that we can’t wait to take action,” the White House said in a Wednesday statement.
“The large and long-standing gap between the supply and demand of affordable homes for both renters and homeowners makes it harder for families to buy their first home and drives up the cost of rent,” it added.
The onset of the coronavirus pandemic deepened a severe shortfall of affordable housing that persisted for years before the dual health and economic crises. Sale prices for new homes are up nearly 20 percent over the past 12 months as a rush of buying activity, supply shortages, and a sharp slowdown in construction fueled staggering price increases.
To help bolster the construction of affordable homes, Treasury and HUD will relaunch a risk-sharing program with state housing finance agencies to help remove some of the financial stakes of funding cheaper homes. FHFA is also increasing its quotas for the amount of homes supported by federal affordable housing tax credits, multifamily homes, and manufactured homes that Fannie Mae and Freddie Mac are required to finance.
The administration will also launch several studies and community outreach initiatives focused on government support for affordable housing and exclusionary zoning policies.
The steps announced Wednesday are meant to make a dent in the national affordable housing shortage as Biden and Democrats attempt to usher a $3.5 trillion reconciliation spending package into law. While the measure has not been finalized, the bill is expected to include tens of billions of dollars for construction of public housing, incentives for the private construction of affordable housing, and grants for scrapping zoning laws that make it difficult or impossible to build cheaper homes in compliance with lot size, height, and parking requirements.