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Money Can’t Solve All Problems. Just Ask Those Trying To Quell The U.S. Housing Crisis

The Build Back Better bill, which passed the U.S. House of Representatives but not the Senate last fall, included $150B to expand affordable housing. After that bill stalled, President Joe Biden's administration seemed to go quiet on the push for federal action on housing.

In late March, however, the administration released its $5.8T proposed federal budget for fiscal 2023, which included a substantial increase in housing program funding and made it clear that housing is a priority — even though not all of its ideas in Build Back Better transitioned to the budget proposal.

What isn't clear is whether Congress will agree with the president on housing, or even if it does, whether a healthy increase in federal funds will make much of a dent in the worst housing crisis in at least a generation.


The administration proposed a total of $71.9B in discretionary spending for the Department of Housing and Urban Development in fiscal 2023. That is an increase of $6.2B, or 9.4%, from the enacted fiscal 2022 budget, and $12.3B more than fiscal 2021.

"It's a step in the right direction, but not enough to overcome the national housing crisis," Preservation of Affordable Housing Senior Vice President and Chief of Staff Andrew Spofford said, adding that the reality is that the administration is constrained by what Congress and especially the Senate will do. POAH is an affordable housing developer based in Massachusetts.

“It’s good, but it’s not bold,” Edward Goetz, director of the Center for Urban and Regional Affairs at the University of Minnesota in Minneapolis, told regarding the budget proposal, stressing that federal support for housing needs to go beyond increases in rental vouchers and other programs that have been in place for decades.

One stubborn impediment to affordable housing development not directly under federal oversight — but which was addressed in Build Back Better — is local opposition to such development. 

Finding ways to encourage local jurisdictions to zone for multifamily rental housing is extremely important, Spofford said. The Build Back Better package had language allowing the federal government to provide incentives to encourage that, but the budget proposal does not, reflecting the kind of ad hoc process that has long been characteristic of federal housing programs.

"I don't think it's would be a surprise to anyone to hear me say that we don't have a good national housing policy," said Council of Large Public Housing Authorities Executive Director Sunia Zaterman. Her organization represents about 70 of the largest U.S. public housing authorities.

Until that happens, federal support for housing will be in the form of pushing for the kinds of proposals detailed in Build Back Better and the latest budget proposals, Zaterman said.

"Is it bold enough? We have a very fragmented housing system, and it really isn't directed by the federal government in many ways," Zaterman said. "It's subject to local and state requirements,  local market conditions, and labor and economic considerations." 

Still, affordable housing advocates say they are generally pleased with the proposed budget.

"The president’s budget request is strong," National Low Income Housing Coalition Senior Vice President of Public Policy Sarah Saadian said. "It includes a major expansion of housing choice vouchers and significant increases to programs that address homelessness and expand housing supply." 

In its budget proposals, the administration is trying to integrate housing as an essential part of its climate proposals and its social and racial equity proposals, Zaterman said.

"This is a reset budget, if you will, that recognizes the constraints of a very slim majority in the House and Senate," she said. "It reflects priorities of the administration, but it also seems to reflect some pragmatism about what could possibly get done."

Among other things, the budget proposal calls for $32.1B for the Housing Choice Voucher program (Section 8), which is the government's major program for housing assistance to very low-income families, the elderly and the disabled. If enacted, that would be the largest single-year increase in the nearly 50 years since the program was created. HUD estimates that such an increase would accommodate an additional 200,000 households.

“This budget will help us meet our mission to provide security and stability for those who live on the outskirts of hope, advance opportunity and equity on behalf of marginalized communities, and meet the existential threats posed by natural disasters and climate change," HUD Secretary Marcia Fudge said in a statement

The Biden administration also asked for $10B for the low-income housing tax credit program over the next decade, as well as making the New Markets Tax Credit permanent at $5B each year, and indexed for inflation after 2026.

Other increases in the proposed budget include $3.7B for the public housing capital fund, up from $3.3B last year, and $1.9B for the HOME program, up from $1.5B. The budget would also make small increases in Homeless Assistance Grants and the Community Development Fund.

"This unprecedented investment demonstrates how seriously the White House views the supply crisis," National Association of Realtors Chief Advocacy Officer Shannon McGahn said in a statement

"Many changes will be made to this plan, but it is good news that the White House sees this issue for what it is — a crisis — and many in Congress on both sides of the aisle agree," McGahn said. "The next step is that Congress will hold hearings on this budget proposal."


Historically, HUD's budget, as measured as a percentage of U.S. gross domestic product, is actually larger than it was in the late 1970s, when it totaled about 0.15% of GDP. As of the end of the 2010s, the total was 0.25% of GDP, but that actually represents a decline compared with the 1990s, when HUD's budget peaked at nearly 0.4% of GDP. During the administrations of both President Barack Obama and President Donald Trump, spending languished.

Biden has made housing much more of a priority since taking office, at least in terms of HUD budgets, and especially when compared with his predecessor.

The Trump administration, in its final budget proposal for HUD, asked for $47.9B for fiscal 2021, or about $8.6B less than the year before. Congress didn't go along with that, and in fact raised the budget to $60.3B. The Biden administration's first proposal for HUD was $68.6B for fiscal 2022 (which started Oct. 1). Congress ultimately trimmed that total, authorizing $65.7B.

Even in ordinary times, supporting affordable housing is a Sisyphean task, but more recently it has been complicated by the pandemic and the spike in inflation — much of which represents rising rents, housing advocates say.

The United States is short about 6.8 million housing units, according to a 2021 report by the National Realtors Association. The shortfall is a factor in fueling rising home prices and rents. In 2021, annual U.S. rent growth of 13.5% was more than double any previous year, Yardi Matrix reports.

Low-income households now struggle to find housing in every state, and in rural, suburban and urban areas, according to the Center on Budget and Policy Priorities, a nonpartisan think tank focusing on poverty.

"Difficulty affording adequate housing is also widespread among low-income people of all racial groups, but it is disproportionately common among people of color," according to a recent report by the organization

More than 60% of people experiencing homelessness and more than 50% of people in low-income renter households who pay over half their income for rent and utilities are Black or Latino, even though those groups make up just 31% of the overall population, the report found.

Critics of current housing policy point to structural issues that stymie progress on affordability, despite higher housing budgets.

"It does little to address the structural issues the market faces," WeLend Managing Partner Ruben Izgelov wrote in Barron's, regarding the housing proposals in Build Back Better.

"The only way we’re going to get close to closing out the supply deficit is for the private sector to start building huge quantities of starter homes, both for rent and for ownership," Izgelov wrote. 

On the for-sale end of the housing market, entry-level housing development has all but dried up. In 1982 such units accounted for 40% of new homes development, but in 2019, the total was just 7%. 

"Even with this budget request, far more resources are needed to address the full scope of the housing crisis, which has only gotten worse during the pandemic and now faces additional challenges, like inflation," Saadian said.

One of the most important things Congress can do is to make housing assistance universally available for everyone in need, Saadian said, noting that currently, only 1 in 4 people who are eligible for housing assistance receive any help. 

"The rest are left to fend for themselves," Saadian said. "Right now, it’s hard to see Congress enacting universal housing legislation. That’s why keeping the targeted housing investments in Build Back Better in any budget reconciliation bill is so important."

Even so, the severity of the housing crisis seems to be having an impact on policymakers — and that is some cause for optimism, POAH's Spofford said.

"Housing didn't used to be a top priority when people talked about domestic policy issues, even as recently as a few years ago," Spofford said. "Now the crisis has become so severe that it no longer only affects people with lower incomes. Housing is near the top of people's list of concerns."