Biden Administration Rolls Out Tweaks To Boost Affordable Housing Development
The moves involve revising regulations governing housing, especially those administered by the Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac. The administration was able to make the changes using its existing authority, without any action by Congress.
“[The changes] should have a meaningful impact, particularly because they are all focused on the lower end of the market, where there is the most need,” Jim Parrott, a former Obama administration housing adviser, told the WSJ.
Among other adjustments, Fannie and Freddie will be able to invest more in rental housing, an existing grant program for affordable housing will be expanded, more money for building manufactured housing will be authorized, and the government-sponsored enterprises' equity caps for low-income housing tax credits will rise from $1B to $1.7B.
The U.S. is short 6.8 million rental homes affordable to extremely low-income renters, whose household incomes are at or below the federal poverty guideline or are 30% of their area median income, the National Low Income Housing Coalition reports. Only 37 affordable rental units exist for every 100 extremely low-income renter households, and the shortage exists in every state and major metro area, including the District of Columbia.
The shortage of lower-end housing, already pronounced in the 2010s, has accelerated because of the coronavirus pandemic, which pushed up demand as well as prices for housing in most parts of the country. Home prices in June experienced a whopping annual gain of 18.6% compared with a year earlier, according to the S&P CoreLogic Case-Shiller National Home Price Index. That was up from an annual gain of 16.8% in May.
"The lack of affordable housing is often more pernicious than people really understand," Berkadia Senior Vice President and Head of Affordable Housing David Leopold told Bisnow. "The negative impact on individual households is well understood, but less so is the impact on communities and the resilience of local economies."
The affordable housing crisis is part of a wider slowdown in housing development, even before the pandemic. The total number of U.S. housing units grew by 6.7% between 2010 and 2020, or about half the rate of growth during the previous decade, with population growth outpacing that figure, according to the Census Bureau.
CORRECTION, SEPT. 2, 5:30 P.M. ET: The story has been updated to reflect that the Biden administration has begun implementation of the changes.