An ambitious Housing Supply Action Plan unveiled last month by President Biden aims to close the country’s housing supply shortfall within five years. Using a combination of legislative and administrative initiatives, the plan — which the administration called the most comprehensive “all-of-government” effort in history — drew a generally positive reaction from the housing and mortgage banking industries.
In a news release, White House officials noted fewer new homes were built in the decade following the Great Recession than in any decade since the 1960s; also, the mismatch between housing supply and demand grew during the pandemic.
The shortfall “burdens family budgets, drives up inflation, limits economic growth, maintains residential segregation, and exacerbates climate change,” officials stated. While rising housing costs have burdened families across the income spectrum, these costs have hit low- and moderate-income families, and people and communities of color, even harder.
The multi-pronged Biden-Harris housing plan includes:
- Deploying new financing mechanisms to build and preserve more housing where financing gaps currently exists, such as manufactured housing, accessory dwelling units, 2-to-4-unit properties, and smaller multifamily buildings.
- Measures to ensure more government-owned homes and other housing goes to owner-occupants, or nonprofits who will rehab them, and not large institutional investors.
- Working with the private sector to address supply chain issues.
- Improving building techniques to finish construction this year on the most new homes in any year since 2006.
- Helping renters who are grappling with high rental costs by building and preserving rental housing for low- and moderate-income families.
- Rewarding jurisdictions that have reformed zoning and land-use policies.
- Expanding and improving existing forms of federal financing, including for affordable multifamily development and preservation, and institute reforms to the Low Income Housing Tax Credit and the HOME Investment Partnerships Program.
Moody’s Analytics estimates the housing shortfall exceeds 1.5 million homes nationwide. The National Association of Realtors®, in a research report it commissioned in 2021, pegged the shortage at 5.5 million homes.
Commenting on the Biden plan, NAR President Leslie Rouda Smith said NAR “welcomes the administration’s work on this effort and encourages policymakers to look at comprehensive action.” She emphasized comprehensive action is needed that “includes zoning reforms, investment in new construction, expansion of financing and tax incentives to spurt investment in housing and convert unused commercial space to residential.”
Continuing, the NAR president said the trade group supports policies encouraging states and localities receiving federal dollars to explore high-density zoning and other land-use rules that lock out families. “We also support new grant programs for localities to enact pro-housing policies.”
Bob Broeksmit, president & CEO of the Mortgage Bankers Association, issued a statement commending the Biden administration “for announcing steps to alleviate the acute shortage of single-family and multifamily housing for prospective homebuyers and renters.”
In the same statement the MBA president said his group intends to review all aspects of the plan in greater details, but said, “Eliminating the regulatory barriers to new construction, including manufactured housing, in underserved markets; expanding affordable financing for multifamily development and rehab projects; and a commitment to more private and public sector partnerships will help address the housing supply and affordability challenges that continue to burden families.
The Housing Supply Action Plan also drew praise from the National Association of Home Builders (NAHB).
NAHB chairman Jerry Konter, said his group commends the White House “for joining the fight to put the issue of housing affordability in the forefront of the national economic agenda after NAHB had been urging the administration to move on this vital national concern for the past several months.”
The NAHB statement also referenced a letter, signed by more than 10,000 of its 140,000 members, it sent to President Biden in April. Citing rapidly rising interest rates, rising home prices and rents, and the rising cost of lumber and building materials, the Home Builders urged “immediate action” to address issues that “threaten to derail the current housing and economic expansion.”
The NAHB letter asked the Biden administration to suspend tariffs on Canadian lumber imports. (The Department of Commerce recently announced it had reduced duties on softwood lumber ships from Canada as part of an independent and quasi-judicial process.)
The home building industry, in a statement on its website, said it agrees with the White House that the key to resolving the nation’s housing affordability challenges is to build more homes. NAHB describes itself as “a willing partner in solving the affordability crisis that will enable builders to construct more affordable entry-level housing, raise first-time, first-generation and minority homeownership rates, provide quality rental housing and shore up the national economy.”
The White House news release outlining the various elements of the Housing Supply Action Plan said the actions build on the strategy the Administration has proposed and urged Congress to pass various measures to recruit more workers into good-paying construction jobs.
The release notes the President’s budget includes a 50% increase in funding for Youth Build, investments of $303 million to expand Registered Apprenticeships and $100 million for a new Sectoral Employment through Career Training for Occupational Readiness program, which focuses on growing industries like construction.
If enacted, the plan’s proposals would use a combination of existing funding, such as the bipartisan infrastructure bill passed last year, Department of Transportation budgets, and new spending proposals.