Will Biden’s Housing Plan Make A Difference?


The President recently released a Housing Supply Action Plan designed to pull back the throttle on the challenges of housing costs over time by increasing the inventory of quality housing in every community.

The plan bills itself as the most comprehensive effort to close the housing supply shortfall in history.

It includes legislative and administrative actions that could help close America’s housing supply shortfall in five years. It will begin by creating and preserving scores of affordable housing units in the next three years.

According to the National Low Income Housing Coalition, there’s a national shortage of seven million homes.

There’s fewer than four affordable and available rental homes for every 10 extremely low-income renter households and not one state has an inventory of homes within their financial wherewithal to satisfy demand.

Dennis Shea, Executive Director of the Terwilliger Center for Housing Policy, told The Mortgage Note the action plan properly addresses a key factor behind today’s housing affordability crisis, and that’s the severe shortage of affordable homes both for rent and for sale.

“Today, we’re witnessing a mismatch between the high demand for housing and an inadequate supply that is propelling housing costs upward,” Shea said.

Through a variety of different approaches, both legislative and administrative, the plan aims to close this gap, he continued.

Shea said that under the plan, the Administration will reward jurisdictions that have reformed zoning and land-use policies with higher scores in certain federal grant processes, for the first time at scale.

The plan will deploy new financing mechanisms to build and preserve more housing where financing gaps currently exist: manufactured housing (including with chattel loans that the majority of manufactured housing purchasers rely on), accessory dwelling units, 2-4 unit properties, and smaller multifamily buildings.

The administration also plans to:

-Expand and improve existing forms of federal financing, including for affordable multifamily development and preservation.

-Ensure that more homes and other housing goes to owners who will live in them – or non-profits who will rehab them – not large institutional investors.

-Work with the private sector to address supply chain challenges and improve building techniques to finish construction in 2022 on the most new homes in any year since 2006.

Still, time’s one issue that Jeffrey Zabel, a professor of Economics and Director of the MS Program in Data Analytics at Tufts University, has with the plan, he explained to The Mortgage Note.

“While the plan’s comprehensive, it will take much longer to meet our housing shortage than the five years that the Biden team claims — particularly since many of the programs the administration is pushing must go through congress.”

Zabel noted that “almost all will take years to begin to show any significant results.”

Katie Goldstein, Director of Housing Campaigns at Popular Democracy, called the plan “woefully insufficient to be able to meet the needs of our communities.”

“The plan leaves out tenant protections, does too little to end corporate control of housing, and the for-profit sector will not solve the housing crisis,” Goldstein told The Mortgage Note. “We need the federal government to invest in social and public housing and pass universal tenant protections.”

Shea said responding effectively to the housing-affordability crisis will require the investment of greater resources from the private sector.

That’s why the Terwilliger Center strongly supports two key elements of the Action Plan: expansion of the Low-Income Housing Tax Credit, which would encourage more private investment in affordable rental housing, and enactment of the Neighborhood Homes Investment Act.

Zabel, though, doesn’t think the direction of the money’s real clear.

“Hard to tell where the monies are really going since most programs are modest and it is not clear how long it will take for them to be implemented,” Zabel said.

Finances aside, since attracting cities with federal dollars seems to be a component aimed at ginning up housing inventory, one question is what it will look like in different regions of the country.

Then there’s the matter of location, said Zabel.

“There’s a focus on increasing rural housing but it’s not sure this is where people want to live. One would hope the impacts are largest where the supply shortage is the greatest which is in the least affordable cities but this also is where the land-use restrictions are binding and hardest to overcome,” Zabel said.

Garrett Watson, Senior Policy Analyst at The Tax Foundation, told The Mortgage Note he expects the plan to impact taxes in a couple of ways.

There are two major tax provisions in the President’s recent housing proposal worth mentioning: a proposal to expand the low-income housing tax credit, and a tax credit expansion to rehabilitate homes for owner-occupiers who are low-to-middle income, explained Wilson.

The LIHTC expansion would target the credit further toward low-income households and increase tax credit allocations, and has been proposed elsewhere in Biden’s agenda, he continued.

“We have a piece overviewing the existing LIHTC program and recommend administrative and oversight improvements to the program, which may be considered in conjunction with other enhancements,” Wilson said.

For the rehabilitation credit, this would create a new federal tax credit to rehabilitate houses in cases where the cost may meet or exceed the existing value of the home.

This credit proposal is modeled after LIHTC, which raises concerns that it may also replicate some of the administrative challenges there.

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Email story ideas to Editor Kimberley Haas: [email protected]