The Biden-Harris administration released a statement of September 1st, 2021, announcing immediate steps that would increase the affordable housing supply. The administration has recognized that major investors have stepped up to purchase real estate, such as urban and suburban single-family homes, and convert them into rental properties. However, the government has also recognized that this may have led to a shortage of affordable housing. In a White House statement, it was revealed that “One out of every six homes purchased in the second quarter of 2021 was acquired by investors.” This has created a limited supply, which drives up pricing. 

However, the administration recognizes there is more to the dilemma than investors buying up most of the supply. The increase in material costs, labor shortage, the global pandemic, and prohibitive zoning laws all add to the problem. Therefore, more can be done to increase the affordable housing supply.  They announced steps that “create, preserve, and sell to homeowners and non-profits nearly 100,000 additional affordable homes for homeowners and renters over the next three years, with an emphasis on the lower and middle segments of the market.”

These steps include giving federal agencies the resources and authority to: 

• Relaunch partnership between the Department of Treasury’s (Treasury) Federal Financing Bank and the Department of Housing and Urban Development (HUD) Risk Sharing Program

• Expand financing through Freddie Mac, Fannie Mae’s and the Federal Housing Administration’s (FHA)

• Leverage existing federal funds

• Explore federal levers to reduce exclusionary zoning

• Launch learning and listening sessions with local leaders

Addressing Workforce and Low-Income Housing with The American Jobs Plan 

At the start of the year, the Biden administration announced its $2.25 trillion American Jobs Plan, which included substantial housing. Some of the housing and community development highlights included the Neighborhood Homes Investment Act, a proposal to build and rehabilitate over 500,000 homes for low- and middle-income homebuyers. The proposal also includes a plan to dedicate $40 billion to improve public housing “infrastructure.” The expected rise in housing and community development would create jobs. 

The plan also includes the Affordable Housing Credit Improvement Act of 2021, referred to as the House Committee of Ways and Means. It will provide low-income housing tax credits, modify tenant income eligibility, and revise rules to better serve and protect veterans and domestic violence victims. Other highlights of the proposed bill include: 

• Provisions to preserve affordable housing projects

• 50% basis boost for projects that reserve units for extremely low-income households

• Lowering the bond financing threshold from 50% to 25%

• Increasing the annual Housing Credit volume cap by 50%

• Up to 30% state discretionary basis boost for bond-financed properties

Addressing the housing shortage issue has always been included in Biden’s speeches. He has laid out his goals to “double down” on workforce housing and create a department focused exclusively on workforce and affordable housing. 

The administration has outlined how they intend to work with the private sector, non-profit organizations, and state agencies to create affordable workforce and low-income housing, including new construction and rehabilitation of existing properties. We will have to tune in to see how the administration's long-term plans and immediate steps will curb the current housing shortage.