President Biden has released a Housing Supply Action Plan to ease the burden of housing costs over time by boosting the supply of quality housing in every community. His plan includes legislative and administrative actions that will help close America’s housing supply shortfall in five years, starting with the creation and preservation of hundreds of thousands of affordable housing units in the next three years. When aligned with other policies to reduce housing costs and ensure affordability, such as rental assistance and down payment assistance, closing the gap will mean more affordable rents and more attainable homeownership for Americans in every community.
The plan will help renters who are struggling with high rental costs, with a particular focus on building and preserving rental housing for low- and moderate-income families.
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. It 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 (ADUs), 2-4 unit properties, and smaller multifamily buildings.
The plan will expand and improve existing forms of federal financing, including for affordable multifamily development and preservation. This includes making construction to permanent loans – where one loan finances the construction but is also a long-term mortgage – more widely available by exploring the feasibility of Fannie Mae purchase of these loans. It promotes the use of state, local and Tribal government COVID-19 recovery funds to expand affordable housing supply. It also includes reforms to the Low Income Housing Tax Credit (LIHTC), which provides credits to private investors developing affordable rental housing, and the HOME Investment Partnerships Program (HOME), which provides grants to states and localities that communities use to fund a wide range of housing activities.
In addition, the plan ensures that more government-owned supply of homes and other housing goes to owners who will live in them – or nonprofits that will rehab them – not large institutional investors. The government will 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.
As his Action Plan reflects, President Biden believes the best thing is to boost the supply of quality housing. This means building more new homes and preserving existing federally supported and market-rate affordable housing, ensuring that total new units do not merely replace converted or dilapidated units that get demolished.
One of the most significant issues constraining housing supply and production is the lack of available and affordable land, which is in large part driven by state and local zoning and land use laws and regulations that limit housing density. Earlier this year, the administration began using federal transportation programs to encourage state and local governments to boost housing supply, where consistent with current statutory requirements.
The administration is now announcing that Department of Transportation (DOT) will continue to include language encouraging locally driven land use reform, density, rural main street revitalization and transit-oriented development in the Bipartisan Infrastructure Law (BIL) and other transportation discretionary grant programs. Integrating affordable housing into its Programs, DOT is issuing updated program guidelines that increase financial support for Transportation Infrastructure Finance and Innovation Act (TIFIA) program projects that include residential development.
The administration is including land use within the U.S. Economic Development Administration’s (EDA) investment priorities. EDA evaluates all project applications for its competitive grants to determine the extent to which they align with EDA’s investment priorities. EDA already includes transit-oriented and infill development within its “Environmentally-Sustainable Development” priority. Over the coming year and before its next round of grants, EDA will add language to its investment priorities to encourage economic development projects that enhance density in the vicinity of the development.
“MBA commends the Biden Administration for announcing steps to alleviate the acute shortage of single-family and multifamily housing for prospective homebuyers and renters,” says Bob Broeksmit, CMB, Mortgage Bankers Association’s president and CEO. “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.
Read the full plan and more detailed steps here.
