In an effort to boost housing supply, the Biden-Harris administration is encouraging communities and developers to explore more commercial-to-residential conversions.
To that end, the White House has released a new guidebook and updated HUD notice that provide tools to help expand housing supply and boost affordability.
The guidebook, developed in partnership with HUD and other federal agencies, helps communities and housing providers identify federal resources to finance the conversion of commercial properties to residential uses and mixed-use development.
In addition to the guidebook, HUD is releasing an updated notice on how its Community Development Block Grant (CDBG) funding – $10 billion of which has been allocated during this administration – can be used to boost housing supply. This includes the acquisition and rehabilitation of commercial buildings.
States and localities can also access up to five times their annual CDBG allocation in low-cost loan guarantees to fund projects such as the conversion of properties to housing or mixed-use development, according to a HUD statement.
“Addressing the affordable housing crisis requires an all-of-the-above approach,” says Marcia L. Fudge, secretary of HUD. “The White House guidebook on commercial-to-residential conversions and the updated CDBG notice are just a few of the steps that HUD is taking to help our state and local partners to boost supply.”
The release of the new guidebook and other measures to promote commercial-to-residential conversions is just one part of the Administration’s overall plan to boost housing supply and improve affordability. Two weeks ago the Administration announced that mortgage lenders can now count income from accessory dwellings when underwriting Federal Housing Administration (FHA) loans.
In a statement, Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), says the “MBA shares the Biden administration’s commitment to increasing housing supply and appreciates its willingness to engage with us and the industry on ways to incentivize lenders and borrowers to rehab, repurpose, and convert more obsolete commercial properties into affordable rental housing and other usable spaces.
“Housing providers are grappling with higher interest rates and rising labor and construction costs at a time when our nation’s housing supply remains inadequate,” Broeksmit says. “The initiatives announced today should help facilitate more commercial-to-residential projects. We encourage state and local governments to ensure zoning laws, tax credits, and subsidies are aligned to take full advantage of these programs.
“We will work with the administration, members of the House and Senate that have crafted related legislation, and other engaged stakeholders to fashion cost-effective ways for multifamily borrowers, developers, and lenders to increase the nation’s rental housing stock,” Broeksmit adds.
The release of the new guidebook and other measures to promote commercial-to-residential conversions is just one part of the administration’s overall plan to boost housing supply and improve affordability. Two weeks ago the administration announced that mortgage lenders can now count income from accessory dwellings when underwriting Federal Housing Administration (FHA) loans.
The new policy on ADUs aims to “help households of more modest means maximize the potential benefits of homeownership to build wealth,” says Julia Gordon, assistant secretary for housing and federal housing commissioner for the U.S. Department of Housing and Urban Development, in a statement. “This new policy also contributes to the supply of affordable housing in many neighborhoods where it’s most needed and least available.”
Tracy Kasper, president of the National Association of Realtors, commends the administration for the measures on commercial-to-residential conversions.
“America is facing a more than $4 trillion underinvestment in housing that has left us short some 5.5 million homes,” Kasper says in a statement. “With this, NAR is extremely appreciative of the administration’s work to bring attention to and help address this critical, nationwide problem. With many office buildings sitting empty, converting underused commercial space into multifamily housing is an innovative, tangible, and sensible solution that will also address housing affordability, which is currently at a historic low.
“Even relatively modest steps will reduce the under-building gap while unleashing tremendous economic activity into our communities, creating millions of new jobs, and igniting economic growth where it is needed most,” Kasper adds.
Photo: Donghun Shin