Biden Moves to Increase Housing Supply
Southland Regional Association of Realtors® As part of its Build Back Better agenda, the Biden Administration recently announced a series of initiatives intended to produce more affordable housing and extend a lifeline to households paying 50 percent or more of their income to keep a roof overhead. The following summarizes the announcement that came from the White House on Sept. 1 and some of the extensive measures multiple federal agencies will implement as they await action from Congress.
The large and long-standing gap between the supply and demand of affordable homes for both renters and homeowners makes it harder for families to buy their first home and drives up the cost of rent. Higher housing costs also crowd out other investments families can and should make to improve their lives, such as investments in education.
As supply constraints have intensified, large investors have stepped up their real estate purchases, including of single-family homes in urban and suburban areas.
One out of every six homes purchased in the second quarter of 2021 was acquired by investors, and reports indicate that in some markets, that number is one in four.
Within investor purchases, typically more than 35 percent of purchases are made by investors who own more than ten properties.
Large investor purchases of single-family homes and conversion into rental properties speeds the transition of neighborhoods from homeownership to rental and drives up home prices for lower cost homes, making it harder for aspiring firsttime and first-generation homebuyers, among others, to buy a home.
At the same, these purchases are unlikely to meaningfully boost supply in the lower-cost portions of the rental market, as investors charge more for rent to recoup higher purchase costs.
President Biden says he is committed to using every tool available in government to produce more affordable housing supply as quickly as possible, and to make supply available to families in need of affordable, quality housing — rather than to large investors.
The Administration announced a number of steps that will 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.
Specifically, federal agencies will:
• Boost the supply of quality, affordable rental units by relaunching the partnership between the Department of Treasury’s Federal Financing Bank and the Department of Housing and Urban Development Risk Sharing Program in order to enable eligible state housing finance agencies to provide low-cost capital for affordable housing development;
• Raising Fannie Mae’s and Freddie Mac’s equity cap for the Low-Income Housing Tax Credit, which is the largest federal program for the construction and rehabilitation of affordable rental housing;
• Making more funding available to Community Development Finance Institutions and non-profit housing groups for affordable housing production under the Capital Magnet Fund.
• Boost the supply of manufactured housing and 2-4 unit properties by expanding financing through Freddie Mac. Along with Fannie Mae’s and the Federal Housing Administration’s existing policies, these steps will enable more Americans to purchase homes, and increase the availability of rental units throughout the country.
• Make more single-family homes available to individuals, families, and nonprofit organizations — rather than large investors — by prioritizing homeownership and limiting the sale to large investors of certain FHAinsured and HUD-owned properties, in addition to expanding and creating exclusivity periods in which only governmental entities, owner occupants, and qualified non-profit organizations are able to bid on certain FHA-insured and governmentowned properties.
• Work with state and local governments to boost housing supply by leveraging existing federal
funds to spur local action, exploring federal levers to help states and local governments reduce exclusionary zoning, and launching learning and listening sessions with local leaders.
Even before the pandemic, 11 million families — or nearly a quarter of renters — paid more than half of their income on rent. President Biden believes this is unacceptable. Rent should be affordable for working families. The Southland Regional Association of Realtors® is a local trade association with more than 10,300 members serving the San Fernando and Santa Clarita Valleys.
SRAR is one of the largest local associations in the nation.
Even before the pandemic, 11 million families — or nearly a quarter of renters — paid more than half of their income on rent