San Diego Union-Tribune (Sunday)
BIDEN AND HOUSING
The president-elect has proposed policies aimed at helping low-income renters, first-time homebuyers and the homeless
Joe Biden backs policies for low-income renters, first-time homebuyers and the homeless.
President-elect Joe Biden has detailed plans to help low-income renters and first-time homebuyers that could make a difference for many Californians who face some of the highest home and rent prices in the nation.
His progressive agenda was released before the election and there is no guarantee it will pass. The new president likely faces a divided Congress that could slow, or deny, approval of his housing strategy.
Biden’s proposals, detailed on his campaign website, include new tenant protection, down payment assistance, community integration proposals and expansion of low-income housing credits.
Redfin economist Taylor Marr said homeowners have mainly benefited from policies and tax reforms during the Trump years. He said the new president’s propositions would strike a different tone.
“It’s a whole suite of policies designed to move the balance slightly more in favor of renters,” Marr said.
Biden said his housing plan will cost $640 billion over 10 years and be paid for by raising taxes on corporations and large financial institutions.
In general, many of the policies included in his plan include elimination of discrimination for minorities and members of the LGBTQ community in renting and homebuying.
Some of the examples include building subsidized housing in underserved communities, ensuring Black and Latino families benefit from investment in housing construction and repair, a variety of tax incentives for building in underserved communities and restoring power to the Consumer Financial Protection Bureau (removed by the Trump administration) to enforce settlements against lenders found to have discriminated against borrowers.
Expansion of Section 8
Section 8 rent vouchers are used throughout much of California for its poorest residents. In San Diego, about 16,000 households receive Section 8 funds every year at the cost of $150 mil
“The fact we have a leader that will actually lead and tackle coronavirus, it’s going to translate to consumer conf idence and lead to people feeling better about home purchases and their economic position in life.” Nathan Moeder • principal with real estate analysts London Moeder Advisors
lion. But, there are 80,000 households on the waiting list.
“The program is woefully underfunded,” said Rick Gentry, CEO of the San Diego Housing Commission, which administers the funds locally.
He said not everyone on the substantial waiting list has had their income vetted, but even if 25 percent of those people were kicked off because they had slightly higher earnings, it would still mean the eligible population is three to four times what they are actually serving.
The Biden plan cites a report from the Center on Budget and Policy Priorities that says around three in four households eligible for Section 8 do not receive assistance because the program needs more funding.
The Biden plan says it will fully fund the program but does not say by how much. He said over time that this program should provide assistance to at least 17 million low-income families.
His website said the increase in funding for Section 8 would be paired with a new law prohibiting landlords from discriminating against those receiving federal housing benefits.
The blame for Section 8 funds being lower than what housing advocates want is not tied to just the Trump administration. Gentry said a big shift came in the mid-1990s with slowed increases in funding by Congress. The program hasn’t been able to keep up with the need ever since.
“I think it is safe to say the increase of resources over the last 25 years has not reflected the increased need,” he said. “So there has been an effective reduction for the eligible population. I think expansion is warranted.”
Renter’s tax credit
For people making too much for Section 8, but who are still low-income, Biden proposes a low-income renter tax credit. He said the program will cost the federal government around $5 billion every tax year.
The credit is based on a policy idea from the Terner Center for Housing Innovation at UC Berkeley. Its proposal is similar to the earned income tax credit. The gist is households spending more than 30 percent of their income on rent and utilities would receive a tax credit when they file their tax return.
While this could likely benefit thousands of Americans, California may be a burden on the entire system. Studies often point out the Golden State has the highest housing costs in the nation. For example, a recent study by San Franciscobased Bungalow found five California cities were among the most expensive places to live based on annual incomes and the cost of living for renting and buying.
In order, it said the most expensive cities were San Francisco, New York, Oakland, Boston, Washington, D.C., San Jose, Seattle, Honolulu, Los Angeles and San Diego.
Gentry, who has worked all over the country in different housing roles, said just because housing costs are lower in many parts of the nation doesn’t mean low-income people in those areas are not spending as much of their income on rent as San Diegans.
Also, he said a lot of the people in San Diego who apply for aid are oftentimes people working multiple jobs to get by.
“It’s not just the very poor who are in abject needs every day,” Gentry said, “but you see working poor as well.”
Down payment assistance
Biden’s plan would give a $15,000 tax credit to help first-time homebuyers get a home. The credit would be available immediately, instead of having to wait for filing taxes.
There are parts of the country where that $15,000 might go a long way, but it might not be as impactful in San Diego County where home prices have gone up 14 percent in a year. The median home price was $650,000 in September.
Real estate agent Najla Wehbe Dipp said the money might not go as far in San Diego as it would in parts of Texas, but that it could still make a significant difference.
She cited Federal Housing Administration loans that require only 3 percent down, meaning the extra money could actually push someone on the fence to make their first purchase.
“$15,000 is 5 percent of a $300,000 condo,” Dipp said, “which is around the price for a condo in some areas of Chula Vista and San Ysidro.”
Housing construction
Trump did not detail a housing plan during his 2016 election campaign, but it was a hope of San Diego housing analysts after his election that he might spur more housing growth because of his background as a real estate developer. That didn’t happen, especially in San Diego County where annual housing production was flat, or dropped, over the last four years — despite a growing population.
There were 8,053 housing units (single-family homes, apartments, and condos) constructed in 2019, said the Real Estate Research Council of Southern California. That compares to 9,579 in 2018, 9,580 in 2017, 9,972 in 2016 and 9,975 in 2015.
Biden’s plan to increase housing is tied to his climate action plan that seeks to eliminate sprawl that increases commute times. He said he would tie new federal investments in housing to a requirement that states and localities eliminate regulations that reduce the availability of affordable housing and contribute to sprawl.
That could be a tall order for San Diego County, and much of California, which has some of the strongest growth control laws in the nation.
Nathan Moeder, principal with real estate analysts London Moeder Advisors, said the Biden plan sounds like it is mainly aimed at enticing developers to build more subsidized housing and would not likely make a difference with overall building.
Moeder said housing construction is regulated by the state and at the local level. So, it is very unlikely Biden’s plan will do anything to increase market-rate construction. However, Moeder said one way Biden’s victory might help the housing market stay strong is possibly making homebuyers and sellers more confident in the future.
“Now that Trump is out of office, or hopefully, we will see a renewed confidence in the housing market, compared to what we’ve had recently,” he said. “The fact we have a leader that will actually lead and tackle coronavirus, it’s going to translate to consumer confidence and lead to people feeling better about home purchases and their economic position in life.”
Subsidized housing is likely to get a boost, with Biden’s plans to increase the annual budget of the Lowincome Housing Tax Credit from $8 billion to $10 billion.
Homelessness
Biden said he would facilitate the creation of a national strategy for ending homelessness, which focuses on a housing first model.
The main idea is it would get away from many housing requirements that require homeless people to get sober first, or some other requirement, before getting a room.
The plan is based on Maxine Waters’ (D-los Angeles) Ending Homelessness Act, which spends $13 billion over five years for the creation of roughly 400,000 homes for homeless people and other homeless assistance grants.
Biden said he will direct the secretary of Housing and Urban Development to lead a task force of mayors and other elected officials to create a roadmap for tackling homelessness in the first 100 days of his administration.
Like many of Biden’s proposals, the push to add more money to combat homelessness may face resistance. A recent analysis of the president-elect’s housing plan by Lendingtree chief economist Tendayi Kapfidze said that if the Senate remains under Republican control, it could be difficult to implement.
“Biden’s proposals that would require congressional approval — tax credits, the creation of a credit reporting agency or the allocation of new money for housing programs — may be stalled due to partisan gridlock,” he wrote.