Biden administration unveils action plan

The Biden administration announced an action plan Monday aimed at boosting the supply of affordable housing amid rising home prices and overall high inflation.

Taken together, administration officials said, the actions announced will help close the affordable housing gap and “ease the burden of housing costs,” noting that housing prices are a key driver of inflation.

The move is the latest step by the administration to show it is working to get a handle on high prices nationwide. U.S. home prices continued to surge higher in February, according to the most recent data from the S&P CoreLogic Case-Shiller U.S. National Home Price Index. Prices rose 19.8% year-over-year in February, an even higher rate than the 19.2% growth seen in January. Meanwhile, rents are up nearly 20% from two years ago.

President Joe Biden said last week tackling inflation is a top domestic priority for his administration. He attacked Republicans for a plan put out by the head of the Senate GOP’s campaign arm rather than laying out any new proposals to combat the worst inflation the country has seen in 40 years.

Among the new policies announced Monday are steps to leverage existing federal funding to encourage state and local reforms to zoning and land-use policies, a senior administration official told reporters, via funding from the bipartisan infrastructure law and the Department of Transportation. A second official noted that the administration will take steps to improve federal financing mechanisms for manufactured housing, multifamily housing, and the construction and rehabilitation of single-family homes.

There are also steps to finance or produce more manufactured housing, accessory dwelling units — also known as garage apartments, basement apartments or backyard homes — 2-4 unit properties and smaller multifamily buildings, according to a White House fact sheet.

The administration also will direct supply of affordable housing for owner-occupants, which the second administration official said is aimed at addressing “the growing trend of large institutional investor purchases of single family homes.”

Housing advocates applauded the administration’s plan.

But while housing experts said the actions were welcome and necessary, they cautioned this would not be a quick fix. In addition, they said, while some actions can be taken on their own many of the recommendations require congressional approval, which may prove difficult.

Record low interest rates coupled with more than a decade of under building created a supply and demand mismatch that has pushed home prices higher. Now the Federal Reserve is working to stem inflation by raising interest rates, which may reduce demand but will also make the cost of buying a home even more expensive.

For nearly eight million households with extremely low incomes, housing consumes at least half of their limited monthly budget, according to the NLIHC. Affordable homes that may have been out of reach for these households even before the pandemic are even more scarce now.