The Biden Administration recently released a plan to address America’s housing shortage, a growing problem that contributed to skyrocketing home prices over the last two years. According to a 2021 study from the National Association of Realtors (NAR), the U.S. has a massive housing shortage of up to 6.8 million units. The housing shortage has worsened affordability across the country, including in major markets such as Miami, with over 80% of median household income required to own a home. This housing shortage, according to NAR, would take ten consecutive years of record construction to correct, but the Biden Administration hopes to correct the current housing deficit in five years.
“This shortfall [of affordable homes] burdens family budgets, drives up inflation, limits economic growth, maintains residential segregation, and exacerbates climate change,” Biden said in a statement. “Rising housing costs have burdened families of all incomes, with a particular impact on low- and moderate-income families, and people and communities of color.”
The plan’s press release notes that the current housing deficit is decades in the making and will take proactive planning to address. The administration’s plan, if passed, will work to address the current housing shortage and affordability crisis through several methods. Supply chain disruptions are a concern, so the administration hopes to work with developers and supply providers to complete the highest number of housing units this year since 2006.
The plan would incentivize housing-friendly, denser development by rewarding municipalities with higher scores in certain federal grant processes. This means that cities, counties, and states that utilize their zoning laws to aggressively tackle the current housing shortage may receive a financial incentive or reward. Biden’s plan would leverage more than $6 billion in federal transportation funding.
The plan also calls for using new ways of constructing and preserving housing. Financing can include cost-effective ways of constructing housing, such as manufactured homes, 2-4 unit properties or smaller multifamily buildings, or accessory dwelling units (ADUs). ADUs are small housing units, usually a studio or one-bedroom, located on a portion of a homeowner’s property or backyard.
To incentivize further affordable housing development, the plan calls for expanding existing forms of federal financing, which would require greater financial investment from the federal government. Government-owned housing should also go to individual homeowners or non-profits for rehab, instead of larger institutional investors or developers.
A National Review article from Howard Husock argued that Biden’s housing plan would only make the situation worse and more expensive, as the federal subsidies and incentives won’t work in his view. According to Husock, “the administration’s most significant near-term change in housing policy, not mentioned in the action plan, will make matters worse — leading to a sad combination of inflation and government dependency.”
Other experts were more supportive of the Biden administration’s plan but agreed that ithttps://www.realtyhop.com/blog/wp-content/uploads/2022/05/sacramento-1.jpg isn’t a complete answer to the problem.
“As rents rise, homelessness increases, public housing deteriorates, and millions of families struggle to keep roofs over their heads, robust federal investments and actions are badly needed and long overdue,” Diane Yentel, CEO of the National Low Income Housing Coalition, said in a statement. “I commend President Biden for taking significant and decisive action, but the administration cannot solve the crisis on its own.”
