The Biden administration recently released a proposed $5.8 Trillion budget for the fiscal year 2023. President Biden mentioned that the funding proposals reflect his administration’s priorities when speaking of the budget.
“Budgets are statements of values, and the budget I am releasing today sends a clear message that we value fiscal responsibility, safety and security at home and around the world, and the investments needed to continue our equitable growth and build a better America,” Biden said in a statement on the budget’s release.
Taking Biden’s statements at face value, it’s clear that addressing the growing affordable housing crisis is a major priority for the administration. According to the National Association of Realtors, homes appreciated 14.6% from Q4 2020 to Q4 2021, mainly due to a supply shortage and the unprecedented demand fueled by the pandemic and historically low interest rates. RealtyHop’s 2021 Year in Review also discovered similar trends, where the nationwide median home price went up 14% in 2021.
HUD Secretary Marcia Fudge said in a statement, “this Budget tells the American people that the President, and our agency, view housing as a foundational platform to help address the most urgent challenges facing our nation.”
To address the affordable housing crisis, the budget proposal includes a 19% funding increase for the Department of Housing and Urban Development (HUD). HUD would have a $71.9 billion budget if Congress approves the funding proposal. The proposed budget would address several issues, including rent assistance, racial inequity in housing, and the affordable housing shortage.
The budget proposal would allocate $32.1 billion, $6.4 billion more than the previous year, for HUD’s rental voucher program, aiding an additional 200,000 low-income families with their rental payments. The money would also bolster emergency renter funding for tenants who need rental assistance due to an emergency, such as missing work due to an accident or illness.
The HUD budget would also set aside nearly $2 billion, around a $600 million increase, for the production of affordable rental homes. The funds would, in part, build 2,000 new affordable housing units for the elderly and disabled. Homeownership programs for renters of affordable housing would also be available. HUD will additionally increase tax credits to incentivize developers to build more affordable housing for low-income and moderate-income renters.
The HUD budget earmarks $3.576 billion for assistance to the homeless, $363 million more than the previous year. The money would fund the Continuum of Care program, which helps cover rent payments for homeless individuals moving into housing. The money also funds programs for shelters, outreach, rapid rehousing, and homelessness prevention.
The proposed budget will also allow the Federal Housing Administration to back loans for low-income borrowers and provide money for down payment assistance pilot programs for first-generation homebuyers.
The budget will provide financial assistance to millions of American renters and prospective homebuyers who live paycheck to paycheck. However, it does little to alleviate America’s growing housing supply shortage. A 2021 National Association of Realtors study found that the U.S. housing market has a shortage of 5.5 million homes.
The study concludes that the U.S. will have to build a record 2.1 million homes each year for a decade to make up for the current supply deficit.