As renters and would-be homeowners struggle with high housing costs, the Biden administration has announced policies to address the strain on household budgets.
This includes $100 million for a program to encourage affordable housing construction and streamline loan application processes to lend a hand speed the construction of more housing units.
Some of those proposals — such as limiting rent increases by corporate landlords — require congressional action, while others are rules and subsidies that can be implemented without legislative approval. The U.S. Department of Housing and Urban Development also will finalize regulations that would allow different types of housing, such as duplexes and triplexes, to be built in compliance with the agency’s manufacturing and safety standards.
The Biden administration and Harris campaign are making their housing policy known to Americans, as Vice President Kamala Harris and former President Donald Trump compete for voters’ trust on economic issues. The August Financial Times/Michigan Ross poll can be seen that Harris is slightly ahead of Trump in who voters trust more on the economy, by 1 percentage point. While that’s a very petite margin, it’s a change from July, when 35% of voters approved of President Joe Biden’s job performance on the economy compared with 41% for Trump.
Plans include reducing bureaucracy, but housing stock is still petite
The administration’s plans to address supply and rising prices also include reusing federal lands in Nevada and limiting rent increases from corporate landlords, which would require action by Congress. Housing and homelessness experts say many of these changes are positive, particularly the zoning changes, while others say several of the actions fall tiny of the current crisis.
On Friday, Vice President Kamala Harris announced her plans to augment housing affordability if she wins the presidential election. Harris’s plans are similar to some of the Biden administration’s approaches to housing policy, with a focus on preventing corporate landlords from raising rents and eliminating local zoning barriers that make it challenging to build affordable housing. She also announced a policy to provide up to $25,000 in financial assistance to first-time homebuyers if they pay their rent on time for two years.
“We will break down barriers and cut red tape, including at the state and local levels, and by the end of my first term, we will end America’s housing shortage by building 3 million new homes and rental units affordable to the middle class,” Harris said Friday at a campaign event in Raleigh, North Carolina.
Indivar Dutta-Gupta, a policy research and seminar fellow at Georgetown University’s McCourt School of Public Policy, praised efforts to make it easier and cheaper to build affordable housing through the Pathways to Removing Obstacles to Housing program, which provides funding to communities that remove barriers such as “outdated” zoning policies and “lack of amenities in the area.”
“It’s very difficult for a builder to just copy and paste their plans from one community to another. Second, we’re not just talking about special permitting and land use requirements, which are tedious,” he said. “They take a lot of time and dramatically increase the cost of housing, so if you can break down the 12- to 6-month process, that can make a big difference in housing affordability.”
Kenneth Chilton, a professor of public administration at Tennessee State University, said homes are certainly being built — but there aren’t enough affordable homes in the $100,000 to $300,000 range where he lives in Nashville. Wages haven’t kept up with those prices, he added.
“The market is skewing more toward wealthier households, so new homes are being built, but they are million-dollar and up homes for people who can afford or are willing to put on the financial burden to afford a million-dollar home,” he said. “… It’s getting harder to afford the discretionary income needed to save for a down payment.”
The Biden administration and Congress have also recently put a greater focus on corporate landlords who are influencing the housing market. Dutta-Gupta and Chilton said that even in situations where they make up a smaller percentage of property owners, their practices are affecting other landlords and driving up rents. Chilton, who has studied how companies that can quickly seize all kinds of properties can affect regional housing markets, said it’s demanding for the average homeowner to compete.
“You have a lot more corporations and investors buying homes,” he said. “Some of them are institutional, but there have been reports recently that even smaller local landlords are adopting the same business practices, like annual leases with cost-of-living adjustments built in. They’re operating like corporate landlords.”
He said none of the Biden administration proposals he has seen addressed potential homebuyers who must apply for loans, unable to compete with groups and investors who make cash purchases without background checks. Democratic lawmakers have introduced legislation A bill was introduced in Congress to limit the power of corporate real estate owners, but it was not passed.
Dutta-Gupta said the Biden administration’s latest efforts are allocating “significant amounts” to targeting affordable housing through grant opportunities, even though they likely fall tiny of demand. He said he’s also encouraged that the U.S. Department of Transportation is making sure its discretionary infrastructure grants prioritize communities with more “pro-housing policies” to give localities more incentive to favor affordable housing. But he said the administration needs to make sure it effectively communicates that through outreach.
“There’s going to have to be a significant effort to explain to communities that there’s a new preference, and in doing so, those communities could potentially be in that preference category,” he said. “You don’t want to just let them know there’s a preference and then there’s no change in behavior.”
Although Trump spoke about mortgage interest rates He didn’t offer much detail on housing policy during his campaign. The Federal Reserve’s federal funds rate affects mortgage rates, and Trump has he said president should ‘at least have a say’ in Fed policy Republican Party for 2024 platform also includes a section on housing affordability that mentions tax incentives intended to “promote homeownership,” allowing recent homes to be built on certain federal lands and easing regulations that “raise housing costs.”
The challenge of maintaining housing
Given the challenges of building a supply of more affordable housing, the National Alliance to End Homelessness would like to see a broader policy approach to prevent more people from becoming homeless. Homelessness is set to reach a record high in 2023.
While the Biden administration has taken steps to expand access to housing for groups at particular risk of homelessness, such as veterans and survivors of intimate partner violence, Steve Berg, policy director at the National Alliance to End Homelessness, would like to see a more universal approach, such as housing vouchers that meet the scale of need. He said targeted emergency assistance combined with eviction moratoriums in places where homelessness is particularly high and growing rapidly, would also be effective in reaching those who need it most.
“The eviction moratorium combined with subsidies for landlords to help people who are behind on rent have proven to be very effective interventions,” Berg said of earlier pandemic policies aimed at getting people into housing.
Why Political Leaders Focus on Housing
The Federal Reserve signaled it was close to cutting key interest rates as inflation slowed and the housing market began to grow frosty down in response to high mortgage rates. The Fed began raising rates in 2022 and increased them 11 times by the end of 2023, putting pressure on the housing market at a time of powerful demand for housing and a shortage of affordable homes.
In May, rent growth in the US was up 3.2% year, the largest augment in more than a year, according to CoreLogic data on family housing rents. Housing affordability is also closely linked to homelessness. From 2019 to 2023, the number of people who had to go to homeless shelters for the first time increased by more than 23%According to the 2024 report by the National Alliance to End Homelessness,
“The Federal Reserve is primarily slowing the economy by making it more steep to build homes and borrow money in general. People are certainly feeling the higher cost of housing right now because of higher interest rates, so it’s time [of the policies] “It may be a lucky coincidence,” Dutta-Gupta said.
