Biden unveils his answer to high home prices

President targets supply shortage, exclusionary zoning

President Joe Biden (Getty, iStock)
President Joe Biden (Getty, iStock)

President Biden laid out a plan Monday aimed at closing the housing shortfall across the U.S..

Doing so will be an uphill battle: The administration’s previous affordable housing proposals floundered under the failed Build Back Better reconciliation bill. Still, housing advocates reacted enthusiastically.

“In my 25 years in this business, we haven’t had this level of focus on housing from the White House,” said Alanna McCargo, president of Ginnie Mae, on Monday at a capital markets conference hosted by the Mortgage Bankers Association.

In a press release, the administration highlighted a 2021 Moody’s estimate that the nation is more than 1.5 million houses short, though a study put the number at north of 5 million.

The president’s new plan seeks to ramp up housing construction by increasing federal funding options for accessory dwelling units, modular homes and manufactured houses, as well as using transportation grants to reward jurisdictions that encourage density. That could mean cities and states that resist new housing will be rejected for road-project funding that was once routinely approved.

The plan recycles several proposals from the reconciliation bill, including a $1.75 billion grant program for localities that enact zoning or policies that “reduce barriers to housing supply elasticity and affordability,” and an expansion of the Low-Income Housing Tax Credit program.

The National Low-Income Housing Coalition commended the president’s proposals, but also emphasized the importance of Congress moving forward with housing investments proposed in the reconciliation bill.

“Only through a combination of administrative action and robust federal funding can the country truly resolve its affordable housing crisis,” Diane Yentel, the group’s president and CEO, said in a statement.

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The U.S. House of Representatives approved the $2 trillion Build Back Better bill in November, but the Senate has not agreed to a version of the measure.

Biden framed his latest housing proposals as a way to combat inflation: boosting housing supply to drive down housing costs.

Other recent initiatives have aimed at deterring large investors from scooping up single-family homes. The Federal Housing Administration recently extended to 30 days the period in which owner-occupants and nonprofits get the first opportunity to bid on properties sold through foreclosures on federally-backed mortgages.

The plan looks to Ginnie Mae to securitize affordable housing financing including Title I loans, which helps explain McCargo’s positive reaction. But she was hardly alone.

Jolie Milstein, president and chief executive officer of the New York State Association for Affordable Housing, echoed excitement that the administration appears committed to ambitious housing policies.

Milstein noted that the proposal to reward jurisdictions for pro-housing land use policies was an important recognition that city and state governments are crucial to ramping up housing supply.

“We need to build more. Small incremental additions are not going to change the calculus,” she said. “It is going to take an all hands on deck approach.”

Orion Jones contributed reporting.