The Biden administration announced this morning a sprawling package of housing related initiatives, largely pulled from the failed “Build Back Better” bill that fizzled in Congress last winter, promising to boost supply, preserve existing affordable housing and re-write regulations and federal incentive programs to expand construction opportunities across the nation.
The approximately 10-page outline is separated into what Biden is calling “immediate steps”—executive branch actions using existing funding—and other programs that will require congressional approval. Ranging from funding apprenticeship programs for skilled construction workers to restructuring loan and grant programs, the Biden administration is characterizing the plan as a roadmap to curb what has become a runaway crisis in affordability and housing supply.
“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,” stated Diane Yentel, president and CEO of the National Low Income Housing Coalition (NLIHC) in a statement.
“Taken together, these and many other initiatives represent the most comprehensive national housing policy we have seen in a generation,” said David Dworkin, president and CEO of the National Housing Conference, in a statement.
After an initial proposal of $300 billion to bolster the housing industry was pared back, then sunk along with the rest of Biden’s social spending bill, the administration was left scrambling to salvage portions of what was meant to be a landmark legislative package. Housing initiatives were widely supported in the industry after lobbyists successfully pushed to remove a handful of tax changes seen as detrimental to real estate professionals.
Much of this new roadmap is drawn directly from those proposals, including tax credits to rehab 125,000 homes for low and middle-income buyers, and the $10 billion “Unlocking Possibilities” program, which would create a competitive grant process for local governments that remove regulatory barriers to affordable housing—an issue that has particularly affected coastal markets.
While that program and many others will depend on congress getting behind Biden, a handful of steps outlined in the plan are being undertaken immediately through executive action. Most notably, the administration is pushing for Freddie Mac to begin moving toward backing mortgages for manufactured homes, which are largely financed by more expensive personal property loans. Freddie and Fannie will also expand programs to finance multifamily construction, and consider backing so-called “construction to permanent loans,” which allows a single loan to fund both a new construction and a mortgage.
The plan pushes to address supply chain disruptions, which have often been cited as one of the biggest short-term barriers for new construction, mostly through advocacy, saying that the Department of Housing and Urban Development (HUD) will highlight alternatives to traditional construction at an upcoming summit this summer, including 3-D printed materials. HUD and other agencies will “explore additional actions” after the administration previously removed tariffs on certain lumber shipments from Canada.
Additionally, a bipartisan spending package for $6 billion passed last year that focused on traditional infrastructure will also have its language tweaked to encourage local governments to reform land use policies and encourage housing production in order to qualify for grants. Biden is also urging local governments to use funds from the American Rescue Plan to create more affordable housing or preserve existing units.
Biden will also move forward with initiatives to direct housing supply toward owner-occupants and away from large investors, who are taking an increasing interest in residential real estate. Fannie, Freddie and the Federal Housing Administration (FHA) will extend the period REO properties are made available to non-profits and owner-occupants, and the FHA has created a new exclusive post-foreclosure time period for owner-occupants and nonprofits to purchase foreclosed properties.
Several of the programs announced will require some level of congressional approval, however, including the broader funding for 800,000 new rental and affordable housing construction through the Low Income Housing Tax Credit (LIHTC) and the “Unlocking Possibilities” program. As legislators have remained broadly deadlocked on many urgent issues affecting the country and upcoming midterm elections are likely to shift the balance of power in Washington, the fate of these programs remains uncertain.
“I commend President Biden for taking significant and decisive action, but the administration cannot solve the crisis on its own,” Yentel said. “Congress must also act with similar urgency and quickly enact Build Back Better’s transformative and badly needed housing investments. Only through a combination of administrative action and robust federal funding can the country truly resolve its affordable housing crisis.”
At first glance, leaders at the National Association of Homebuilders (NAHB) applauded the plan and its focus on housing production and addressing affordability issues plaguing the market. However, NAHB CEO Jerry Howard is concerned with how little the plan prioritizes efforts to help first-time home buyers.
“The ability of people to buy their first home really drives the entire housing market from the rental housing company all the way to the move-up buyers, and I am sort of disappointed to not see a whole lot there for first-time homebuyers,” Howard says.
If the federal government can get the funding appropriated and participation by Congress, Howard thinks that the plan will go a long way toward helping the low-income rental arena.
“We think it can be very helpful there and even helpful in some of the more close-to-market-rate rental housing,” he says.
Howard was cautiously optimistic about the plans to focus on manufactured housing, a sector he says has gotten much attention as a possible solution to the housing supply challenges in the market.
“Right now, manufactured housing and mobile homes certainly have a place in the market, but to think of them as the panacea for our housing supply shortage, I think, is a bit far-fetched,” Howard says. “The notion that manufactured and mobile homes are going to take the place of a traditional stick-built housing, which is what some people are concluding by looking at this plan, I think that’s pie in the sky.”
The announced plan has also caught the attention of the Mortgage Bankers Association (MBA), which recently commended the federal government’s efforts to mitigate the acute housing shortage.
“Eliminating the regulatory barriers to new construction, including manufactured housing, in underserved markets; expanding affordable financing for multifamily development and rehab projects; and a commitment to more private and public sector partnerships will help address the housing supply and affordability challenges that continue to burden families,” said MBA President and CEO Bob Broeksmit, CMB.
With aspects of the plan aimed at improving financing options, Broeksmit indicated that the association is also encouraging HUD to “focus on the issues that continue to lead to significant lending pipeline delays in its MAP program, which is a primary financing option for producing more affordable rental housing.”
“MBA will examine all aspects of the plan in greater detail and remain committed to working with the administration, Congress, and industry stakeholders on safe and responsible policies that increase homeownership opportunities and affordable rental housing options across America, especially for minority and low- and moderate-income households,” Broeksmit said.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news to jwilliams@rismedia.com.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to jgrice@rismedia.com.
