Home » Blog » Market Updates » New White House Plan to Address Housing Shortage

New White House Plan to Address Housing Shortage

Share on facebook
Share
Share on twitter
Tweet
Share on linkedin
Share
Share on email
Email

As President Biden’s trillion-dollar infrastructure package, including the Neighborhood Homes Tax Credit, is being hammered out by Congress, the administration has recently outlined additional steps to address the shortage of affordable housing in this country.

Key to a new White House housing proposal is a plan to build and preserve 100,000 homes for low-income renters and homebuyers over the next three years. The initiative will limit the number of homes sold to large investors, who have been blamed for buying up single-family homes and converting them into rentals—hindering supply and driving up pricing. 

“One out of every six homes purchased in the second quarter of 2021 was acquired by investors, and reports indicate that in some markets, that number is one in four,” according to the White House statement. “Within investor purchases, typically more than 35% of purchases are made by investors that own more than 10 properties.”

According to the brief, “President Biden is committed to using every tool available in government to produce more affordable housing supply as quickly as possible, and to make supply available to families in need of affordable, quality housing – rather than to large investors.”

Unpacking the Plan – 4 Key Strategies

1. Raise Low-Cost Capital for Affordable Housing Development

Relaunch a partnership between the Treasury’s Federal Financing Bank and HUD’s Department of Risk Sharing Program to allow eligible state housing finance agencies to fund affordable housing development.

2. Boost Construction and Supply of Rental Housing

Expand financing by increasing Fannie Mae and Freddie Mac’s Low-Income Housing Tax Credit (the nation’s largest federal program for the construction and rehab of affordable rental housing) to $1.7 billion per year along with expansion of a competitive grant program through the Treasury’s Community Development Financial Institutions to encourage affordable housing production.

3. Limit Investor Purchases of HUD and FHA Homes

Make more single-family homes available to eligible individuals, families, and nonprofit organizations – rather than large investors by prioritizing homeownership and limiting the sale to large investors of certain FHA-insured and HUD-owned properties. Create exclusive bidding timeframes for qualified government entities, owner-occupants, and qualified nonprofits.

4. Leverage Federal Funds to Spur Local Action

Partner with state and local governments to fully utilize available federal funding for existing block grants and identify ways to reduce exclusionary zoning. 

The Industry Response

“It is important that the plan includes tangible policies to incentivize new residential construction,” responded National Association of Home Builders (NAHB) chairman Chuck Fowke. “We look forward to working with the administration in the effort to boost the supply of affordable rental housing and single-family housing for America’s hard-working families.”

The National Association of Realtors (NAR) also responded favorably to the news but notes that there is more work to be done. 

“The administration’s plan to make available 100,000 new homes is just a small fraction of the roughly 6 million units needed to fill the gap in housing supply. The current state of the market does not afford many Americans from low- and middle-income households the opportunity to purchase and own a home and continues to hold back the true potential of our market and our overall economy,” said NAR president Charlie Opper.

Creating Opportunity. New Western.

The current conditions make the aged housing inventory New Western delivers an exceptional opportunity for investors to help revitalize our communities and expand homeownership opportunities. With the administration’s tax credit continuing to advance through Congress, it’s an even more appealing proposition for real estate investors.

As the largest private source of distressed properties in the nation, New Western is uniquely poised to help investors identify qualified properties to meet their goals and help positively impact neighborhoods across the country. Contact us today and see how we can help you find the right deal for your investment strategy.

You May Also Like

Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.