By The White House | Created at 2024-12-05 19:51:39 | Updated at 2024-12-22 10:58:17
2 weeks ago
As Prepared for Delivery at the Novogradac Housing Finance Conference
We are at a critically important moment for housing policy.
Housing is less affordable for Americans now than at any point in recent memory. Approximately half of renters are cost-burdened and a quarter are severely cost-burdened, meaning they must devote over half of their income to rent. Renters report that homeownership – long seen as the main source of wealth building for the middle-class – feels unattainable.
Much has been made of why various measures of economic sentiment remain at low or moderate levels in light of a macroeconomy that has performed so well – with robust growth, low unemployment, and an inflation rate that is nearly back to normal. I suspect that the housing situation facing middle- and low-income households is likely one of the more significant reasons.
How did we get here? The combination of a missing decade of apartment construction and homebuilding after the Global Financial Crisis and a historic shift in housing demand after COVID led to a substantial mismatch between supply and demand that triggered unsustainable growth in rents and home prices. And bringing the housing market into better balance would still be insufficient for households earning the lowest incomes, as these households don’t earn enough income to afford market rents.
As we near the end of this presidential term, I’d like to focus today on the groundwork President Biden and Vice President Harris have laid to address housing affordability by increasing the supply of housing. Two and a half years ago, our Administration launched the Housing Supply Action Plan, an all-of-government effort to build and preserve more housing.
Today, I will discuss our work as part of that plan to break down barriers to housing, increase the flow of public and private capital into housing that is affordable, and promote innovation to lower costs. And I’ll highlight what I see as the opportunities ahead for state and local governments and the private sector to build on this work – even as it remains critical that Congress meet the moment to encourage more housing production and preservation.
Breaking Down Barriers to Housing
Land use, zoning, and permitting barriers have long constrained housing supply. Since the 1980s, housing prices have grown sixfold, while construction costs have quadrupled. Restrictive regulations at the state and local level have contributed to this dynamic and divergence.
That’s why the Administration’s plan began with federal action to incentivize state and local governments to reduce barriers to housing construction. Our Administration launched a first-of-its-kind grant program, which supports state and local governments in removing obstacles to affordable housing development, including awarding grants to 21 communities across the country that are taking steps like updating land use policies to increase density and by-right permitting, streamlining regulations, and increasing staffing to enable faster approvals. In addition, we incorporated zoning and land use reforms as selection criteria in more than $20 billion in competitive federal funds, including transportation dollars —meaning, if you have pro-housing policies in place, you are more likely to receive highly-sought after federal grant dollars.
The federal government also has an important role to play in reviewing its regulations and policies in a manner that promotes public health and safety, while seeking to make it easier to build and preserve housing. For example, our Administration waived certain environmental review requirements when commercial structures are being converted into housing.
Looking ahead, this moment calls for much more than just rhetoric of deregulation. We need to build a real coalition across the private sector, state and local leaders, and members of both parties in Washington that asks what more we can do through our policies, investments, and partnerships, to reward and encourage zoning, land use, and permitting reforms that make it easier, faster, and cheaper to build.
Increasing the Flow of Public and Private Capital into Housing that is Affordable
The second key area of focus in our Housing Supply Action Plan was mobilizing more public and private capital into building and preserving housing that is affordable for working families. This is an area where Congressional action is critical, as subsidy dollars are often needed to build and operate housing that is affordable for low-income households.
At the same time, part of making the case to Congress and to the private sector that more capital is needed is demonstrating that existing federal dollars can be used effectively, including to crowd in private investment. Since launching the plan, we finalized regulations to make it easier to use the Low-Income Housing Tax Credit for building mixed-income housing; indefinitely extended and expanded the Federal Financing Bank Risk Share program to channel more capital into projects and increase certainty for new construction; made it easier to layer funds from the American Rescue Plan, which represented the largest one-time housing block grant in U.S. history, with other sources of federal financing; and unlocked billions of dollars in low-cost lending authority at the Department of Transportation to finance housing near transit—a program that will close a deal on its first housing project in the coming days.
Another way governments can help increase the flow of private capital into housing that is affordable is by making under-utilized public land or buildings available for housing. For example, right here in Clark County, Nevada, our Administration recently announced the sale of 20 acres of public land for just $100 per acre that will be transformed into homes for working and middle-class families. And the United States Postal Service, which owns 8,500 facilities nationwide, is soon to announce a first-of-its-kind sale of surplus land to be repurposed as affordable housing – building on steps that the U.S. Forest Service has already taken to enable workforce housing in high-cost areas in the Mountain West.
Looking ahead, in addition to pressing for Congressional action, we must also consider what more the private sector can do in light of increasing housing needs across the income spectrum and significant preservation demands, with the aging of the housing stock and the upcoming expiration of affordability covenants for hundreds of thousands of homes. There is a growing recognition that building and preserving more housing is not just a social necessity—it is also an economic opportunity that, if structured properly, can improve outcomes like long-term affordability and housing quality, and earn attractive risk-adjusted returns.
I believe this recognition presents a critically important opportunity that shares some similarities with the push to mobilize private capital into the energy transition that began more than a decade ago. For example, if the private market, in partnership with state and local governments, can demonstrate how to operate quality, affordable workforce housing at scale, it could bring much-needed capital into meeting the housing needs of working families, begin to address housing challenges in high-opportunity areas, incentivize better policy and innovation, and provide policymakers with insights on how to improve existing housing subsidy programs.
Promoting Innovation to Lower Costs
A final area of focus in the Housing Supply Action Plan was action to encourage housing innovation and improve construction productivity in order to lower costs. This goal, while more long-term than the others I’ve discussed, has the potential to benefit renters and homebuyers, builders, developers, and manufacturers alike.
One key step our Administration has taken to encourage this kind of innovation is enabling more housing types – including duplexes, triplexes, and fourplexes – to be built under the HUD Code, a single code that enables offsite manufacturers to benefit from economies of scale because it does not require them to follow different codes in different states. Another example is the Build Back Better Regional Challenge, a grant competition that funded an R&D investment in mass timber for affordable housing, which aims to promote the use of scalable building materials.
Looking ahead, more can and should be done to create the conditions for innovation and productivity growth in multifamily construction in particular. This is an area where the private sector can contribute substantially, with dozens of firms now beginning to experiment with technologies like modular building, robotics, advanced manufacturing, and 3D printing. Efforts to mobilize more private capital into affordable and workforce housing should aim to leverage these technologies in a manner that enables each dollar to go further and faster.
Conclusion
There is no question that the housing challenges facing families across the country are immense. And, while bipartisan consensus is building on this issue, Congressional action is sorely needed. But I remain optimistic about what we can do together in the years ahead to tackle the challenge of housing affordability by building and preserving more housing.
This does not mean housing supply solutions alone are sufficient. We must also support the lowest-income households and promote fairness and competition – from prohibiting egregious rent increases when federal dollars are used to ensuring that algorithmic price fixing does not diminish the incentive for housing providers to compete on price and quality.
But we can’t begin to address the housing challenges facing workers, families, and communities, without a dedicated effort to build and preserve more housing at a scale we haven’t seen in decades. And I remain optimistic that the coming years can bring such an effort.
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