Published on November 11, 2021
Written by The Servion Group
Researchers at Freddie Mac estimate that the supply of homes in the U.S. is about 3.8 million units short of what is needed to meet demand. The shortage has been so severe for so long that housing prices are steadily rising faster than incomes, which makes it much harder for people to save for down payments.
The White House Council of Economic Advisors recently published an analysis of the affordability problem and outlined the Biden administration’s plans to tackle it. Specifically, the plan is aimed at creating an additional 100,000 affordable homes over the next three years. To accomplish this, the administration plans to:
While this plan is designed to create 100,000 affordable homes, the administration also estimates that its overall economic agenda would lead to the construction and renovation of 2 million additional homes. This would be accomplished through the low-income housing tax credit, a proposed new tax credit for construction in economically vulnerable neighborhoods, and incentivizing local governments to remove exclusionary zoning policies that limit housing construction.
Acknowledging that there are no quick fixes to the affordability situation, the Council’s announcement concluded by saying, “There is no magic formula to quickly relieve the supply constraints.”
The Mortgage Bankers Association issued a statement supporting the plan: “MBA strongly supports efforts to increase the housing supply by encouraging the construction and rehabilitation of affordable apartments and homes for renters and first-time buyers.”