Last week, the Biden administration unveiled a multi-pronged proposal for federal agencies to address the lack of housing inventory, ahead of action from Congress.
While the announcements didn’t include any major new programs, federal agencies will restart programs that previously lapsed, such as the U.S. Treasury and the Department of Housing and Urban Development’s risk-based sharing program, and increase funding to existing programs. The Federal Housing Finance Agency announced a significant increase — from $1 billion to $1.7 billion — in government sponsored enterprise investments in Low-Income Housing Tax Credit projects.
The mortgage industry and housing advocates were generally supportive of the modest measures. Many items the housing industry and affordable housing advocates are hoping for are still up in the air as Congress negotiates the infrastructure packages.
Bob Broeksmit, president of the Mortgage Bankers Association, said the trade association “strongly supports” efforts to increase supply by spurring construction and rehabilitation of homes for renters and first-time buyers.
But Broeksmit pointed out that bigger changes depend on Congress. Measures under consideration include a downpayment assistance program and a number of measures focused on rental housing.
“The lack of supply is a huge problem, and HUD and FHFA should do what they can administratively while Congress considers more significant initiatives,” said Broeksmit. “MBA looks forward to continuing to work with the administration, Congress, and all other stakeholders on ways to address supply constraints and ensure government programs appropriately complement private capital to help both renters and homeowners.”
The National Association of Realtors, which represents real estate agents, was also supportive of the efforts — especially those actions directed at preventing “corporate landlords” from buying up single-family homes. FHFA will extend the period owner occupants, public entities, and nonprofits have to buy Fannie Mae and Freddie Mac real estate owned properties before competing with investor bids.
“NAR applauds the administration’s new effort to address America’s housing supply crisis and to prevent the expansion of corporate landlords at the expense of homeownership,” said Charlie Oppler, president of NAR. “Distressed homeowners should have the opportunity to buy-back their homes, but if not, other worthy homeowners should receive next priority.”
But the trade association said that the Biden administration’s goal of creating or rehabbing 100,000 homes in three years “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 Oppler.
From the standpoint of affordable housing advocates, the Biden administration’s efforts were a good first step. But they’re hoping for much more substantive action.
Nikitra Bailey, the senior vice president of public policy at the National Fair Housing Alliance, said that while existing homeowners have gained $1 trillion in wealth, due to home-price increases, renters, disproportionately people of color, have not.
Those increases in wealth have “largely left most Black and Brown people further behind without the safety net that home equity provides to homeowners,” said Bailey. “Wealthier families have used their home equity to weather economic disruptions during the COVID-19 induced recession.”
Bailey argued that the federal government should work more closely with states to make sure minority homeowners are not tossed out, in the wake of a Supreme Court decision that overturned the latest Centers for Disease Control eviction moratorium.
While some of the actions — like expanded access to financing for manufactured housing — will take effect in the near term.
Some of the actions are more open-ended. While addressing exclusionary zoning — local regulations that discourage rental housing — may be a part of Congress’ infrastructure bill, federal agencies will at least start to look into the issue.
The FHFA said it will conduct a study on how much GSEs mortgage activity is concentrated in jurisdictions with exclusionary zoning policies. In addition to the demographic characteristics of homeowners of those loans, the study will gauge whether GSE purchases further or discourage restrictive zoning measures.
HUD also said it will be taking a look at exclusionary zoning, and would release its latest research on steps state and local governments are taking to remove regulatory barriers to affordable housing. Local zoning regulations often favor single-family residential development, and discourage multifamily and affordable housing development.
Salim Furth, a senior fellow at the Mercatus Center at George Mason University, which advocates for free-market based policies, said FHFA’s intention to study Fannie Mae and Freddie Mac’s contribution to exclusionary zoning stood out among the modest proposals.
“The Federal Housing Administration actively promoted residential segregation until 1950, and the federal tax code still subsidizes artificially high housing costs through the mortgage interest deduction,” said Furth. “It is high time to identify and rectify other areas where current federal policies contribute to exclusion and unaffordability.”