The White House announced plans Wednesday to make available nearly 100,000 affordable homes over the next three years, in an effort to tackle a housing supply shortage that has contributed to skyrocketing home prices.
The new policies would limit the sale of the new homes to individuals and nonprofits rather than investors who bought one of every six homes sold in the second quarter, according to the White House. The plans — designed to boost construction in urban and rural areas — would be implemented by the Treasury Department, the Department of Housing and Urban Development and the Federal Housing Finance Agency, which regulates government-controlled mortgage giants Fannie Mae and Freddie Mac.
While President Joe Biden has already pushed for hundreds of billions of dollars in new housing spending as part of the $3.5 trillion package Congress is considering, “the president knows that we can’t wait to take action,” the White House said Wednesday.
The scope of the plan is modest compared to industry estimates of how many new homes are needed to meet demand. The White House is aiming to make available 100,000 new homes, while a recent study released by the National Association of Realtors found home supply is lagging by between 5.5 million and 6.8 million units.
Treasury and HUD would revive a joint risk-sharing program that lapsed in 2019 to give state housing finance agencies the ability to provide more low-cost capital for affordable housing developments. Fannie Mae and Freddie Mac, which stand behind about half of the residential mortgage market, would be allowed to expand their investments in multifamily properties financed with the Low Income Housing Tax Credit. Community Development Financial Institutions and housing nonprofits would be able to access more funds under the Capital Magnet Fund to produce more affordable housing.
Policymakers have fretted for years about a housing supply shortage that has put homeownership out of reach for millions of Americans. The U.S. housing stock grew by an annual average rate of 1 percent in the last two decades, down from 1.7 percent from 1968 through 2000, according to a June report commissioned and released by the National Association of Realtors.
Home prices continued to soar during the pandemic, even as much of the rest of the economy sputtered. And they show no sign of slowing down: Home prices rose 18.6 percent in June compared to a year earlier, according to the S&P CoreLogic Case-Shiller national home price index — the highest annual rate since the index began in 1987.
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