The Biden administration announced a set of moves to tackle housing affordability on Thursday, with administrative moves to add 100,000 affordable homes in the next three years, and a powerful reminder that the American Jobs Plan would help the housing crisis in a much bigger way.
Housing supply has fallen behind population growth for 40 years, leaving a home shortage that stands around 3.8 million and rental vacancy rates at their lowest level in 35 years. Nearly half of all renters pay more than the 30% considered affordable. Given those and other facts, the administration acknowledged, “There is no magic formula to quickly relieve the supply constraints.” But this is a start.
Right now, the Department of Housing and Urban Development and Fannie Mae and Freddie Mac have under their control thousands of houses that have been foreclosed on. The Biden administration is taking steps to make sure those houses go to owner-occupants or to nonprofits that will get them to owner-occupants, rather than to investors. Fannie Mae and Freddie Mac will also broaden the types of homes for which they purchase mortgages to include single-wide manufactured homes (this authorization goes to Freddie Mac after Fannie Mae already got it in 2020) and to expand the mortgages available for owner-occupants buying two to four unit properties.
Fannie Mae and Freddie Mac will also expand access to a tax credit for builders of affordable rental units, while grants and affordable financing will encourage more construction of affordable housing.
Those changes only add 100,000 affordable homes over the next three years, though. For more, Congress needs to act. With Biden’s American Jobs Plan, nearly two million affordable housing units could be added, through constructing or rehabilitating affordable rental housing with federal subsidies and creating incentives for “the removal of exclusionary zoning and harmful land use policies.”
What does “harmful land use policies” mean? The White House offers an example: “For example, while the greater Los Angeles area, which is experiencing a housing crisis that disproportionately affects people of color, currently has 84 golf courses (including eight municipal courses in Los Angeles proper) occupying an estimated 10,000 acres of land, a single 200-acre course could potentially provide housing for 50,000 people.”
Beyond those proposals, “the Administration proposes a tax credit subsidy for building and rehabilitating homes for low- to middle-income homeowners living in economically vulnerable communities.” That move would help reduce racial inequality, because, “Given racial disparities in home values, this proposal advances the Administration’s agenda on racial equity by boosting home values in economically distressed communities, which are disproportionately inhabited by people of color.”
Earlier in the summer, the Biden administration kicked off an effort to reduce racial housing discrimination—but that’s an effort that would have a lot more punch if there was more affordable housing available for people who were denied the generational wealth so many white families built by buying affordable houses not available to Black and brown people decades ago.
A recent investigative report by The Markup suggests another angle for fighting discrimination: “Holding 17 different factors steady in a complex statistical analysis of more than 2 million conventional mortgage applications for home purchases, we found that lenders were 40% more likely to turn down Latino applicants for loans, 50% more likely to deny Asian/Pacific Islander applicants, and 70% more likely to deny Native American applicants than similar white applicants. Lenders were 80% more likely to reject Black applicants than similar white applicants. These are national rates.”
These decisions are being driven in part by algorithms that have been touted as bringing more equity to mortgage decisions—yet turn out to systematically discriminate against people of color. And some of the most important algorithms are coming from … Fannie Mae and Freddie Mac, the former of which suddenly announced a change to its approval system just as The Markup was asking questions. This important investigation should become a focus of administration investigation and action.
Once again, President Biden is trying to tackle a problem that’s been decades in the making. It will be slow. Without Congress, it can’t be enough. But it’s better than nothing.
Housing supply has fallen behind population growth for 40 years, leaving a home shortage that stands around 3.8 million and rental vacancy rates at their lowest level in 35 years. Nearly half of all renters pay more than the 30% considered affordable. Given those and other facts, the administration acknowledged, “There is no magic formula to quickly relieve the supply constraints.” But this is a start.
Right now, the Department of Housing and Urban Development and Fannie Mae and Freddie Mac have under their control thousands of houses that have been foreclosed on. The Biden administration is taking steps to make sure those houses go to owner-occupants or to nonprofits that will get them to owner-occupants, rather than to investors. Fannie Mae and Freddie Mac will also broaden the types of homes for which they purchase mortgages to include single-wide manufactured homes (this authorization goes to Freddie Mac after Fannie Mae already got it in 2020) and to expand the mortgages available for owner-occupants buying two to four unit properties.
Fannie Mae and Freddie Mac will also expand access to a tax credit for builders of affordable rental units, while grants and affordable financing will encourage more construction of affordable housing.
Those changes only add 100,000 affordable homes over the next three years, though. For more, Congress needs to act. With Biden’s American Jobs Plan, nearly two million affordable housing units could be added, through constructing or rehabilitating affordable rental housing with federal subsidies and creating incentives for “the removal of exclusionary zoning and harmful land use policies.”
What does “harmful land use policies” mean? The White House offers an example: “For example, while the greater Los Angeles area, which is experiencing a housing crisis that disproportionately affects people of color, currently has 84 golf courses (including eight municipal courses in Los Angeles proper) occupying an estimated 10,000 acres of land, a single 200-acre course could potentially provide housing for 50,000 people.”
Beyond those proposals, “the Administration proposes a tax credit subsidy for building and rehabilitating homes for low- to middle-income homeowners living in economically vulnerable communities.” That move would help reduce racial inequality, because, “Given racial disparities in home values, this proposal advances the Administration’s agenda on racial equity by boosting home values in economically distressed communities, which are disproportionately inhabited by people of color.”
Earlier in the summer, the Biden administration kicked off an effort to reduce racial housing discrimination—but that’s an effort that would have a lot more punch if there was more affordable housing available for people who were denied the generational wealth so many white families built by buying affordable houses not available to Black and brown people decades ago.
A recent investigative report by The Markup suggests another angle for fighting discrimination: “Holding 17 different factors steady in a complex statistical analysis of more than 2 million conventional mortgage applications for home purchases, we found that lenders were 40% more likely to turn down Latino applicants for loans, 50% more likely to deny Asian/Pacific Islander applicants, and 70% more likely to deny Native American applicants than similar white applicants. Lenders were 80% more likely to reject Black applicants than similar white applicants. These are national rates.”
These decisions are being driven in part by algorithms that have been touted as bringing more equity to mortgage decisions—yet turn out to systematically discriminate against people of color. And some of the most important algorithms are coming from … Fannie Mae and Freddie Mac, the former of which suddenly announced a change to its approval system just as The Markup was asking questions. This important investigation should become a focus of administration investigation and action.
Once again, President Biden is trying to tackle a problem that’s been decades in the making. It will be slow. Without Congress, it can’t be enough. But it’s better than nothing.