In an ambitious effort to tackle the soaring housing costs and affordability crisis affecting millions of Americans, President Joe Biden has outlined a comprehensive plan focused on expanding access to affordable housing for renters and homebuyers alike. Speaking at the Urban Institute, a leading research organization on housing, the President unveiled proposals aimed at reducing housing costs and building millions of additional homes to alleviate the current market pressures.
During his State of the Union Address, President Biden called upon Congress to back his plan for constructing 2 million extra homes, in a bid to lower expenses for renters, and make the housing market more accessible for first-time buyers and those looking to change their living situations. Additionally, the President announced new administrative measures destined to reduce closing costs and create fairer rental markets. A historic investment of $185 billion has been included in the President’s Fiscal Year 2025 budget, marking a significant commitment to improving the housing landscape while also aiming to decrease the deficit by taxing the wealthiest Americans more heavily.
The nation’s current housing challenges are rooted in a combination of factors, including a dramatic decline in residential construction following the Global Financial Crisis (GFC) and an unprecedented demand from the largest generation in American history entering the housing market. This mismatch between supply and demand has led to a significant increase in rental and home purchase prices, pushing the American dream of homeownership out of reach for many.
In response to these challenges, the Biden-Harris Administration has initiated several steps to increase housing construction, from enabling builders to access federal financing to proposing tax credits aimed at stimulating the market.
President Biden’s proposals aim to address immediate market challenges by:
- Encouraging Congress to pass a mortgage relief credit for first-time homebuyers, offering up to $10,000, which is expected to aid over 3.5 million middle-class families.
- Introducing a sellers’ tax credit to stimulate the inventory of starter homes, potentially benefiting nearly 3 million families.
- Launching efforts to lower closing costs through a Federal Housing Finance Agency pilot program and pursuing rulemaking to enhance competition on closing costs imposed by lenders.
The President has also underscored the importance of fostering a fair and affordable rental market, with measures including:
- Expanding rental assistance to low-income households through the Housing Choice Voucher program.
- Implementing actions to cap annual rent increases for Low Income Housing Tax Credit units, protecting 2 million households from steep rent hikes.
- Proposing new rules to eliminate misleading and excessive fees in rental agreements.
The cornerstone of President Biden’s strategy is a massive building initiative designed to narrow the housing supply gap and enhance affordability. This includes a significant expansion of the Low Income Housing Tax Credit (LIHTC) to produce or preserve 1.2 million affordable units over the next decade, alongside proposals for a new Innovation Fund for Housing Expansion and support for the construction or preservation of over 400,000 starter homes through the Neighborhood Homes Tax Credit.
“In the end, we have to build, build, build,” President Biden emphasized, outlining a vision that not only addresses immediate needs but lays the foundation for long-term, sustainable improvement in the nation’s housing infrastructure.
Engagement and further details on the administration’s efforts will be communicated directly from the White House, inviting Americans to be part of the transformative journey towards a more accessible and affordable housing market for all.