As the U.S. economy has rebounded from the pandemic, supply has not kept pace with surging demand in the housing market.
In a guest article on Treasury Secretary Janet Yellen's blog, U.S. Deputy Secretary of the Treasury Wally Adeyemo comments on yesterday's report from the National Association of Realtors entitled "Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing" as well as the general state of housing in America during a time when affordability and accessibility have become a significant problem.
"The signs of affordability we saw in mid-2020 have evaporated as gains in measures like the Housing Affordability Index have largely been erased in the intervening year," Adeyemo said.
He emphasizes the disparate impact of the housing lack on communities of color and low-income households (also stressed in this week's Harvard's Joint Center for Housing Studies 2021 report) and lays out efforts by the Biden-Harris administration to improve the situation for all Americans.
"The Biden Administration has worked hard to mitigate these pressures. We have put in place a number of programs and policies to keep families in their homes, including an extension of the moratoria on evictions and foreclosures; additional mortgage forbearance; and the American Rescue Plan’s roughly $22 billion Emergency Rental Assistance Program and $10 billion Homeowner Assistance Fund, which provide relief to struggling renters and homeowners, respectively," Adeyemo wrote, adding that "there is more we need to do to fully address the long-term structural problems driving the shortage of affordable housing."
He says Black Americans are especially likely to lose homes they own "because a history of discriminatory and abusive financial practices has weakened their ability to weather financial shocks like job losses, on top of the generations in which many were locked out of homeownership altogether."
He affirms that affordability was already a challenge before 2020, but says the pandemic has worsened the challenge for lower- and middle-income families, whether they are renting or buying.
Biden's housing policy is historic in its approach, he says, in that it focuses on supply constraints and the availability of affordable housing units and that it is driven by six key principles: affordability, stability, safety, equity, resiliency, and accessibility.
"It is important to expand the housing supply through tax incentives and subsidies, direct investments in high-quality public housing, and changes to exclusionary land-use policies that restrict housing construction where it is needed," noted the Deputy Secretary. "Moreover, creating additional housing units in line with these principles will create hundreds of thousands of good, union jobs, the majority of which will not require a college degree. These investments will create economic prosperity inclusive of local community members and create new employment opportunities, including for workers of color."
To follow through on the aforementioned principles, expand access to housing, and create good jobs for working Americans, he notes, the Biden-Harris Administration has put forward a robust housing agenda that falls into four main categories:
Offering tax credits to incentivize construction and rehabilitation of affordable housing; investing in affordable rental housing; revitalizing public housing; and incentivizing removal of exclusionary zoning policies.
According to Adeyemo, housing proposals in the American Jobs Plan will generate production or preservation of more than 2 million affordable housing units. He says federal investments will be augmented by private sector capital to further expand the supply of affordable housing, both from traditional real estate developers and from community-focused organizations like Community Development Financial Institutions and minority depository institutions.
CDFIs are receiving an influx of $12 billion in capital under the American Rescue Plan (as outlined by Secretary Yellen earlier this week). Those grants combined with other efforts will "maximize the impact of these policies and catalyze the new housing developments our country needs," noted the Deputy Secretary.
"This new housing will offer a pathway to financial stability for millions of families and help address the longstanding economic and racial disparities that for too long have been endemic in America’s housing system."
The full commentary from Deputy Secretary Adeyemo is available at [email protected].