As renters and prospective homeowners struggle with high housing costs, the Biden administration has announced measures to counteract this strain on household budgets.
This includes $100 million in funding for a program to encourage the construction of affordable housing and simplify loan application processes to speed up the construction of more housing.
Some of these proposals – such as a cap on rent increases by corporate landlords – require a vote in Congress, while others are regulations and grants that can be implemented without congressional approval. The U.S. Department of Housing and Urban Development will also finalize a rule that would allow the construction of various housing types, such as duplexes and triplexes, while meeting the agency’s manufacturing and safety standards.
The Biden administration and the Harris campaign are pitching their housing policies to the American people, while Vice President Kamala Harris and former President Donald Trump are competing for voters’ trust on economic issues. A Financial Times/Michigan Ross poll from August shows that Harris is narrowly ahead of Trump by one percentage point in who voters trust more on economic issues. While that’s a very petite margin, it represents a change from July, when 35% of voters approved of President Joe Biden’s job on economic issues, compared to 41% for Trump.
Plans would reduce bureaucratic burdens, but housing stock is still low
The government’s plans to combat supply and rising prices include rezoning federal land in Nevada and a cap on rent increases from corporate landlords, which would require congressional intervention. Housing and homelessness experts say many of these changes are positive, particularly zoning changes, while others argue some of these measures are insufficient for the current crisis.
On Friday, Vice President Kamala Harris announced her plans to improve housing affordability if she wins the presidency. Harris’ plans are similar to some of the Biden administration’s approaches to housing policy. Her focus is on stopping commercial landlords from driving up rents and reducing local zoning barriers to building affordable housing. She also announced a policy that would provide first-time homebuyers with up to $25,000 in payment assistance, on the condition that they pay their rent on time for two years.
“We will break down barriers and eliminate red tape, including at the state and local levels, and by the end of my first term, we will end America’s housing crisis by building three million new homes and rentals that are affordable to the middle class,” Harris said Friday at a campaign rally in Raleigh, North Carolina.
Indivar Dutta-Gupta, who focuses on policy research and seminars at Georgetown University’s McCourt School of Public Policy, welcomed developments to make it easier and less high-priced to build affordable housing through the Pathways to Removing Obstacles to Housing program, which provides funding to communities to remove barriers. like for example “outdated” development plans and a “lack of amenities in the neighborhood.”
“It’s very difficult for a developer to just copy and paste their plans from one community to another. And secondly, it’s not just the special permit and land use requirements that are burdensome,” he said. “They’re time-consuming and they dramatically increase housing costs. So if you can shorten a process that takes 12 months to six months, that can make a huge difference to housing affordability.”
Kenneth Chilton, a professor in Tennessee State University’s school of public administration, said housing is being built, but in the area where he lives, Nashville, there are not enough affordable homes between $100,000 and $300,000. Wages have also not caught up with those prices, he added.
“The market has shifted toward the wealthier households, so new homes are being built, but they’re costing millions of dollars and more, and they’re for people who can afford it or are willing to put themselves under financial strain to afford a million-dollar home,” he said. “…It’s getting harder and harder to come up with the disposable income you need to save the down payment.”
The Biden administration and Congress have also recently focused more heavily on corporate landlords influencing the housing market. Dutta-Gupta and Chilton said that even in situations where they make up a smaller percentage of landlords, their practices influence other landlords and drive up rents. Chilton, who has studied how firms that can quickly buy up all kinds of properties can affect regional housing markets, said it’s tough for the average homeowner to compete.
“There are many more companies and investors buying up housing,” he said. “Some of these are institutional investors, but there have been recent reports that even smaller local landlords are adopting the same business practices, namely one-year leases with cost-of-living adjustments built in. They act like corporate landlords.”
He said none of the Biden administration proposals he has seen have taken into account prospective homebuyers who must apply for loans and that they cannot compete with groups and investors who pay cash and do not conduct inspections. Democratic lawmakers have Legislation introduced A bill was introduced in Congress to limit the power of immense landowners, but it was not passed.
Dutta-Gupta said the Biden administration’s recent efforts are putting “significant dollar amounts” into finding affordable housing through grants, even if they are likely to be below demand. He said it was also encouraging to see the U.S. Department of Transportation prioritizing communities with “more housing-friendly policies” in its discretionary infrastructure grants to give communities more incentive to promote affordable housing. But he said the administration needs to make sure it communicates that effectively through outreach.
“There needs to be a serious effort to explain to communities that there is a new preference and how these communities can potentially fall into that preference category,” he said. “You don’t want to just let them know there is a preference and then no behavior change occurs.”
Although Trump spoke of Mortgage interest rates During his campaign, he did not provide many details on housing policy. The Federal Reserve’s benchmark interest rate influences mortgage rates and Trump has said the President should have “at least a say” in Fed policy. The Republican Party has platform also includes a section on housing affordability, mentioning tax incentives to “encourage homeownership,” allowing modern homes to be built on certain federal lands, and relaxing regulations that “increase housing costs.”
The challenge of accommodating people
Given the challenges of building affordable housing, the National Alliance to End Homelessness wants to see more comprehensive policy approaches to prevent more people from becoming homeless. Homelessness reached a record high in 2023.
Although the Biden administration has taken steps to expand access to housing for groups particularly vulnerable to homelessness, such as veterans and survivors of domestic violence, Steve Berg, chief policy officer at the National Alliance to End Homelessness, wants a more universal approach, such as housing vouchers that match the level of need. He said targeted emergency rental assistance combined with eviction moratoriums in places where homelessness is particularly high and rising rapidly would also be an effective way to reach the people who need it most.
“The eviction moratorium combined with subsidies for landlords to help people with rent arrears were very effective measures,” Berg said of previous measures during the pandemic to facilitate people find housing.
Why housing is so crucial to policymakers
The Federal Reserve has signaled that it is close to cutting interest rates as inflation has eased and the housing market has begun Cool in response to high mortgage rates. The Fed began raising rates in 2022 and raised them 11 times by the end of 2023, putting pressure on the housing market at a time of high demand for housing and a shortage of affordable housing.
In May, rental growth in the US was +3.2% year over year, which was the largest augment in more than a year, according to CoreLogic single-family rental data. A lack of affordable housing is also closely linked to homelessness. From 2019 to 2023, the number of people who had to go into emergency shelters for the first time increased by more than 23%according to a 2024 report by the National Alliance to End Homelessness.
“The Federal Reserve is slowing the economy primarily by making it more high-priced to build homes and borrow in general. People are certainly experiencing higher housing costs right now due to higher interest rates, so the timing is [of the policies] may be a coincidence,” said Dutta-Gupta.
