The Biden administration’s announcement Monday of a “Housing Supply Action Plan” has produced a positive reaction from the housing and mortgage banking industries.
The administration said the plan is intended to “ease the burden of housing costs over time by boosting the supply of quality housing in every community.” The plan includes legislative and administrative actions that the administration believes “will help close America’s housing supply shortfall in five years, starting with the creation and preservation of hundreds of thousands of affordable housing units in the next three years.”
The plan includes:
- Helping renters who ware struggling with high rental costs, with a focus on building and preserving rental housing for low- and moderate-income families.
- Deploying “new financing mechanisms” to build and preserve more housing where financing gaps currently exist.
- Expanding and improving existing forms of federal financing, including for affordable multifamily development and preservation. This includes making Construction to Permanent loans (loans that finance construction but become a long-term mortgage) more widely available by exploring the feasibility of Fannie Mae acquiring these loans.
- Ensuring that more government-owned homes and other housing goes to owners who will live in them, not large institutional investors, and
- Working with the private sector to address supply chain issues and improve building techniques to “finish construction in 2022 on the most new homes in any year since 2006.”
“This is the most comprehensive all-of-government effort to close the housing supply shortfall in history,” the administration said in a news release.
Earlier this month, Black Knight’s Data & Analytics Division reported that, with 30-year mortgage interest rates above 5%, housing affordability was nearing its all-time worst level. As of April 21, the share of median income required to make the principal & interest payment on the average-priced home was 32.5%. That was within 1.6 percentage points of the all-time high 34.1% payment-to-income ratio seen in July 2006, it said.
Bob Broeksmit, president & CEO of the Mortgage Bankers Association, released a statement on the administration’s plan, supporting the effort to address affordability.
"MBA commends the Biden administration for announcing steps to alleviate the acute shortage of single-family and multifamily housing for prospective homebuyers and renters,” Broeksmit said in the statement.
"Eliminating the regulatory barriers to new construction, including manufactured housing, in underserved markets; expanding affordable financing for multifamily development and rehab projects; and a commitment to more private and public sector partnerships will help address the housing supply and affordability challenges that continue to burden families,” he stated.
He continued, “As the administration focuses on ways to improve the financing of multifamily projects, MBA strongly encourages HUD to focus on the issues that continue to lead to significant lending pipeline delays in its MAP (Multifamily Accelerated Processing) program, which is a primary financing option for producing more affordable rental housing.”
Broeksmit added that MBA will review “all aspects of the plan in greater detail,” and that his organization remains “committed to working with the administration, Congress, and industry stakeholders on safe and responsible policies that increase homeownership opportunities and affordable rental housing options across America, especially for minority and low- and moderate-income households.”
Jerry Konter, chairman of the National Association of Home Builders (NAHB), also praised the plan.
"We commend the White House for joining the fight to put the issue of housing affordability in the forefront of the national economic agenda after NAHB had been urging the administration to move on this vital national concern for the past several months," he said.
In April, the NAHB sent a letter — signed by more than 10,000 of its members — to President Biden urging “immediate action” to address issues that “threaten to derail the current housing and economic expansion.”
The letter, written on behalf of the 140,000 members of NAHB, cited rapidly rising interest rates, rising home prices and rents, and the rising cost of lumber and building materials for significantly decreasing housing affordability, especially for entry-level buyers and renters.
It asked the administration to suspend tariffs on Canadian lumber imports, as well as for federal regulatory reform to “ease housing affordability woes.”
In a statement on its website, the NAHB said it “ agrees with the White House that the key to resolving our nation's housing affordability challenges is to build more homes. The home building industry is a willing partner in solving the affordability crisis that will enable builders to construct more affordable entry-level housing, raise first-time, first-generation and minority homeownership rates, provide quality rental housing and shore up the national economy.”
