In the years following the epidemic, the cost of living has increased significantly due to high mortgage rates and persistently high prices for groceries and other necessities. As a result, the Biden administration is launching new initiatives to expand access to affordable housing.
On Monday, while in Minneapolis, Treasury Secretary Janet Yellen will tout the fresh investments. Among them are initiatives to increase the Federal Fund’s funding of affordable housing and to provide $100 million through a brand new fund over the next three years.
The housing crisis is drawing more and more attention in this year’s election, which coincides with rising interest in home prices.
“There has been a long-term accumulation of a very serious shortage in the housing supply,” Yellen states in prepared remarks for Monday afternoon. “This supply bottleneck has resulted in an affordability crunch.”
According to Yellen, the government is “implementing a wide affordability strategy to alleviate the price pressures that people have been facing.”
Following the pandemic, housing costs increased, impacting both renters and homeowners. The Case-Shiller 20 City Composite Home Index shows that between March 2020 and March 2024, home prices rose by 46%. According to a recent Treasury report, housing costs have increased more quickly than salaries during the previous 20 years.
In the meantime, May saw a decline in the number of previously occupied U.S. house sales for the third consecutive month as record-high prices and rising mortgage rates turned off many potential buyers during the housing market’s normally busiest time of year.
According to data gathered by the National Low Income Housing Coalition, there is a deficiency of over 7 million reasonably priced homes in the United States to accommodate the over 10.8 million families with extremely low incomes. Additionally, the group claims that there isn’t a single state or county in the nation where a tenant making the minimum wage and working full-time could afford a two-bedroom apartment.
In certain cities, it’s turning into a crisis. For example, housing costs in Massachusetts’s Martha’s Vineyard have become a public safety concern due to the difficulty in attracting and keeping 911 dispatchers and correctional officers.
Both President Biden and the likely Republican nominee Trump have made a number of recommendations regarding ways to lower the cost of living for regular Americans. For example, Trump has suggested that workers’ gratuities be tax-free, while Biden is pursuing a strategy to lower student loan payments for borrowers. When the Associated Press asked for a comment, a Trump campaign representative did not reply.
However, because of rising housing costs, some analysts believe the crisis won’t go away until the Federal Reserve reduces its benchmark interest rate, which is currently at 5.3 percent.
“Until the Fed decreases policy rates,” according to a Friday letter from Sal Guatieri, a top economist at BMO Capital Markets Economic Research, there should be little movement in the housing market.
The White House has taken steps to stop evictions and address the housing issue, according to Diane Yentel, CEO of the National Low Income Coalition, “but there is much more work remaining to be done.”
To “immediately enact revolutionary and desperately needed housing initiatives,” according to Yentel, congressional action is required. The nation can only effectively address its affordable housing challenge by combining strong government financing with administrative action.
Yellen will urge Congress to approve Biden’s proposed budget, which was unveiled in March, during her speech.
The budget contains a goal to develop over 2 million houses and asks Congress to grant a tax credit to first-time homebuyers. This would result in a larger low-income housing tax credit.
In addition to implementing a multi-agency initiative to encourage states and communities to turn more vacant office buildings into housing units, the Biden administration has taken other actions to increase the supply of housing. Billions of dollars of federal money are available to support these transitions.
Communities received an $85 million grant from the Dept. of Housing and Urban Development in July 2023 in order to remove obstacles to affordable housing, such as zoning laws, which in certain areas have made it difficult to increase the quantity and density of affordable housing.
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