President Biden appears to be taking the affordable housing crisis seriously, as his proposed $6 trillion budget will dedicate 15% more, or $9 billion, to the Department of Housing and Urban Development than previous budgets (“DHUD”). The DHUD will focus on creating affordable housing for low-income renters; this $9 billion is in addition to the $27.4 billion in housing assistance that was included in the $1.9 trillion pandemic relief bill passed earlier this year. Of course, the proposed budget needs to be approved by Congress, and it’s a virtual certainty that the numbers will be reduced. Still, it is clear the affordable housing crisis is on President Biden’s radar.
As everyone is aware, there has been a record-low supply of homes for sale during the pandemic. Economic instability also pushed mortgage rates down, which had a direct impact on surging home prices. Moreover, low mortgage rates accomplished it’s goal by driving more people to seek home loans; ultimately this allowed lenders to increase the requirements for a loan, which pushed low-income earners even further behind in the race to become homeowners. As such, affordable housing became an even more serious issue as low-income earners were forced to continue renting.
The proposed budget aims to retrofit, preserve, and build roughly 2 million homes and commercial buildings, which will increase supply, and potentially reduce price growth. We are already seeing the impact of increased supply on price growth, as prices have grown at a slower rate in February, March, and April of 2021 than they have since the beginning of the pandemic.
While the bill also tackles discrimination in housing, and assistance for low-income renters, that is beyond the scope of this article. At the Chernov Team we understand that knowledge is power, and knowledge of legislation that could impact the housing market as a whole is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.
