Joe Biden Eyes Housing Market Solutions

President Joe Biden on Wednesday said he has a plan to build 2 million new homes, part of his efforts to increase the supply of houses in the market which he believes is key towards improving affordability.

Prospective homeowners have struggled to afford getting into the housing market amid record-high mortgage rates and high prices. A limited supply of houses has led to increased competition which has led to increased buying costs.

Biden suggested more supply was the key to relieving the high cost of homes. His administration plans to help spur more building through programs like the Neighborhood Homes Tax Credit.

The White House said that the tax provision would lead “to the construction or preservation of over 400,000 starter homes in communities throughout the country.”

Another measure that the president has suggested could help improve available affordable housing was the Low-Income Housing Tax Credit, which takes aim at improving the rental market.

“My plan will also establish an innovative program to help communities build and renovate housing or convert housing from empty office spaces into housing, empty hotels into housing,” Biden said.

Another White House proposal includes an innovation fund of $20 billion also targeting the building of more homes.

“This fund would support the construction of affordable multifamily rental units; incentivize local actions to remove unnecessary barriers to housing development, pilot innovative models to increase the production of affordable and workforce rental housing; and spur the construction of new starter homes for middle-class families,” the White House said.

Part of the challenge that has stifled supply of new homes is the struggles facing the existing homes market. With mortgage rates elevated, homeowners willing to sell are reluctant to give up their low monthly home loan payments that they secured at lower rates in the past.

The new homes market has fared slightly better. On Tuesday, the Commerce Department revealed that more homes were about to hit market ahead of the Spring selling season. Completed homes went up by 20 percent last month to 1.7 millon new homes. Housing starts, construction that have begun, went up by 11 percent to 1.5 million. Meanwhile, building permits, which tends to be a forward-looking indicator, also improved last month.

“Affordable housing has been a challenge for a long time. To solve it long term, we have to increase supply, because when supply is down and demand is up, costs rise,” Biden said. “The bottom line to lower housing costs for good is to build, build, build.”

Other proposals from the White House include an 8-billion-dollar plan to reduce homelessness.

“Funds from this proposal would support non-congregate emergency shelter solutions, interim housing, rapid rehousing, permanent supportive housing, and rental housing for extremely low-income households experiencing housing instability or homelessness,” according to the White House.