In a significant move to tackle the ongoing housing crisis and escalating costs associated with homeownership, the Biden administration unveiled its plan on Thursday to provide financial support to hundreds of thousands of households aspiring to own a home.
Neighborhood Homes Investment Act
During a speech on Thursday, Lael Brainard, the director of the White House’s National Economic Council, outlined the administration’s strategy. She emphasized the importance of the proposed Neighborhood Homes Investment Act, designed to promote homeownership for an additional 500,000 households while simultaneously injecting vitality into neighborhood revitalization efforts.
A glimpse into the draft of the bill reveals the introduction of a new federal tax credit, earmarked for financing the development and renovation of 1-4 family housing units in distressed urban, suburban, and rural neighborhoods. Senators Ben Cardin (D-Maryland) and Todd Young (R-Indiana) are the architects behind this legislation, projecting its potential to assist 500,000 homes and generate an impressive $125 billion in development revenue over the next decade.
Navigating a Turbulent Housing Market
Amidst a housing market grappling with the Federal Reserve’s aggressive measures to combat record inflation, Brainard indicated that President Biden is not prepared to wait for congressional action. The administration is actively pushing for zoning reforms, aiming to remove barriers that hinder the construction of affordable homes. Furthermore, the Department of Transportation is poised to make low-cost loans available to facilitate housing development near transportation hubs. “Our Department of Transportation is making billions of dollars in low-cost loans available for developing housing near transportation,” Brainard said.
Empowering First-Time Buyers
Recognizing first-time buyers’ struggles in the current climate, the administration is implementing a range of measures. One noteworthy initiative involves a reduction in mortgage insurance premiums through the Federal Housing Administration program. “This will mean savings of around $1,200 per year for a homebuyer buying a median home,” Brainard said.
President Biden’s proposed budget introduces a program for down payment assistance, specifically tailored for first-time homebuyers. The White House asserts that this program will not only uplift first-generation homeowners but also contribute to narrowing the persistent racial gap in homeownership.
Extending Assistance Beyond Homebuyers
The administration’s commitment to addressing housing challenges extends beyond prospective homebuyers to include renters. “[This could] help make homeownership a reality for families who do not have the advantage of previous generational wealth building from homeownership. Passing this legislation could begin to close the stubborn racial gap in homeownership,” Brainard said.
Brainard highlighted that the administration has already provided assistance to 100,000 low-income households, ensuring that their rent is capped at 30% of their incomes. “The president’s budget proposes expanding rental assistance to more than 200,000 additional households, including a first-of-its kind rental assistance guarantee for low-income veterans and former foster youth,” she added.
However, some Redditors are skeptical of Biden’s plan. One wrote: “As much as I would appreciate this, it doesn’t actually solve the problem.
“Houses are being bought up at a ridiculously fast pace by big corporations who are owned by Blackrock or Vangaurd in 90% of cases. They then turn around, slap a cheap coat of paint on the old property, throw in some vinyl floors overtop of the nice hardwood (because it would be too expensive to actually renovate) and then rent the house for 2-4x their mortgage price to people like me, who would have normally been a prospective home owner in any other generation.
“Our options are rent or die. And the value of the property continues to go up and make the rich people who own stock in these companies richer.
“It needs to be made illegal for these operations to exist. No corporation should be legally allowed to own single-family housing. Their only priority is making money for their shareholders and they don’t give a single %uck about the American consumer. They are taking advantage of housing, one of the most fundamental needs for every person.”