The President’s Plan To Increase Housing Supply

President Biden two weeks ago unveiled a new plan to hopefully increase the supply of housing and I applaud him for doing so. He wants to close the housing gap over the next 5 years by expanding sweeteners and reducing regulatory hurdles. Here are some details of his plan
· Expand existing federal subsidies for multifamily housing development.
· Create new federal tax credits for developing or rehabbing homes for owner-occupants instead of investors, making available 125k homes for low-and moderate-income homebuyers.
· Create a $10 billion grant program for HUD to use to reward localities that eliminate barriers to developments.
· Give HUD $25 billion to distribute to state and local housing finance agencies and their partners for developing housing of moderate density or less than 100 units.
· The recipients could incentivize multigeneration housing, investments that make vacant properties productive again, or even new novel ideas.
· The goal is to create 500k new housing units over the next 10 years.
· FHA and FHFA may also consider help lenders with new financing to add ADUs and other renovation ideas.
· There will be assistance to make more FHA loans available for manufactured housing.
· Help will be provided to the builders of manufactured housing by way of expanding their warehouses and help with supply chain issues.

I don’t know that there are many towns or cities willing to eliminate barriers to development and Denver alone could use $1 billion for this, so $10 billion isn’t going to go very far. Second, our country’s vacancy rate is at an all-time low of 0.8% so there is very little room for improvement with this idea. Third, the problem with ADUs for us as a lender is can an appraiser find comps with ADUs that have recently sold? This would be like looking for a needle in a haystack.

Unfortunately there is no money to increase the number of workers in construction which is where the most- good could be done. I would prefer to see tens of billions of dollars go to high schools to create classes and programs that expose these teens to jobs in the construction industry. This also could reduce drug use, gang activity, and homelessness as it gives these teens especially in minority areas with HOPE for a great future besides going to college.