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Biden administration economists call for more aggressive federal action to reduce costs for homebuyers and renters, taking aim at one of the biggest economic challenges facing President Biden as he seeks re-election. ing.
Policy recommendations in a White House report to be released Thursday include what could be aggressive federal intervention into local politics that determine where homes are built and who lives in them. The administration supports plans to pressure cities and other localities to ease zoning restrictions that often hinder the construction of affordable housing.
The recommendations are part of the new administration’s deep dive into the decades-long housing crisis that is hampering the president’s chances for a second term. The proposal is included in the president’s annual economic report and could serve as a blueprint for a major housing push if Biden wins a second term.
The report includes a series of measures aimed at reducing the cost of renting or buying housing, and requires local authorities to develop cities and cities to enable the development of more affordable housing. It is encouraging that planning laws be amended.
Jared Bernstein, chairman of the White House Council of Economic Advisers, said in an interview that “unless we address land use regulation, it’s very difficult to make a difference in this housing, this affordable housing.” .
Bernstein added that administration officials believe many local leaders are encouraging an expanded federal role in zoning reform. This could help overcome opposition from local groups opposed to the development. “I feel like we’re kicking down more open doors now than ever before,” he said.
The report is filled with statistics that show why housing is a significant source of stress for American families and an electoral liability for Mr. Biden.
The administration acknowledged that it has limited authority over local zoning regulations, which tend to dictate the design and density of housing in specific areas. Most of the president’s recommendations to expand supply involve using federal money as a carrot to encourage local governments to permit more construction, such as adding low-income housing and small starter homes.
With the election coming up and Republicans holding a majority in the House of Representatives, it is unlikely that such a policy will be enacted before the end of the year.
But a focus on housing and support for a comprehensive set of policies to increase its supply and affordability could serve as a blueprint for a bipartisan approach to the issue if Biden wins re-election. There is. He also could add momentum to the housing reform movement underway in statehouses across the country.
The report documents how home prices for American households have significantly outpaced wage growth over the past decade. This puts ownership out of reach for middle-income home buyers and pushes low-income renters to the brink of poverty.
Currently, a quarter of tenants (approximately 12 million households) spend more than half of their income on rent. Prices are so high that if a minimum wage employee worked 45 hours a week for her entire month, the median rent would eat up every dollar he or she earned.
The report says this is due to a long-standing housing shortage. The housing shortage has become a rare point of agreement between Democratic and Republican lawmakers.
This shortage is the result of decades of not building enough housing, a trend that worsened after the 2008 financial crisis. The problem is exacerbated by rising construction costs and the zoning and land-use regulations in many areas that make it difficult and expensive to build homes. These rules also limit what types of units can be built and where, making it illegal to build apartments in single-family residential districts, for example.
The lack of affordable housing is especially detrimental to low-income families and couples starting new lives. Over the past decade, millions of affordable apartments have virtually disappeared due to soaring rents and disrepair. At the same time, the market share of smaller, lower-cost “starter homes” is shrinking.
Over the past few years, a bipartisan group of lawmakers from both red and blue states has pushed dozens of state laws that would limit cities’ control over development. The report encouraged them and noted the government’s efforts to encourage such reforms, including the Housing Action Plan announced two years ago.
Biden has focused on housing in recent weeks, in part to show voters he is fighting to cut one major monthly expense. Privately, his aides have expressed hope that the Federal Reserve’s interest rate cuts this year will lower mortgage rates and, in turn, lower home prices as new housing supply comes to market. are doing.
Biden has taken the lead in public, urging lawmakers to pass significant federal investment in housing and tax credits for homebuyers.
“If inflation continues to go down — and it’s predicted that they will — mortgage rates will go down, but I’m not going to wait,” Biden said Tuesday in Las Vegas. “I’m not going to wait.”
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