Housing supply

White House to unveil measures to ease housing shortage

WASHINGTON — The Biden administration is set to unveil a series of measures aimed at addressing America’s shortage of entry-level homes and rental properties, according to people familiar with the matter, measures designed to boost their financing and their construction over the next few years.

The changes would rely on the administrative authority of government regulators such as the Federal Housing Finance Agency as Congress weighs broader policy changes related to the debate over overhauling America’s infrastructure, according to a draft plan considered Tuesday by the Wall Street Journal. Details could change before the White House releases its final version. The FHFA oversees Fannie Mae and Freddie Mac, the two mortgage giants that back about half of the $11 trillion mortgage market.

Individually, each regulatory measure is technical and modest. Collectively, however, “they should have a significant impact, particularly because they are all focused on the lower end of the market, where the need is greatest,” said Jim Parrott, a former housing adviser at the administration, commenting on the project.

The White House was expected to announce the measures as early as Wednesday, one of the people said.

A change would allow Fannie and Freddie to invest more of their resources in rental housing by increasing an existing regulatory cap on their investments in apartment projects supported by the low-income housing tax credit. A second would expand an existing competitive grant program for community development finance institutions to encourage the production of affordable housing. Yet another would increase the funding available for manufactured homes, which are built in factories rather than on land. They generally cost much less than site-built homes and are often occupied by low-income residents.

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Additional changes would give first-time home buyers and philanthropists a chance to buy distressed properties insured by the Federal Housing Administration, in a bid to give them a leg up on investors who have bought many properties. of this type in recent years.

The administration can make the changes without congressional action.

Limited supply has been a recent driver of higher house prices for renters and buyers, alongside robust demand. The median price for existing homes in July was $359,900, the National Association of Realtors said earlier this month, up 18% from a year earlier. This was just slightly below the all-time high median price of $362,800 reported the previous month.

New housing construction over the past 20 years has fallen 5.5 million units below long-term historical levels, according to a June report by the NAR.

This year’s housing boom was unusually widespread, with property prices soaring in major cities, suburbs and small towns. The Covid-19 pandemic reshaped where and how Americans want to live, as many households sought more space to work from home and remote workers could live farther from their offices.

The proposals come as Congress debates a series of additional measures backed by the Biden administration to boost the supply of affordable housing, including a grant program of at least $5 billion to ease zoning laws. so-called exclusions, such as minimum lot sizes or prohibitions on multi-family housing. The administration says such rules have inflated housing and construction costs and excluded families from areas with jobs and other economic opportunities.

Some economists and city planners say relaxing these zoning rules would help expand the supply of housing available for rent or sale, which is the tightest in 30 years. Local regulations on environmental protection and the capacity of roads, schools and sewers often enjoy strong support among residents, who generally want to keep property values ​​high.

As part of expected administrative action, FHFA is expected to announce that it will investigate the extent to which Fannie and Freddie’s operations are concentrated in jurisdictions with exclusionary zoning.

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Pete Mills, senior vice president of residential policy at the Mortgage Bankers Association, which represents some of America’s largest mortgage lenders, said the administration’s actions were “good, productive steps.”

“The housing supply problem is a huge problem and every little drop in the bucket helps,” he said. “We need to do what we can administratively while Congress deliberates on larger initiatives.”

Write to Andrew Ackerman at andrew.ackerman@wsj.com

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