Biden Administration Announces Housing Supply Action Plan
The White House announced its progress in implementing the Housing Supply Action Plan last Friday, which outlines a set of administrative and legislative initiatives aimed at increasing the supply of housing across the country over the next five years. The plan includes creating more housing of all kinds, including affordable rentals, and singles out the importance and urgency of providing affordable housing, particularly during a period of high-interest rates and inflation. The current financial environment after COVID-19 has uniquely impacted tenants, causing an increase in demand and rents to rise at the fastest pace recorded in decades.
The plan calls for four points of emphasis for affordable housing practitioners:
- Expansion of the low-income housing tax credit (LIHTC) and creation of the Neighborhood Homes Tax Credit (NHTC) used in concert with other local and federal funds will aid in the creation and preservation of affordable housing across the country,
- Final average income test guidance will be out by September,
- Encouraging alignment of affordable housing subsidies, and
- Growing Fannie Mae’s and Freddie Mac’s LIHTC equity investments.
Impact On Renters
The plan also seeks to finance more than 800,000 affordable rental units by expanding and strengthening the low-income housing tax credit. Similar language was included in the “Build Back Better” plan, which included a range of actions aimed at rebuilding lower and middle-class Americans with housing, transportation, and infrastructure investments. This critical piece of legislation would significantly increase resources for affordable housing.
There’s a tremendous opportunity with the proposed Housing Action Plan and with it comes several challenges the industry must navigate. The growing demand for rental units and insufficient supply is garnering more attention and investment in the affordable rental housing sector. Not only due to its fundamental importance, but also because it aligns with investors’ environmental, social, and governance (ESG) goals.
