The U.S. Department of the Treasury has announced new steps to make housing more affordable, closely aligning with policies supported by the National Association of REALTORS® (NAR). These measures aim to reduce housing costs and increase the number of homes available, addressing a major concern for many Americans.
Here’s a breakdown of what the Treasury’s plan includes:
- Extra Funding for Affordable Housing: The Treasury will provide an additional $100 million over the next three years through a new program run by the Committee Development Financial Institutions (CDFI) Fund. This money will help finance affordable housing projects.
- Predictable Interest Rates: State and local housing finance agencies borrowing from the Federal Financing Bank will benefit from more predictable interest rates. This stability will help support new housing developments.
- Boost in Federal Home Loan Banks Spending: The plan encourages the Federal Home Loan Banks to increase their spending on housing programs, further supporting affordable housing efforts.
- Guide for State and Local Governments: A new “How-To Guide” will help state and local governments use recovery funds provided by the Treasury to build housing. This guide aims to make it easier for these governments to develop affordable housing.
- Updates to the Capital Magnet Fund: The Capital Magnet Fund will be updated to give CDFIs and non-profits more flexibility in financing affordable housing. These updates should enhance their ability to support affordable housing projects.
NAR’s Response
NAR’s Chief Advocacy Officer Shannon McGahn applauded the Biden Administration’s comprehensive approach to promoting homeownership, emphasizing the need for all levels of government to work together to tackle the housing affordability crisis.
Support for the Yes in My Backyard (YIMBY) Act
NAR is also backing the Yes in My Backyard (YIMBY) Act (H.R. 3507). This act would require localities receiving Community Development Block Grant (CDBG) funds to publicly report their efforts to remove barriers to affordable housing development. The act encourages local governments to:
- Remove zoning regulations that limit housing development.
- Reduce parking requirements.
- Decrease regulatory barriers that hinder construction.
McGahn pointed out that overly restrictive zoning and permitting regulations are slowing down construction and preventing lower-cost housing from being built where it’s needed. She called for city and state regulations to support the construction of affordable housing by allowing multi-family structures and manufactured homes.
Meeting with White House Officials
On Monday, McGahn met with White House officials to discuss housing affordability issues and share NAR’s research. She highlighted the economic benefits of investing in housing, noting that each home sale generates two jobs and that the real estate sector accounts for nearly 20% of the entire economy.
Addressing the Housing Shortage
McGahn stressed the urgent need to address the housing deficit, citing historical data and NAR’s research. Housing construction peaked in 2005 with over 2 million housing starts, but dropped to 550,000 starts just four years later. With a historical average of 1.5 million starts per year, the current deficit will take years to correct without urgent action. NAR’s research revealed a nationwide shortage of 5.5 million units, especially in the middle-income price range, creating a “missing middle” in the housing market.
Impact on the Greater Sacramento Area
These new Treasury steps could have a significant impact on the Greater Sacramento area. With the additional funding and support for affordable housing, Sacramento could see an increase in the availability of affordable homes, addressing the pressing issue of housing affordability in the region. The focus on predictable interest rates and increased spending by Federal Home Loan Banks will provide more stable financing options for new developments, potentially leading to a boost in housing projects.
The “How-To Guide” and updates to the Capital Magnet Fund will help local governments and non-profits in Sacramento effectively use recovery funds and finance affordable housing projects. This could streamline the process of developing affordable housing and make it easier for organizations to support these initiatives.
NAR’s support for the YIMBY Act could also lead to changes in local zoning and permitting regulations, making it easier to build multi-family structures and manufactured homes in the area. This could help reduce barriers to construction and increase the supply of lower-cost housing where it’s needed most.
