Yellen Unveils Measures to Lower Housing Costs 👉 Updatem News

Biden administration’s new tools aim to reduce median home prices that have soared 38 percent since January 2021.

Treasury Secretary Janet Yellen, while announcing the latest administration housing policy measures, said the White House is employing “a broad affordability agenda” to help deal with the ongoing supply shortage and ease record prices.

Last month, due to a blend of supply tightness and solid demand, the median home price soared to an all-time high of $419,300.

Appearing in Minnesota on June 24, Ms. Yellen unveiled new efforts to bolster supply and lower costs, including a $100 million fund over three years to finance affordable housing projects.

“We face a very significant housing supply shortfall that has been building for a long time,” Ms. Yellen said in prepared remarks. “This supply crunch has led to an affordability crunch.”

The newest framework also consists of urging several federal, state, and local agencies to help finance new housing development. The White House called upon the 11 Federal Home Loan Banks (FHLB) to enhance their spending on housing programs.

As part of President Joe Biden’s fiscal year 2025 budget, the White House urges the FHLBs to dedicate 20 percent of their net income to housing programs, with a focus on prioritizing new construction. By law, the banks are mandated to allocate 10 percent, but they have voluntarily committed to 15 percent.

In addition, the administration announced an “Affordable Housing How-To Guide” that educates state and local governments in using recovery funds offered by the Treasury Department to build housing.

Ms. Yellen’s announcement was made days before President Biden is scheduled to debate former President Donald Trump. Inflation is expected to be a major topic in the first presidential debate.

While the consumer price index (CPI) eased for the second consecutive month in May, the shelter component has remained high.

Last month, shelter inflation climbed 0.4 percent and has surged more than 21 percent since January 2021.

Cumulatively, rents have risen 21 percent, and median home prices have rocketed 38 percent over the last three years, according to National Association of Realtors data.

But the senior administration official believes that shelter inflation will moderate.

“We see certain positive signs, such as the fact that total units under construction remains at a 50-year high,” Ms. Yellen added. “But we face a very significant housing supply shortfall that has been building for a long time. This supply crunch has led to an affordability crunch.”

White House Targets Housing

Ms. Yellen is the latest Biden administration official to make a public announcement on housing.

Last week, Lael Brainard, the director of the National Economic Council, delivered remarks and participated in a question-and-answer session at the Urban Institute.

She touted the president’s multiple public policy tools to enhance supply, including a $10,000 tax credit to push current homeowners to sell their starter homes.

“Costs and, particularly, affordability of housing costs, remains a pain point for too many Americans,” Ms. Brainard said on June 20.

“The president knows that housing costs are a critical part of every family’s budget. He has a comprehensive plan to lower housing costs for families.”

The top White House economist also pointed to a tax credit that supports new housing construction activity that is projected to build 200,000 additional affordable units. The public policy instrument, a part of the broader Tax Relief for American Families and Workers Act of 2024 bill, has stalled in Congress.

Director of the National Economic Council Lael Brainard speaks during the daily press briefing at the White House in Washington on June 27, 2023. (Madalina Vasiliu/The Epoch Times)

New housing construction activity levels have trended downward since early 2022. In May, housing starts tumbled 5.5 percent to an annualized rate of 1.277 million, the lowest since July 2020, according to the U.S. Census Bureau.

Single-family housing starts declined 5.2 percent to a seven-month low, while starts for units in buildings with five or more units plummeted 10.3 percent to a two-month low.

Heading into the June 27 debate, several other White House officials have announced, or plan to announce, housing-related policies to increase housing supply, access homeownership, and lower costs.

Acting HUD Secretary Adrianne Todman is set to speak at the National Leased Housing Association’s annual meeting in Washington to discuss how the president is lowering housing costs and utility bills “by increasing access to affordable clean energy and improving energy and water efficiency.”

America’s Affordable Housing Challenge

According to a new study by the Treasury Department, home and rent prices have been rising faster than incomes across the country for the last two decades.

For the last 24 years, housing demand has outpaced supply, officials say.

“This is largely due to changing demographics: although the construction of housing has kept pace with overall population growth, it has fallen well short of the estimated number of housing units demanded by an aging population,” the report stated.

Affordability issues have been “particularly severe for households of color and low-income communities,” as black and Hispanic households dedicate more of their incomes to housing expenses, the report notes.

Zillow recently reported that middle-income households must put 35.4 percent down, or $127,750, to afford the monthly mortgage payment when purchasing a typical U.S. residential property.

“Down payments have always been important, but even more so today. With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less,” said Skylar Olsen, chief economist at Zillow, in the report. “Mortgage rate movements during that time could make the difference between affording that home and not.”

The median monthly mortgage payment is $2,829 at a 6.99 percent mortgage rate, up 8.6 percent from a year ago, Redfin data show. This is $30 below the record high set in the four weeks ending April 28.

Original News Source Link – Epoch Times

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