Amid an affordable housing shortage, record-high rent burdens and increasing homelessness, President Joe Biden used his election-year State of the Union address on March 7 to outline his proposals to make housing more accessible. The president said he wants to spur the construction and renovation of two million homes, facilitate home purchases for first-time buyers and bring rents down.
Lael Brainard, director of the National Economic Council, called it “the boldest housing plan in a generation” at a March 12 Urban Institute event. Biden’s proposed budget for fiscal year 2025 requests $72.6 billion for the Department of Housing and Urban Development as well as $185 billion in mandatory spending for affordable housing investments over 10 years.
Much of the president’s plan centers on tax credits, which Brainard said provide critical support for private construction in the affordable housing market and are a proven way to boost supply. The centerpiece of Biden’s housing proposals, Brainard said, is an expansion of the Low Income Housing Tax Credit that would result in the construction or preservation of approximately 1.2 million affordable housing units over the next 10 years.
Biden called for tax credits of up to $10,000 for first-time homebuyers or middle-class homeowners who sell their starter homes to first-time homebuyers. The president also proposed down payment assistance for first-generation homebuyers, defined as first-time homebuyers whose parents do not own a home. The proposed program would provide such households without intergenerational wealth with $25,000 on average toward a down payment, Brainard said.
Panelists at the Urban Institute event emphasized the need to lower costs for both homeowners and renters, though Michael Neal, senior fellow at the Urban Institute, pointed out that renters are more likely than homeowners to be cost-burdened, spending more than 30% of their income on housing. To increase rental affordability for some, the Biden administration proposed creating housing voucher guarantees for extremely low-income veterans and youth aging out of foster care.
“People's incomes just aren't at a level for them to be able to only use 30% of their income for their rent,” said Peggy Bailey, vice president for housing and income security at the Center on Budget and Policy Priorities. Truly addressing the rental affordability crisis will require “a lot of money” to subsidize rents, Bailey said.
Urban Institute nonresident fellow Jim Parrott said that the housing proposals “probably lean a little harder than maybe they needed to on the demand side … given that the nature of the problem right now is really a supply shortage, not a demand problem.”
Still, Parrott said that housing supply challenges are often highly localized, highlighting the administration’s plan to spend $20 billion on competitive grants for states and localities to increase the supply of what he called “entry-level” housing, such as affordable rentals.
Though many of Biden’s housing proposals require Congress’ approval to proceed, the Biden administration approved a pilot program to “save households an average of $750 by no longer requiring them to purchase lender’s title insurance when they are refinancing their mortgage,” Brainard said.
