Washington, D.C. The Biden administration is announcing new steps to make it easier for people to find affordable housing. This is because the cost of living has gone up a lot since the pandemic, thanks to high interest rates and still-high prices on groceries and other necessities.
On Monday, when she goes to Minneapolis, Treasury Secretary Janet Yellen will talk about the new investments. The investments include giving $100 million over the next three years through a new fund to help finance affordable housing, making it easier for the Federal Financing Bank to finance affordable housing, and other steps.
The housing crisis is becoming a bigger issue in this year’s elections, which is why people are paying more attention to home prices.
“We have a very big housing supply shortfall that has been building for a long time,” Yellen says in remarks that were meant to be delivered Monday afternoon. “The lack of supplies has made it hard for people to afford to buy things.”
“Affordability is a broad goal of the Democratic administration,” Yellen says, “to ease the price pressures that families have been feeling.”
The cost of housing went through the roof after the pandemic, affecting both buyers and renters. The Case-Shiller 20-City Composite Home Price Index says that between March 2020 and March 2024, home prices went up by 46%. A new study from the Treasury finds that over the last 20 years, housing costs have been going up faster than incomes.
Also, sales of previously owned homes in the U.S. fell for the third month in a row in May. This was because rising mortgage rates and record-high prices turned off many people who wanted to buy a home during what is usually the busiest time of the year for the housing market.
For Americans with low incomes, the National Low Income Housing Coalition reports that there are not enough affordable homes for the more than 10.8 million families with very low incomes in the U.S. The group also says that no state or county in the country can afford a two-bedroom apartment for rent for someone who works full time and makes minimum wage.
In some cities, it’s getting worse. For example, on Massachusetts’s Martha’s Vineyard, the high cost of housing has become a public safety issue because it’s hard to find and keep jail guards and 911 dispatchers.
President Biden and Donald Trump, the likely Republican nominee for president, have both come up with different ideas to make life easier for average Americans. For example, Trump wants to make tips tax-free for workers, while Biden wants to lower student loan payments for borrowers. The Associated Press asked someone from the Trump campaign for comment, but they did not respond.
But because of rising home prices, some economists think the problem might not go away until the Federal Reserve lowers its key interest rate, which is currently 5.3%.
An expert at BMO Capital Markets Economic Research named Sal Guatieri wrote on Friday that the housing market probably won’t change much “until the Fed lowers policy rates.”
Diane Yentel, president and CEO of the National Low Income Housing Coalition, said, “There is much more work still to be done.” She said the White House has tried to stop evictions and deal with the housing crisis.
Yentel said that Congress needs to act quickly to make “transformative and badly needed housing investments.” The country can only really solve its affordable housing crisis with strong federal funding and strong action by the government.
That’s when Yellen will ask Congress to pass Biden’s budget plan, which came out in March.
A plan to build more than 2 million homes is in the budget, which asks Congress to give first-time homebuyers a tax credit. The Low-Income Housing Tax Credit would be made bigger.
The Biden administration has also taken other steps to increase the number of homes available. For example, it has started a multiagency effort to get states and cities to turn more empty office buildings into apartments, with billions of dollars in federal funds available to help.
The Department of Housing and Urban Development gave $85 million to communities in July 2023 to help remove barriers to affordable housing. For example, zoning laws that make it hard to build more affordable housing have been removed in some areas.
