President Biden has said that inflation is on the top of his list and will be addressed. It is reported that this is the worst inflation the U.S. has experienced in forty years. The action plan announced was to increase the supply of affordable housing.
The administration concurs that this will help close the affordable housing gap and “ease the burden of housing costs,” noting that housing prices are a key driver of inflation. This will help the country get the high prices of US homes under control. The S&P CoreLogic Case-Shiller US National Home Price Index reported a rise in home prices of 19.8% year-over-year in February and rent is up 20% over prices seen this time two years ago.
For regular homeowners or those looking to buy a primary residence, this market is challenging. The administration also wants to guide the number of institutional investors who can purchase single-family homes. Another issue that will be tackled is the supply chain challenges and the improvement of building techniques. To ensure that all the construction from 2022 is completed and ready for a homeowner.
The housing shortage has been a big issue and will be addressed. Along with getting more inventory out there, the proposed legislative actions will also put measures into place to help ease costs. These will include tax credits for low- and middle-income home buyers and a proposed $25 billion for grants for affordable housing production.
“The Plan’s policies to boost supply are an important element of bringing homeownership within reach for Americans who, today, cannot find an affordable home because there are too few homes for sale in their communities. And it will help reduce price pressures in the economy, as housing costs make up about one-third of the market basket for inflation, as measured by the Consumer Price Index,” the White House said in a fact sheet.
Housing experts are excited about the administration’s plan but do report that it will take time to fix. It is great that the private and public sectors are coming together to help address the housing supply and the increased prices on homes.
“This is the right focus,” Dennis Shea, the executive director of the Terwilliger Center for Housing Policy said. “We’ve under built the housing supply by millions of homes over the past 20 years. Efforts to increase the supply of homes should reduce housing costs for people looking to rent or buy a home.”