Housing isn’t just the backbone of the American dream and the way most Americans build wealth. It also makes up nearly one-fifth of the entire U.S. economy.
In his first 100 days in office, President Joe Biden has understandably made housing a key focus of his agenda, aiming to help renters struggling during the pandemic remain in their homes, bring homeownership within reach for millions more Americans, and fight discrimination. Perhaps the most urgent housing challenge Biden faces is the historic 50-year low in inventory, which was down 28% year over year in March. Properties typically sold in 18 days—the fastest ever. Without new housing supply, the wealth gap in the U.S. will get worse, and minorities, younger and lower-income Americans, and first-time home buyers will be hurt most.
Before he took office, Biden proposed further opening the path to homeownership with a first-time home buyer tax credit and student debt relief, which are both priorities of the National Association of REALTORS®. But homeownership incentives must be created in tandem with incentives for new construction. Fueling housing demand without creating more supply will only serve to drive housing prices up even further, adding to the affordability crisis.
To alleviate the problem, NAR is urging the Biden administration to pursue policies that would spur the creation of more residential units. This could be done with grants and tax incentives for communities to increase housing supply, renovate houses in blighted neighborhoods, and convert excess commercial property into residential units. It could also be done by protecting the 1031 like-kind exchange, which is most often used in multifamily transactions. These policies would also help close the homeownership gap in America.
Increased fair housing enforcement by HUD is also critical. Even more than 50 years after the passage of the Fair Housing Act, many Americans continue to be left behind. Breaking down systemic barriers isn’t easy, but Biden immediately set a positive tone with the choice of Marcia Fudge as HUD secretary. She is a well-respected leader who was confirmed with a bipartisan vote in the Senate. Her experience as a mayor and member of Congress will serve the nation well as she works toward more safe and affordable housing for lower-income Americans.
In one of her first actions, Secretary Fudge issued a prohibition of discrimination based on sexual orientation and gender identity, and she ordered a review of policies addressing equity in housing. She also moved to restore the Affirmatively Furthering Fair Housing rule that was weakened last year. The rule requires local governments that receive HUD funding to assess their fair housing efforts. NAR supported both of these moves, which are vital for thriving and inclusive communities and a housing market free from discrimination. No person should be locked out of a street, neighborhood, or town because of their race.
With daily U.S. COVID-19 deaths at their peak on Inauguration Day in January, Biden extended forbearance and foreclosure protections and issued rental assistance guidance through the Treasury Department, which brought more stability for tenants and the reeling commercial real estate sector.
He also laid out new reforms to make it easier for small businesses, sole proprietors, independent contractors, and the self-employed to get Paycheck Protection Program loans. The initiative included prioritizing small businesses over larger ones for a two-week period, simplified loan forgiveness, and improved loan calculations for independent contractors. The President said 70% of those helped by the effort were women and people of color.
Biden’s American Rescue Plan became law with hard-fought priorities for NAR, like aid for struggling state and local governments, the creation of a homeowners assistance fund, a small-business grant program, and a fresh round of funding for rental assistance and broadband. Shortly after the American Rescue Plan was finalized, the president rolled out the details of his American Jobs Plan. NAR thanked him for including support to address the lack of housing inventory, the affordability crunch, and fair housing initiatives.
The proposal aims to build and rehabilitate more than 500,000 homes for low- and middle-income home buyers, which the White House highlighted as “a pathway for more families to buy a home and start building wealth.” The plan also includes a historic investment in broadband.
NAR President Charlie Oppler said it best: “Broadband access is no longer a luxury, it is a critical utility.” That was true before the pandemic, and it’s even more so now.
On his 99th day in office, President Biden addressed the nation to unveil the American Families Plan, which would provide social programs and benefits paid for with various tax increases. NAR is working to educate Congress about the impact several of the tax measures in this proposal could have on the real estate industry. Ideas like curbing the 1031 like-kind exchange, which has been part of the tax code since 1921, may sound good on paper but would cause quite a bit of harm to the housing industry and economy.
There is a long legislative road ahead for these infrastructure plans in a near evenly divided Congress. But there’s a real opportunity in the coming months to address systemic issues involving housing affordability and fair housing in a bipartisan manner while enhancing the American dream in the process. And the nation’s 1.4 million REALTORS® stand ready to help.