3/20/2023 0 Comments Wally adeyemoIt’s hard to see how Biden’s current plan will substantially tackle the nation’s lack of housing. While this is a good signal of the Treasury’s and the Biden administration’s priorities, the proposed policies are unlikely to do enough to solve the supply crisis - and that’s if Congress gets on board. While preserving existing affordable housing is important and ensures supply does not decrease, that only keeps the US at the status quo, which is a market with a roughly 4 million home shortage and where roughly 46 percent of renters are rent-burdened. The Treasury Department did not confirm with Vox how many units are going to be produced vs. Adeyemo is making the case that the federal government cannot remain content with just helping people afford expensive housing - it has to do something to address the cost of housing itself. Those four listed above are some of the housing policies in the American Jobs Plan, which Treasury estimates will “generate production or preservation of more than 2 million affordable housing units.” What’s significant about the memo is its focus on supply. Those policies themselves aren’t new proposals for Biden’s administration. $5 billion incentive program to “reward jurisdictions” that remove exclusionary zoning policies.$40 billion to invest in America’s public housing stock.Roughly $94 billion in additional subsidies to “build and preserve rental housing for the lowest-income renters”.Tax credits that make it “cost-effective to build new units of affordable housing and to rehabilitate existing homes in poor condition”.The memo outlines a few policies that Treasury believes will help alleviate the problem, all of which it would need Congress’s help to implement: Not only is it the fundamental cause of skyrocketing prices over the last year, it was responsible for the burdensome cost of rent and homes before Covid-19 ever hit the United States and it opens the door to increased discrimination. housing policy by focusing on supply constraints and the availability of affordable housing units, including multifamily rental units.”Īdeyemo is right: The supply problem is the biggest problem in the housing market. In the memo, he writes: “Critically, the Biden-Harris Administration is undertaking an historic shift in U.S. Secretary of the Treasury Janet Yellen (left) swears in Wally Adeyemo as deputy secretary of the Treasury on March 26. “Ultimately, the biggest driver of the lack of affordable housing today is a supply constraint that has existed before the COVID pandemic but has been exacerbated by the pandemic,” Adeyemo tells Vox. Now, in a memo authored by Deputy Secretary of the Treasury Wally Adeyemo, he makes the case for an increased focus on supply-side interventions. But they don’t do anything to reduce the cost of housing. These types of policies are broadly popular since they help people afford something expensive. Things like the mortgage interest deduction, which reduces homeowner’s taxes ( stimulating demand) or the Fed buying up over a trillion dollars in mortgage bonds to help bring down mortgage rates (also stimulating demand). Traditionally, the federal government’s housing policies have been demand-side interventions. Its message? The country is quickly running out of homes, and you need to do something about it. The Treasury Department is waving a warning flag to Congress and other policymakers about the housing market.
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