WASHINGTON (AP) – The Biden administration announced new steps to increase access to affordable housing as still-high prices for groceries and other necessities and high interest rates have dramatically pushed up the cost of living in the post-pandemic years.
Secretary of the Treasury Janet Yellen promoted the new investments Monday during a visit to Minneapolis. Investments include securing $100 million through a new fund to support affordable housing financing over the next three years, boosting affordable housing financing and other measures from the Federal Finance Bank.
The increased focus on house prices comes as the housing crisis becomes a growing issue in this year’s general election campaign.
“We face a very significant shortage of housing supply that has been built up for a long time,” Yellen said in a speech Monday afternoon. “This supply crisis has led to an affordability crisis.”
Yellen said the Democratic administration is “pursuing a broad affordability agenda to address the price pressures that households have felt.”
Both homebuyers and renters are grappling with rising housing costs that skyrocketed in the wake of the pandemic. According to the Case-Shiller 20-City Composite Home Price Index, home prices rose 46% between March 2020 and March 2024. A new Treasury analysis shows that over the past two decades, housing costs have risen more faster than income.
Meanwhile, sales of previously occupied homes in the US fell in May for the third month in a row as rising mortgage rates and record high prices discouraged many prospective homebuyers during what is traditionally the housing market’s busiest time of year.
For low-income Americans, statistics from the National Low-Income Housing Coalition show that nationally there is a shortage of more than 7 million affordable homes for more than 10.8 million extremely low-income American families . And there is no state or county in the country where a full-time minimum wage renter can afford a two-bedroom apartment, according to the group.
It is turning into a crisis in some cities. For example, on Martha’s Vineyard in Massachusetts, the cost of housing has become a matter of public safety as it becomes difficult to attract and retain corrections officers and 911 dispatchers.
President Biden and presumptive GOP nominee Donald Trump have laid out a series of proposals on how to make life more affordable for average Americans, from Trump. proposing to make tips tax-free for workers and Biden pursuing a plan to lower student loan payments for borrowers. A representative from the Trump campaign did not respond to an Associated Press request for comment.
But rising housing costs have led some economists to predict that the crisis may not end until the Federal Reserve lowers the key interest rate, which remains at 5.3%.
Sal Guatieri, a senior economist at BMO Capital Markets Economic Research, wrote on Friday that little change is expected in the housing market “until the Fed cuts policy rates.”
Diane Yentel, president and CEO of the National Low Income Housing Coalition, said the White House has made efforts to prevent evictions and address the housing crisis, “but there’s still a lot of work to do.”
Yentel said congressional action is needed to “quickly deploy transformative and much-needed housing investments. Only through a combination of administrative action and strong federal funding can the country truly solve its affordable housing crisis.”
In her speech, Yellen urged Congress to pass Biden’s proposed budgetreleased in March.
The budget asks Congress to provide a tax credit for first-time buyers and includes a plan to build more than 2 million homes. He would expand the low-income housing tax credit.
The Biden administration has taken other steps to increase housing supply, including launching a multi-agency effort to encourage states and cities to convert more vacant office buildings into residential units, with billions of federal dollars available to help spur those transitions.
In July 2023, the Department of Housing and Urban Development awarded $85 million to communities to reduce barriers to affordable housing, such as zoning restrictions that in some places have become an obstacle to increasing the supply and density of affordable housing.
___
Follow AP’s coverage of Treasury Secretary Janet Yellen at https://apnews.com/hub/janet-yellen.