The Biden administration said on Thursday that it was looking to help hundreds of thousands of households to realize their dream of homeownership, part of an effort to reduce housing costs, increase supply of affordable homes and mitigate the rising expense of paying for a house for Americans.
Through its backing of a proposal known as the Neighborhood Homes Investment Act, it would “promote homeownership for an additional 500,000 households while increasing neighborhood revitalization investments,” Lael Brainard, the director of the White House’s National Economic Council, said in a speech on Thursday when she urged Congress to act on the proposal.
The act will introduce a new federal tax credit to help fund “the development and renovation of 1-4 family housing in distressed urban, suburban, and rural neighborhoods,” according to a draft of the bill.
The legislation introduced by Senators Ben Cardin, a Democrat from Maryland, and Todd Young, a Republican from Indiana, could help 500,000 homes and generate $125 billion in development revenue over the next decade, the lawmakers said earlier this year.
The housing market is in the midst of a convulsion fueled by the Federal Reserve’s effort to fight record inflation. The Fed’s raising of rates at the most rapid clip since the 1980s has helped push up borrowing costs for home buyers. Mortgage rates have soared to two-decade highs, prices have jumped, and the supply of homes has fallen.
Brainard suggested that President Joe Biden will not wait for Congress. The administration, for example, said that it was advocating for zoning reforms that will help unlock the construction of affordable homes.
“Our Department of Transportation is making billions of dollars in low-cost loans available for developing housing near transportation,” Brainard said.
The administration has also been trying to help first-time buyers who have struggled to gain a foothold into homeownership. Home prices were nearly six times the median potential first-time homebuyer income in the third quarter, according to NerdWallet’s recent analysis.
The White House pointed out that it was trying to reduce costs for first-time buyers through the Federal Housing Administration program. The effort, it said, helped reduce mortgage insurance premiums by 0.3 percent.
“This will mean savings of around $1,200 per year for a homebuyer buying a median home,” Brainard said.
Biden has proposed, through his budget a program, down payment assistance for first-time home buyers that the White House said will uplift first-generation homeowners.
“[The program could] help make homeownership a reality for families who do not have the advantage of previous generational wealth building from homeownership. Passing this legislation could begin to close the stubborn racial gap in homeownership,” Brainard said.
The White House also said that it was looking to help renters.
Brainard said that the administration has helped 100,000 low-income households guarantee their rent at 30 percent of their incomes.
“The president’s budget proposes expanding rental assistance to more than 200,000 additional households, including a first-of-its kind rental assistance guarantee for low-income veterans and former foster youth,” she added.