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How the Biden Administration and Congress can build on solid housing production numbers – now

Last week, I wrote “Housing has never been so expensive – for homeowners and renters, at all income levels, in every part of the country,” noting that our “deficit of 3-5 million housing units, depending on how we account for it, could take 10-15 years to close.” This week, we saw concrete evidence that the gap is starting to narrow. The numbers should be seen as a good start, with an invitation to do the next right thing: pass the bipartisan tax bill that includes a significant increase in the Low Income Housing Tax Credit, extend the Federal Financing Bank’s Multifamily Risk Sharing program, and enact the Neighborhood Homes Investment Act.

The good news is that real progress is being made by homebuilders. According to the data jointly released on February 16 by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD), building permits issued for privately?owned housing units in January 2024 were at a seasonally adjusted annual rate of 1,470,000. This is 8.6 percent above the January 2023 rate of 1,354,000. This increase was made in the face of historically high interest rates. In a falling rate environment, we could see even more units being built as demand grows.

Progress on single-family construction was concentrated among smaller housing units with fewer bedrooms, according to Zillow. Zillow reported that this shift is likely due in part to builders responding to worsening affordability for potential first time home buyers. According to third quarter 2023 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area came in at 2,221 square feet, close to the lowest reading since the end of 2010. Average (mean) square footage for new single-family homes registered at 2,430 square feet. 2,200 square feet is a lot of house, and significantly larger than most apartments. Both my first home and my parents were well under 2,200 square feet. It’s a great start.

The author and his mother in front of their first home in 1961. Built for under $20,000, the house recently sold for $350,000. Both prices were below the U.S. median home price at the time. Photo by Edward Dworkin


While single-family units led the increase, multifamily unit construction may have peaked, according to Bill McBride at Multifamily starts were down 36.8% year-over-year in January while single-family starts were up 22.0% year-over-year. McBride noted that the “expected weakness in multi-family starts began last summer, and we should see ongoing weakness in the sector based on less household formation, falling asking rents, rising vacancies, and tighter lending. We saw this coming in the National Multifamily Housing Council’s (NMHC’s) Quarterly Survey of Apartment Market Conditions and in the Architectural Billings Index that showed a decline in multi-family design for the 17th consecutive month in December. A near record number of multi-family housing units are currently under construction due to construction delays. This suggests a large number of multi-family housing units will be delivered in 2024.”

But few of these were affordable units. This leveling of the higher-priced multifamily market is a perfect opportunity to accelerate the construction of affordable rental housing. It’s essential that we do not lose the new building capacity of the multifamily housing construction industry when we still have such a deep deficit of affordable housing.

While rents have begun to stabilize, the huge increases experienced since the pandemic are baked into the unaffordable housing pie. According to NHC’s Paycheck to Paycheck database, the income needed to rent a one-bedroom apartment in Phoenix, Ariz., is up 34%. In Tampa, Fla., it’s up 24%. Even Boise, Idaho, requires an 18% increase in salary to afford the same one-bedroom apartment. Arizona saw a 30% jump in its homeless population during that same period. Not coincidentally, Metro Phoenix’s homeless population has grown by an astonishing 50% in the past five years. The dramatic spike has been in spite of major efforts from the city, county and state to address the issue, according to Arizona public radio station KJZZ.

One program that the Biden administration can fix immediately is the Federal Financing Bank (FFB) Risk Share Program. This joint U.S. Department of Treasury and HUD program was created in 2015 to close a funding gap in the private markets and stimulate greater affordable housing production.

FFB funding proved to be an excellent source for state and local housing finance agencies (HFAs) to access long-term, fixed-rate financing to construct and preserve affordable multifamily rental housing. Despite helping 14 state and local HFAs commit $2.4 billion in financing for over 24,000 units nationwide, the Trump Administration terminated new FFB funding commitments at the end of 2018. Thanks to President Biden, the program was restarted in 2021 and is part of the president’s Housing Supply Action Plan. Since its inception, the FFB Risk-Sharing Program has closed or committed $4.9 billion for 42,000 apartments. The program is making a hefty profit for the government – $462 million in profit, if the current negative credit subsidy rate of 7.83% is applied to the total volume.

Despite its record of creating and preserving tens of thousands of units of affordable housing, the program is set to expire in 2024. Unless administrative action is taken, HUD will no longer accept applications for new transactions after September 30, 2024. President Biden can keep this important program alive without any action by Congress. He should do so immediately.

A major step towards closing the rental housing gap has already been approved by the U.S. House of Representatives. The Tax Relief for American Families and Workers Act includes major provisions from the Affordable Housing Credit Improvement Act, which will create 200,000 additional units of affordable rental housing. The bill passed the House 357 to 70 after a 40-3 vote in the House Ways and Means Committee. But the Senate has still not acted on the bill.

While Senators and Representatives are meeting with constituents during the Presidents Day recess, now is an ideal time to reach out to them and let them know passage of this legislation is vitally important. The 357 Representatives who voted for the bill should be thanked and asked to contact their Senators to encourage immediate action. Shelter costs have once again slowed progress on getting inflation under control while millions of Americans struggle to afford their housing. We can’t waste another year.

To assist in your outreach, we have drafted talking points you can use in emails or conversations. We also encourage you to look up your metro area in NHC’s Paycheck to Paycheck database, where you can get regularly updated information on how 150 occupations may struggle with housing affordability. To contact your Senators, click here.

While single family homebuilders have also stepped up to close the gap in housing available for homeownership, there are also millions of homes across the country that need major rehabilitation, or vacant lots where new affordable housing for homeownership can be built.

In hundreds of communities throughout the country, the cost of rehabbing or building a new home surpasses its value when completed, perpetuating a vicious cycle that keeps neighborhoods underwater and hinders revitalization efforts. The Neighborhood Homes Investment Act (NHIA) creates a federal tax credit that covers the gap between building or renovating a home in distressed areas and the price at which the home can be sold. NHIA tax credits are awarded to project sponsors—developers, lenders, or local governments—through a competitive statewide application process administered by each state’s housing finance agency. As Senator Todd Young (R-Ind.) said in his note to our members earlier this year, in Indiana NHIA would support the construction and renovation of more than 9,000 new over a decade. Senator Young introduced the bill with Senator Ben Cardin (D-Md.). It currently has 10 cosponsors in the Senate, including five Republicans.

The NHIA will be a great resource for red and blue states alike. In cities like Detroit, Cleveland, Indianapolis, and Baltimore, neighborhoods stuck in a cycle of growing blight can be restored. But appraisal gaps are also a critical issue in rural areas. More than one in four census tracts in Kentucky are distressed, according to the NHIA criteria. Overall, 45% of Kentucky’s census tracts qualify compared to 29% nationwide. In ten years, NHIA could build or rehab 6,300 homes in Kentucky, creating $1.5 billion in development activity, 11,000 jobs in construction and related industries, $700 million in wages, and $151 million in state and local government revenue. An interactive map for most of the country is available at

We need to do everything in our power to create affordable housing. As I said last week, a deficit of 3-5 million housing units, depending on how we account for it, could take 10-15 years to close. We dug this hole over 15 years. We are going to have to get out of it the same way. One shovel at a time. Delay, however, ensures it will take longer, and be more costly.

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