On Wednesday, the White House introduced a four-point plan to “increase affordable housing supply” nationwide:
- Increase rental housing with various low-interest loan and tax credit programs;
- Increase federal loan programs for manufactured housing and two- to four-unit homes;
- Focusing existing home loan programs on individual homebuyers rather than investors; and
- Encouraging state and local governments to use American Rescue Plan funds to build affordable housing and to reduce exclusionary zoning.
Most of these points do nothing to increase housing supply. The first two mainly redeploy funds that are already being spent on housing into slightly different housing programs. The third assumes that speculators are driving up housing prices and denying homeownership to families when in fact the “large investors” that Biden proposes to exclude from federal home loan programs are merely responding to rising prices. Almost no new homes would be built as a result of any of these three points.
Only the last point has the potential to increase housing supply, but will do so in the most expensive ways possible. Government construction of so-called “affordable housing” is usually anything but affordable, with cities and states often spending twice as much per square foot as private builders on new homes. Continue reading
