Biden Wants to Boost Affordable Housing. Easier Said Than Done.

The cost of housing has become nigh insurmountable for many Americans, but their struggle can be a politician’s boon—a big structural problem ripe for capitalization in a campaign. As he kicks his reelection effort into gear, President Joe Biden is getting in on the action, touting his proposals to lower the cost of living. He spent a brief but significant chunk of his recent State of the Union address on a slew of new proposals intended to make housing more affordable for renters and first-time homebuyers; the following week, he outlined these policies in his budget proposal for fiscal year 2025.

This renewed interest from the president highlights the importance of housing policy amid a challenging election season. “If inflation keeps coming down, mortgage rates will come down as well,” Biden said in his State of the Union remarks. “But I’m not waiting.”

As is always the case, the president’s budget is essentially a grab bag of messaging items that are unlikely to end up getting passed by Congress. But its implications extend beyond the campaign trail by staking out territory for future policy debates. Some housing advocates hope that introducing these proposals will help provide new momentum for lawmakers to take up these issues—and perhaps even encourage the president to become more ambitious.

“The sum total of the proposals is really exciting, and the way in which they’re trying to look at the whole housing supply shortage [and] housing unaffordability problem holistically,” said Janneke Ratcliffe, vice president for housing finance policy at the Urban Institute. “Anything that can lighten the load on the renters is obviously going to be good for the households, but also good for the communities they live in and the economy.”

In 2022, over 22 million households spent more than 30 percent of their monthly income on rent and utilities, according to a January report by Harvard’s Joint Center for Housing Studies. Those who spend this portion of their income are considered by housing experts to be “cost-burdened.” Some are more cost-burdened than others: Among such households, 12.1 million renter households spent more than half of their income on housing costs.

Biden’s proposals include boosting funding for the housing choice voucher program and investing $86 billion in the Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity. His budget would also boost rental assistance for very low-income populations, including through funding for long-term contracts with owners to rent new affordable housing units.

To assist homeowners, Biden has also proposed a pair of tax credits to make homeownership more accessible: a two-year $5,000 tax credit for first-time buyers earning under a certain threshold and a $10,000 credit for families seeking to sell their starter homes. The president’s budget further includes funding for a program to assist low-income first-generation homebuyers.

Across the country, mortgage affordability remains low: With a 20 percent down payment, the Urban Institute estimated that the share of median income needed for a monthly mortgage payment hovered at nearly 32 percent in January. With a 3.5 percent payment, the share of median income needed increased to almost 37 percent.

Although Biden’s proposal is the most comprehensive housing plan proposed by a president in recent memory, it is not invulnerable to critique from housing experts. Biden’s planned tax credits may not go as far as the administration might hope in avoiding the “lock-in” effect, wherein homeowners are reluctant to give up their low mortgage rate in order to sell and buy a new house: Julie Fonseca, assistant professor of finance at University of Illinois at Urbana-Champaign, wrote on X that “the tax credit isn’t very large relative to how much low mortgage rates are worth to borrowers,” such that “it might not be enough to incentivize even one seller to sell, let alone two.”

Some believe that Biden could be even more ambitious in his goals. “Given the vision that the president is putting in the budget, then let’s go for it, right?” said Peggy Bailey, vice president for housing and income security at the Center for Budget and Policy Priorities. “Let’s just start to make bigger proposals so that … we can have the proposals ready for the moment that we need them.”

But any such policy is unlikely to be approved by Congress. Even when Democrats held both chambers of Congress and the White House in 2021 and 2022, they were unable to pass ambitious affordable housing proposals. At the end of 2021, efforts to enact the Build Back Better Act—the massive social policy bill championed by Biden and supported by most congressional Democrats—fell apart due to universal opposition from Republicans and at least one conservative Democrat. That bill had included multiple provisions to boost affordable housing, including an expanded low-income housing tax credit and a new tax credit to promote renovating homes in distressed areas, as well as large investments in public housing and housing choice vouchers. (These proposals are echoed in Biden’s budget released this month.)

“Had we passed prior legislation that the administration proposed, we would have been able to really provide the type of relief that families are desperately in need of as it relates to the rising housing costs that families are experiencing,” said Nikitra Bailey, executive vice president of the National Fair Housing Alliance. Then there are the practical constraints of the current Congress, including an agreement reached by Biden and former Speaker Kevin McCarthy last year that capped spending at certain levels; the funding for housing in Biden’s budget is reflective of those caps.

Moreover, when considering housing assistance, long-term solutions are more difficult to formulate than short-term relief. Bailey of the Center on Budget and Policy Priorities argued that the government should account for low-income people who will always struggle with earning enough to pay rent amid price increases. “We need to be thinking at least longer than two, three years when we’re creating these programs. We need to make sure that we’re thinking decades in advance so that these resources are perpetually available,” she said.

In 2021, Freddie Mac—one of two government-created companies that helps provide stability and liquidity to the U.S. mortgage market—estimated that there is a deficit of 3.8 million units across the country. Some estimates of the housing shortage are even higher, particularly for very low-income renters. According to the National Low Income Housing Coalition, the United States has a shortage of 7.3 million rental homes available to renters with incomes at or below federal poverty guidelines or 30 percent of their area median income—translating to an average of roughly 34 affordable and available rental homes for every 100 very low-income renters across the country.

Some conservatives argue that tax credits alone are not sufficient to address the affordable housing crisis. “There is a growing consensus that the solution to making housing more affordable lies in adding more housing supply, not in easy credit and market distorting subsidies,” Edward J. Pinto, senior fellow and co-director of the housing center at the conservative American Enterprise Institute, wrote in reaction to Biden’s proposals earlier this month.

However, Ratcliffe said that while tax credits could not “single-handedly” account for the lack of affordable housing, they could “catalyze more long-term solutions,” which would include building more units. The pace of building has never recovered since the foreclosure crisis more than a decade ago, creating a domino effect: More people in the rental market resulted in greater demand, leading to higher rents, thus forcing lower-income Americans out of the market and contributing to homelessness. “What it’s going to take is a supply strategy that looks at all these different pieces of the puzzle,” Ratcliffe said. “I think that the administration has some proposals in all of those buckets.”

Even as Biden’s budget proposals are unlikely to pass—not only because they are considered partisan by Republicans but because Congress has been unable to approve full government funding five months into the fiscal year—advocates say they provide a good launching point for further conversations. After all, lack of affordable housing cuts across party lines. But talk about increasing access to affordable housing reform is less useful as a campaign platform if it cannot be backed up by meaningful action.

“What voters want are real solutions, bipartisan solutions, to really address the skyrocketing cost of housing and ensure fair access for everyone,” said Bailey of the National Fair Housing Alliance.