TL;DR: On May 16, 2022, the Biden-Harris administration released a five-point action plan to increase the nation’s housing supply over the next five years, ensuring “affordable rents” and “more attainable homeownership for Americans in every community” through a package of executive and legislative strategies. These strategies are a move in the right direction; will North Carolina’s Home Rule – Dillon’s Rule state of limbo neuter the Triangle’s potential benefits?
A Comprehensive Strategy to Address the Nation’s Housing Shortage
On May 16, 2022, President Biden and Vice-President Harris announced the “Biden-Harris Administration Housing Supply Action Plan To Help Close the Housing Supply Gap in Five Years.” The program summary describes both new administrative actions and proposed legislative actions to mitigate the nation’s unprecedented housing supply shortage and reduce the cost of quality housing over the next 3-10 years.
The Cost of Housing is Too Damn High!
The rising cost of housing has impacted every corner of the nation. It’s nearly impossible to consume any type of media these days without coming across an article, op/ed, or personal post despairing of the cost of housing, skyrocketing rents, short supply of housing, lack of housing diversity, character and quality of housing, the continued sprawl of residential growth, housing material supply chain challenges, the lack of construction and trade workers, debates about housing policies and zoning codes, long, expensive development review, NIMBYS, YIMBYS, and on, and on.
The communities of the Research Triangle have certainly not managed to escape ballooning housing prices. Even the places once considered more affordable (hi, Durham) are quickly becoming out of reach as housing supply struggles to keep up with demand. Compounded by pandemic related supply chain interruptions and the already-increasing cost of construction materials, housing prices continue to trend steeply upward. The rising cost of housing (for both buyers and renters) generates a cascade of impacts (bidding wars, predatory purchasers, evictions, increases in H+T Indices, disintegration of community networks, armchair experts, and much more).
The road to [housing] is paved with good intentions.
We are increasingly seeing beneficial regulations and policies such as stormwater regulations, climate change, housing affordability, and anti-displacement policies being weaponized to prevent desperately needed development. In some Triangle communities, the development review process has become so onerous that developers estimate it will cost $1,000,000 just to get a project to advisory boards and council. Combined with all of the external factors driving up housing prices, local “faux-gressives” are doing their best to hit the brakes (in their Prius, obvi) on any and all housing development, while waving the banner of smart, responsible growth and development.
Who cares about federal housing policy?
Because federal policies and priorities play a major role in the housing market and our built environment. In the 1930s, a housing shortage prompted the federal government to dip their toe into the real estate game, jump-starting America’s march to suburbanization. Not convinced? Consider the adverse impacts of federal housing policies on generations of non-white, urban dwelling Americans (see Rothstein’s “Color of Law” or Massey and Denton’s earlier seminal work “American Apartheid”). We continue to reckon with this legacy, and many of the challenges we face today are the direct result of these past mistakes. We can and must do better.
Welcome news from the White House
The White House announcement on housing indicates that the Biden-Harris Administration is taking the housing crisis seriously and proactively seeking solutions to complex problems. As stated in the release, increasing housing supply is “an important element of bringing homeownership within reach for Americans who, today, cannot find an affordable home because there are too few homes for sale in their communities” and supporting sustainable economic growth by reducing price pressures driving inflation.
We’ve reviewed the action plan framework, breaking down key elements, and synthesizing the assessments that have emerged over the last few weeks to generate our initial reaction to what we believe are the potential positives and pitfalls of the Administration’s strategies (through a Research Triangle lens, of course). We look forward to learning (and sharing!) more as these actions and strategies are implemented.
The Big Picture
The Housing Supply Action Plan includes both “Immediate Actions” (i.e., things that do not require Congress) and legislative actions (i.e., initiatives the “Administration has proposed and continues to call on Congress to pass”). These are organized within five primary focus areas:
- Providing Incentives for Land Use and Zoning Reform and Reducing Regulatory Barriers
- Piloting New Financing for Housing Production and Preservation
- Improving and Expanding Existing Federal Financing
- Preserving the Availability of Affordable Single-Family Homes for Owner-Occupants
- Addressing Other Constraints to Supply: Materials Costs and Labor Supply
Below is a summary table of focus areas and strategies (Administrative Actions and Legislative Actions) in the Housing Supply Action Plan.
Housing Supply Plan Focus Areas and Strategies
| Providing Incentives for Land Use and Zoning Reform and Reducing Regulatory Barriers | |
| Administrative Actions | Legislative Actions |
| Leveraging transportation funding from the Bipartisan Infrastructure Law (BIL) | Unlocking Possibilities Program |
| Integrating affordable housing into DOT Programs | Housing Supply Fund grants to reduce affordable housing barriers |
| Including land use within the U.S. Economic Development Administration’s (EDA) investment priorities | |
| Piloting New Financing for Housing Production and Preservation | |
| Administrative Actions | Legislative Actions |
| Supporting production and availability of manufactured housing | Provide tax credits to build and rehabilitate 125,000 homes for low- and middle-income homebuyers. |
| Scaling Up Accessory Dwelling Units (ADU) and piloting ADU and home renovation financing tools | Provide Housing Supply Fund financing for affordable housing production to develop 500,000 units of housing for low- and moderate-income renters and homebuyers |
| Boosting rural single-family construction | |
| Improving and Expanding Existing Federal Financing | |
| Administrative Actions | Legislative Actions |
| Strengthening Enterprise financing for multifamily development and rehabilitation | Financing more than 800,000 affordable rental units by expanding and strengthening the Low-Income Housing Tax Credit |
| Leveraging American Rescue Plan (ARPA) funds for investments in affordable housing | Expanding access to federal subsidies for the construction or rehabilitation of rental homes affordable to low and extremely low income households |
| Finalizing the LIHTC “Income Averaging” proposed rule | Addressing longstanding public housing capital needs. Nearly two million people across the country live in public housing |
| Advancing HOME as a key tool for the production and preservation of affordable rental and homeownership housing | Preserving more than 10,000 multifamily rental housing units in urban and rural America |
| Continuing to drive housing production through the Federal Financing Bank’s Risk Sharing Program | |
| Improving the alignment of federal funds to reduce transaction costs and duplications, and accelerate development | |
| Supporting the construction of more than 8,000 rural multi-family housing units | |
| Disposing of federal properties to create affordable housing for people experiencing homelessness | |
| Supporting new and existing affordable housing in Indian Country | |
| Preserving the Availability of Affordable Single-Family Homes for Owner-Occupants | |
| Administrative Actions | Legislative Actions |
| Directing supply to owner-occupants and mission-driven entities instead of large investors | |
| Encouraging use of CDBG for local acquisition and local sales to owner-occupants and mission-driven entities | |
| Addressing Other Constraints to Supply: Materials Costs and Labor Supply | |
| Administrative Actions | Legislative Actions |
| Partnering with the private sector to address supply chain disruptions for building materials | Recruiting more workers into good-paying construction jobs |
| Promoting modular, panelized, and manufactured housing – and construction R&D | |
Key takeaways and things to keep an eye on
- The Housing Supply Plan promotes the integration of land use, housing, and transportation – this is progress.
- It also brings a new federal partner into the mix – the EDA – connecting economic development to transportation, land use, and housing planning and investments – also good
- Communities that have enacted land use reforms receive priority consideration for some federal grant programs. This is good, but it only impacts the small subset of communities that apply for federal grants. And it doesn’t guarantee results. One recommendation is “requiring that jurisdictions demonstrate how land-use policies have actually increased housing production.”
- Many of the actions lack the teeth to drive large-scale change by “encouraging” but not “requiring”
- The Housing Supply Plan does not designate funding, technical assistance, or model guidance to help communities reform zoning and reduce barriers to housing development – many communities don’t know where to start
- The Plan claims to enjoy bipartisan support in Congress – a rarity these days.
- Could support financing 1 million+ accessory dwelling units (ADU) in addition to other “overlooked” housing types (modular, manufactured, live-work, etc.) in the next five years but zoning, building code, and land use changes must still be made at the state and/or local level to allow development of more innovative housing types. This is especially challenging in North Carolina where municipalities don’t have the luxury of robust home rule.
- The success of many actions relies on still untested financing options
- Boosting construction in rural areas also incentivizes housing development in locations far from existing infrastructure and services – is this how we want to grow? And – why is the United States Department of Agriculture financing housing development?
- The plan’s definition of “large investors” (those owning 10+ properties) seems arbitrary and squishy – what is a property? Is this a unit? Theoretically, this could be an investor with 1,000 apartment units or 10 small houses.
- Some solutions for easing the construction and trade labor shortages require comprehensive immigration reform. I’m not holding my breath on this happening anytime soon. And labor shortages in the skilled trades aren’t forecasted to let up anytime soon. In fact, they are anticipated to get worse.
- Actions to address supply chain challenges don’t resolve the freight movement challenges at the root of many bottlenecks. This includes labor shortages (at ports and movement between ports and destinations), inadequate infrastructure supporting freight movement (everything from rest areas for truck drivers to rails to carry trains), and increased consumption.
Overall, the Housing Supply Plan demonstrates a commitment and creativity from the White House for solving our nation’s affordable housing crisis. And it’s fantastic to see the Biden Administration thinking seriously about the importance of integrated land use and transportation planning, zoning and code reform, more flexible and innovative financing strategies, and expanding the diversity of our housing stock. But it’s not yet clear if these encouraged actions are enough to push the needle in the right direction. Especially in North Carolina, where our ability to implement many of the actions are limited by a bizarre state of limbo between Home Rule and Dillon’s Rule and the inability of local governments to enact policies without express delegation of power from the state. Triangle Blog Blog will continue tracking progress on the Housing Supply Plan, keeping you up to date and in the know.