Biden Announces Plan to Lower Housing Costs for Working Families

In conjunction with his State of the Union address, President Biden & the White House announced A PLAN to lower housing cost for working families. 

Below are some of they points and any insights I can provide on the matter. I do my very best to keep politics out of any commentary so I'll make best efforts to be as neutral as possible in my comments. 

1. President Biden believes housing costs are too high, and significant investments are needed to address the large shortage of affordable homes inherited from his predecessor and that has been growing for more than a decade. 

Weitz- I'd agree that costs are too high for the average American. 

2. President Biden will call on Congressional Republicans to end years of inaction and pass legislation to lower costs by providing a $10,000 tax credit for first-time homebuyers and people who sell their starter homes; build and renovate more than 2 million homes; and lower rental costs. 

Weitz- Is a $10,000 tax credit going to do much if you can't afford the home in the first place? 

3. Mortgage Relief Credit. President Biden is calling on Congress to pass a mortgage relief credit that would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years. This is the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home, and will help more than 3.5 million middle-class families purchase their first home over the next two years. 

Weitz- This math doesn't work in Seattle area, but I like the concept. 

4. The President’s plan also calls for a new credit to unlock inventory of affordable starter homes, while helping middle-class families move up the housing ladder and empty nesters right size. Many homeowners have lower rates on their mortgages than current rates.

Weitz- How? See below. 

5. The President is calling on Congress to provide a one-year tax credit of up to $10,000 to middle-class families who sell their starter home, defined as homes below the area median home price in the county, to another owner-occupant.

Weitz - so I go from a 2.5% mortgage at $700k so I can buy a 7%+ mortgage at $700k. That's a horrible move if the credit only lasts a year. On a $700k home loan, that's $32,000  increase annually, but thanks for the $10,000 tax credit!

6. Lowering Closing Costs for Home Mortgages. The Consumer Financial Protection Bureau will pursue rulemaking and guidance to address anticompetitive closing costs imposed by lenders on homebuyers and homeowners.  These charges—which benefit the lender but not the borrower—can add thousands to the upfront costs of a mortgage.  Those upfront costs cut into the amount of homebuyers’ down payments and reduce homeowners’ available equity.

7. Tax Credits to Build More Housing. President Biden is calling for an expansion of the Low-Income Housing Tax Credit to build or preserve 1.2 million more affordable rental units. Renters living in these properties save hundreds of dollars each month on their rent compared with renters with similar incomes who rent in the unsubsidized market.

8. Innovation Fund for Housing Expansion. The President is unveiling a new $20 billion competitive grant fund as part of his Budget to support communities across the country to build more housing and lower rents and homebuying costs. This fund would support the construction of affordable multifamily rental units; incentivize local actions to remove unnecessary barriers to housing development; pilot innovative models to increase the production of affordable and workforce rental housing; and spur the construction of new starter homes for middle-class families. 

Weitz - intrigued by this as would be my developer contacts. I have to say its a bit concerning that this is 1/3 of what many want to send to Ukraine.

9. Fighting Rent Gouging by Corporate Landlords. The Biden-Harris Administration is taking action to combat egregious rent increases and other unfair practices that are driving up rents.

I've keep an eye on this. I'll never be made a tax credits, but this doesn't seem to solve the issue although the grant program seems very intriguing.