By Lexi Masarweh | Staff Writer
Due to the rise in housing prices, the Biden administration and White House officials are planning to build and restore over two million homes.
Americans are struggling to pay rent and spend most of their income on it. President Joe Biden finds this to be a danger to his economic plans, which focus on the middle class.
The Biden administration has set forth plans to relieve this housing crisis. The White House Council of Economic Advisers published its analysis of the housing affordability issue, which found that the COVID-19 pandemic created many problems related to housing and other economic concerns.
According to researchers at Freddie Mac — a mortgage loan company — the U.S. is 3.8 million homes short of what is required to cover demand, and this insufficiency has caused home prices to rise more rapidly than incomes are.
The Biden administration’s plan to solve this issue is to provide 100,000 affordable housing units in a span of three years. Also, its goal is to expand the financing possibilities for apartment buildings with tax credits, grants and loans.
Dr. Steve Gardner — Herman Brown professor of economics and director of the McBride Center of International Business — said the plan is aimed primarily at increasing the supply of housing by making it more affordable and recognizing the fact that there is a significant problem with substandard housing.
“There were studies like San Antonio, for example, that rate pretty negatively in terms of the percentage of the housing that is unsafe to live in,” Gardner said. “If you have unsafe housing and you have children that are being raised in unsafe housing, it can have health effects on children that can persist through their lives. Then, that has a negative effect on the economy over a longer period of time.”
Gardner said that there was a podcast he listened to regarding a group of people who lived in a mobile home park. Investors were about to purchase the mobile home park, with plans of increasing the rent. The people who lived there created an organization and bought the mobile home park so that they could keep it affordable.
Gardner said that the Biden administration’s proposal is trying to make it easier for groups of people to do the same thing that the residents of that mobile home park did.
Dr. Craig Gundersen, professor of economics, said the most important way to reduce housing prices in the U.S. is to have fewer housing regulations.
“There’s way too many housing regulations there in terms of zoning,” Gundersen said. “It’s hard to build houses in the Bay Area. It’s hard to make sure that more people can live in a house. It’s hard to even build small-scale housing behind a house with a big lot. Therefore, all of this is what drives high housing prices in the Bay Area.”
Gundersen said Houston has few zoning regulations, which means housing is affordable to everybody there.
“The median house price in San Francisco is $1.4 million,” Gundersen said. “The median house price in Houston is about $250,000. This is all due to regulations, and so once those are gotten rid of or moderated, you are going to have this equilibrium of housing prices across the country.”
Gundersen said his preferred method to address this issue would be either providing a universal basic income — which would enable people to make their own decisions regarding what they want for housing — or giving people vouchers to the Section 8 housing program — which would allow people to rent their own housing with subsidies from the federal government.