President Biden’s Proposed Budget Attempts To Help Low-Income Renters and Homebuyers
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Joe Biden has big plans to increase the amount of affordable housing throughout America and help lower-income renters and would-be homeowners.
The president released his proposed 2024 budget on Thursday, which outlines his administration’s plans to increase the Department of Housing and Urban Development’s budget by 1.6%. This would bring HUD’s funding to $73.3 billion in 2024. But this budget is regarded as more aspirational as it is unlikely to pass through a Republican-controlled House of Representatives in its current form.
“The Budget invests in Americans at every station in life—from those seeking to purchase a home to those who receive HUD rental assistance—and will ensure families across the country can live in communities that are safe, affordable, and resilient,” HUD Secretary Marcia Fudge said in a statement.
The budget prioritizes helping lower-income renters, helping more people from underserved communities become homeowners, and increasing the supply of affordable housing. Biden also is putting more money toward ending homelessness and preventing and addressing housing discrimination.
Many are skeptical that additional funding will turn much around. During Biden’s two years in office, housing has become more, not less, expensive and many Americans are struggling to pay their rent and mortgages.
“The problem is, this doubles down on 50 to 60 years of failed federal housing policy,” says Ed Pinto, director of the American Enterprise Institute’s Housing Center. AEI is a conservative-leaning think tank. “The money ends up being siphoned off by the builders, the government agencies, and nonprofits, and it never gets to benefit the people they say it’s going to benefit.”
Some of the key points of the president’s budget include increasing the pool of money available for housing vouchers, which 2.3 million low-income families who rent their homes use to help pay their landlords. The administration expects an additional $2.4 billion would maintain the existing vouchers and expand access to an additional 200,000 new families, including youth aging out of foster care, those facing homelessness, and low-income veterans.
In addition, more money would be set aside for eviction prevention, which includes emergency rental assistance and legal assistance to those at risk of losing their homes.
Money would be earmarked for fair housing organizations focused on eliminating housing discrimination.
Biden is also prioritizing building and rehabbing affordable rentals and homes for sale. This includes creating more reasonably priced homes for tribal communities and modernizing and rehabbing the nation’s public housing.
The president is also focused on expanding opportunities for homeownership. The budget also aims to create a down payment assistance program for first-generation homebuyers from communities of color.
It also touted the Federal Housing Administration’s recent announcement that it will reduce the mortgage insurance premiums by a third. Most buyers who don’t put down 20% on their home purchases are required to carry the insurance. The cut is expected to save FHA borrowers about $800 in their first year of homeownership.
Pinto believes the FHA premium reduction will ironically wind up making housing less affordable for the very people trying to become homeowners. By making homeownership more affordable for buyers, it will drive up the demand for housing, he says. That typically leads to higher prices as well as bidding wars when there aren’t enough homes to go around.
“If you increase demand and don’t increase supply, prices go up,” says Pinto.
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