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Yellen: Efforts to Boost Housing Supply06/24 06:13

   The Biden administration is announcing new steps to increase access to 
affordable housing as still-high prices on groceries and other necessities and 
high interest rates have dramatically pushed up the cost of living in the 
post-pandemic years.

   WASHINGTON (AP) -- The Biden administration is announcing new steps to 
increase access to affordable housing as still-high prices on groceries and 
other necessities and high interest rates have dramatically pushed up the cost 
of living in the post-pandemic years.

   Treasury Secretary Janet Yellen will promote the new investments on Monday 
during a visit to Minneapolis. They include providing $100 million through a 
new fund over the next three years to support affordable housing financing, 
boosting the Federal Financing Bank's financing of affordable housing and other 
measures.

   The increased attention to home prices comes as the housing crunch becomes 
an increasing issue in this year's general election campaign.

   "We face a very significant housing supply shortfall that has been building 
for a long time," Yellen says in remarks prepared for delivery Monday 
afternoon. "This supply crunch has led to an affordability crunch."

   Yellen says the administration is "pursuing a broad affordability agenda to 
address the price pressures that families have been feeling."

   Both homebuyers and renters are facing increasing housing costs that 
skyrocketed after the pandemic. According to the Case-Shiller 20-City Composite 
Home Price Index, home prices increased by 46% between March 2020 and March 
2024. A new Treasury analysis shows that over the past two decades, housing 
costs have been rising faster than incomes.

   Meanwhile, sales of previously occupied U.S. homes fell in May for the third 
straight month as rising mortgage rates and record-high prices discouraged many 
prospective homebuyers during what's traditionally the housing market's busiest 
period of the year.

   For low-income Americans, statistics from the National Low Income Housing 
Coalition show that nationally there is a shortage of more than 7 million 
affordable homes for the more than 10.8 million extremely low-income U.S. 
families. And there is no state or county in the country where a renter working 
full-time at minimum wage can afford a two-bedroom apartment, according to the 
group.

   It is becoming a crisis in some cities. For instance, on Martha's Vineyard 
in Massachusetts the cost of housing has become a public safety issue as it 
becomes difficult to attract and retain correctional officers and 911 
dispatchers.

   President Biden and presumptive GOP nominee Donald Trump have put forward a 
variety of proposals on how to make life more affordable for average Americans, 
from Trump proposing to make tips tax-free for workers and Biden pursuing a 
plan to cut student loan payments for borrowers. A representative from the 
Trump campaign did not respond to an Associated Press request for comment.

   But increased housing costs have some economists predicting the crunch may 
not end until the Federal Reserve lowers its key interest rate, which remains 
at 5.3%.

   Sal Guatieri, a senior economist at BMO Capital Markets Economic Research, 
wrote Friday that little change is expected in the housing market "until the 
Fed reduces policy rates."

   Diane Yentel, president and CEO of the National Low Income Housing 
Coalition, said the White House has made efforts to prevent evictions and 
address the housing crisis, "but there is much more work still to be done."

   Yentel said congressional action is needed to "quickly enact transformative 
and badly needed housing investments. Only through a combination of 
administrative action and robust federal funding can the country truly resolve 
its affordable housing crisis."

   In her speech, Yellen is to call on Congress to pass Biden's proposed 
budget, released in March.

   The budget calls on Congress to provide a tax credit for first-time 
homebuyers and includes a plan to build more than 2 million homes. It would 
expand the Low-Income Housing Tax Credit.

   The Biden administration has taken other steps to boost the housing supply, 
including launching a multi-agency effort to encourage states and cities to 
convert more empty office buildings into housing units, with billions of 
federal dollars available to help spur such transitions.

   In July 2023, the Department of Housing and Urban Development provided 
communities with $85 million to reduce barriers to affordable housing, such as 
zoning restrictions that in some places have become a hurdle to increasing the 
supply and density of affordable housing.

 
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