Since it was announced in May, the Biden administration’s roadmap to address urgent housing needs has generated relatively little buzz. While it was mostly applauded by the construction, mortgage and real estate industries for prioritizing supply and affordability bottlenecks that currently prevent many from obtaining even basic housing needs, much of the plan either depends on congressional action, cooperation at the local and state level, or both.
Earlier this month, the Department of Housing and Urban Development (HUD) announced details for one portion of the plan, titled “Our Way Home.” More of an awareness campaign than a brand-new program, “Our Way Home” seeks to “center localized efforts to address the housing shortage” and “engage communities through roundtables, listening sessions, and peer learning opportunities,” according to a statement from HUD Secretary Marcia Fudge.
“A big part of this initiative is to applaud the community partnerships and progress that is already happening. It is also a call to action,” Fudge wrote.
Fudge’s statement was revealing in that it highlighted maybe the biggest roadblock to Biden’s housing roadmap—and, more broadly, to any executive effort to quickly intervene in housing—which is that many of the levers that control housing supply and affordability remain extremely local.
According to a new breakdown of the Biden plan by the UC Berkeley Terner Center for Housing Innovation, much of what the plan aspires to requires either more details in order to fully evaluate, or will depend to a significant degree on local policymakers and other stakeholders.
“The plan’s ‘all of government’ approach implicates a variety of federal agencies and departments as well as state and local governments and the private sector,” the researchers noted.
While broadly applauding the administration’s effort to center housing issues, the Terner analysis points out that some details in the roadmap are not yet forthcoming, even as its goals are potentially significant and could create transformative change to what has become a historic crisis.
“By bringing the full weight of the federal government to bear on a comprehensive strategy to build more homes throughout the country, this plan offers a range of policy interventions…while making progress on a number of key housing issues,” the Terner researchers added.
Comparing the plan to Terner’s own framework for reforming federal housing policy released in 2021, the researchers honed in on three specific aspects of the plan: a promise to explore lending programs for ADUs, incentivize zoning reform and overhaul affordable housing funding, areas that align with actionable, substantive reforms previously identified by Terner.
Notably on the ADU front, Biden has directed government entities like Fannie Mae and Freddie Mac to begin “exploring avenues” to change how these structures are financed, which would support an ongoing movement to ease restrictions on how, when and where ADUs can be built.
“No mainstream source of financing exists for ADU construction and, as a result, most homeowners must use cash savings or home equity lines of credit to build an ADU,” the researchers noted. “This lack of financing is part of the reason why we see ADUs built disproportionately in wealthy areas, leaving low- and moderate-income homeowners without a pathway to realizing the wealth and revenue potential of ADU development.”
Sarah Berke, a program officer at Minnesota-based nonprofit Family Housing Fund, told RISMedia last year that ADUs “add something new” to local efforts toward creating more affordable housing in socioeconomically diverse areas.
But even as her state significantly loosened zoning restrictions, only a relatively small number of ADUs appeared in the area—at least partially due to trouble financing them, Berke says.
“The projects we looked at cost around $75,000 or $80,000—that’s still affordable for some folks, but not for other folks,” she says, adding that detached or free-standing structures cost around $200,000. “In Minnesota you have to build a foundation with frost footings and everything…that’s part of the consideration.”
The Terner center researchers called the possibility of government-backed loans for these projects “a potentially significant step forward” with “implications well beyond backyard homes,” noting the changes also could include modular construction and manufactured homes.
Zoning reform has remained a very hot topic particularly in the land-starved, least-affordable housing markets in the Northeast and West. Biden, in the plan, promised to use funds appropriated by congress last year for infrastructure to incentivize cities and states to enact more progressive zoning policies.
“But exactly how the government can achieve this…remains a topic of debate, given the deeply entrenched local politics of zoning and variation in local market conditions. The key to the success of a pro-housing incentive approach lies in the ability of such good faith efforts to actually result in new housing,” the researchers caution.
Speaking to RISMedia earlier this year, Catherine Brinkley, a professor at UC Davis studying health, regional planning and sustainable development, says that the effort to reform zoning is a complex and invariably regional process, making heavy-handed government interventions likely to underperform.
“All of those decisions are very local,” she says. “Even where a city isn’t doing enough to build housing… the city can’t fight the development based on its zoning code, it can still slow down the permitting process.”
Many local officials will design lengthy review processes or even file lawsuits to delay a new housing development, Brinkley says. One affluent city in California tried to designate the entire town as a mountain lion habitat earlier this year to avoid state-mandated housing increases, a demonstration of just how resistant some regions are to changing their often harmful and restrictive housing policies.
For that reason, educating and getting locals onboard with adding more housing to their town or neighborhood ends up being the most important step to overcoming these attitudes. Brinkley led a project aggregating the language California towns use to describe their zoning policies qualitatively, hopefully to help residents and policymakers reorient toward more inclusive policies and decrease resistance to change. Another project in Connecticut called the “Zoning Atlas” has similar goals, gathering data to compare and visualize how municipalities restrict land use.
“Because it’s a local issue and it’s under local control, the data hasn’t been aggregated until very recently,” Brinkley says. “It’s been really hard to know, is this a problem everywhere, is it a problem in particular places? And then who is making headway and how are they doing it? It has been hitherto unknown.”
Sara Bronin, a Cornell professor and the creator of the Zoning Atlas, was nominated last summer by the Biden administration to chair the federal Advisory Council on Historic Preservation.
The Terner researchers agreed that zoning reform by itself was simply not sufficient to overcome the myriad of ways housing can be stymied at the local level.
“Updating zoning is not enough to catalyze construction. Market dynamics, fees, and other regulatory mechanisms can render well-meaning land use reforms ineffective,” they wrote. “That is why any reforms tied to incentives must include some sort of assurance that they actually lead to added supply. We continue to do work on this topic in the hope of providing resources for policymakers to understand the importance of comprehensive land use and zoning reform that will result in measurable increases in new homes.”
Finally, the Terner researchers highlighted the Biden plan’s commitment to streamline the complex, opaque and “fragmented” system for funding affordable housing—programs like the Low-Income Housing Tax Credit (LIHTC), HOME Program, and Community Development Block Grants.
“The patchwork of supply-side subsidies drives up overall cost, which results in affordable housing subsidies becoming less effective,” the researchers claim, adding that the number of separate subsidies needed to fund a new project doubled between 2000 and 2018. Details of how exactly the Biden plan would “harmonize” funding for affordable housing funding had not yet been released, though researchers noted that Minnesota created a “one stop” application for funding
Each additional subsidy source was associated with an added 1.7% in total project cost per unit, according to a 2020 Terner study. That study also laid out a more efficient path for funding affordable housing programs, with some changes admittedly requiring congressional approval.
“Better alignment, if not outright consolidation, of other federal funding sources that often layer with LIHTC would reduce the costs and complexity associated with the fragmented financing of housing production and could allow these resources more flexibility to respond to changing market needs, including the shifting geography of poverty and opportunity,” the study claimed.
The Terner researchers concluded that the first step to any meaningful work from the federal level on housing has to start with a recognition of just how vital housing is, and how public resources can support it.
“This plan…serves as a significant statement of values given that no president in recent memory has so explicitly wielded executive authority to directly address such a range of housing supply issues,” they wrote. “While it remains to be seen if Congress will similarly step up, the administration lifting up housing supply as a core issue and laying out a set of immediately actionable steps represents a meaningful response to the systemic housing challenges our country is currently facing.”