On Monday, US Treasury Secretary Janet Yellen announced that the Biden Administration would commit new funding to boost housing supply and lower housing costs. The measure includes $100 million to help finance affordable housing through the Community Development Financial Institutions Fund and calling on Federal Home Loan Banks to do more to boost their support of housing programs.
In an exclusive interview, Treasury Secretary Yellen sits down with Yahoo Finance Reporter Jennifer Schonberger to discuss the recent announcement and its implications for housing market.
Watch Yahoo Finance’s full, exclusive interview with US Secretary of the Treasury Janet Yellen.
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This post was written by Nicholas Jacobino
Video Transcript
Housing affordability has become a major issue for Americans in this country.
You’re here today in Minneapolis announcing new initiatives on housing affordability, including a brand new Treasury programme that would allocate $100 billion over three years to help finance housing affordability.
How quickly can Americans expect relief from these programmes?
Well, these are things that are in our power now with the tools we have that I think will be helpful.
But I don’t wanna say that there’s a silver bullet.
Um, I think we look to Congress to do much more.
Uh, President Biden has proposed a programme that would lead to the construction of 2 million, um, new housing units which, um, it would really make a sizable dent in the problem that we face.
But we wanna use every tool that we have.
And today we announced, as you said, $100 million from, um returns on investments that we’ve been making in community development financial institutions over the next three years, and that can make a noticeable difference.
We’re also calling on the Federal Home Loan banks which were chartered to, uh, deal with housing and promote affordable housing to up their, uh contributions, their use of their income to 20% of their income.
Um, to help with the affordable housing situation, we made a few additional announcements today.
We can do to lower burden in one of our key housing programmes of the Magnet fund and also, um to help housing agencies.
Local housing agencies have access to, um reasonable, low quality, low cost financing through the federal Financing bank.
It’s not just low income Americans, though, that are grappling with housing affordability.
It’s the middle class.
So why not offer tax incentives to try to increase housing supply on the market, whether for home builders or investors who bought up so many of the foreclosures following the financial crisis?
Well, we agree with that.
The most important tax incentive that we have, it’s the most important affordable housing programme is the low income housing tax credit.
And there is a bipartisan bill that passed the house that we’re supported of would love to see the Senate vote on it that would increase the supply of these, um, housing tax credits and boost affordable uh, housing.
So, uh, President Biden has also proposed a tax rebate for first time home buyers and, interestingly, also, um, for sellers of homes, many of whom have seen such a big increase in mortgage rates.
They took out their own mortgages when rates were much lower.
They have a reason to move.
But, um, having to re having to buy a new house at current mortgage rates would really boost their housing costs.
They’re reluctant to move and not much.
Um, housing goes on the market these days, and this would be a credit also that goes to sellers that would help unlock the housing market.