The Biden Housing Plan – Part 1

"Housing should be a right, not a privilege," claims newly elected President Biden.

The Biden Housing Plan - Housing Tides Analysis - Part 1
Published January 26, 2021

This is part one in our two part analysis of the Biden Administration's proposed changes to housing policy.
Read part two here.

Now that Biden is President and Democrats control both chambers of Congress, the President is emboldened to implement his sweeping, comprehensive plan for housing, calling for $640 billion over ten years.

Proponents are enthusiastic over the number of boxes it checks off their wish list, while critics claim Biden is throwing big money at real problems without offering workable solutions.

Undoubtedly, the impacts on the home building industry will be mostly positive, with just a few adverse effects. We have reviewed the prominent analyses of this plan from writers and analysts involved in the residential sector. His plan will address everything from affordable housing to anti-discrimination policies. What will Biden do to encourage construction where it is needed?

Housing Tides will present and discuss our research in this issue and the next issue.

Summary of Biden's Infrastructure Plan: Expanding Housing Affordability

Biden is proposing a $2 trillion infrastructure plan over ten years, including funding for the construction and rehabilitation of 1.5 million affordable housing units, with upgrades to meet more robust energy efficiency standards. Tax increases and financial fees on firms with more than $50 billion in assets will fund the plan. (1)

Within this $2 trillion plan, Biden has proposed a 10-year, $640 billion housing plan that includes: (1)

  • $300 billion devoted to new construction
  • $10 billion expansion of the Housing Credit enactment and enacting the Neighborhood Homes Investment Act
  • $100 billion Affordable Housing Fund (Roha)
    • $65 billion for state housing authorities
    • $20 billion for a Housing Trust fund
    • $10 billion for making homes more energy efficient
    • $5 billion for HOME and Capital Magnet Fund programs

This plan must be passed by Congress and implemented by the Biden administration, in close cooperation with state and local governments. Although it has lofty goals, this ambitious and complex plan will face many challenges in securing funding. Its administrators will have their work cut out for them.

New HUD Secretary Nominee: What does it mean for housing?

Representative Marcia Fudge (D-OH) has been nominated as HUD Secretary. She will oversee the majority of the plan's implementation. This was a surprising nomination, as she was also considered for other cabinet positions, such as Agriculture. Fudge does not have a long track record working directly on housing issues, as her emphasis has been on agriculture. Biden saw her as a longtime champion of affordable housing (2), urban revitalization, and infrastructure investment. She previously served as Mayor of Warrensville, OH. She has earned high praise from Sen. Sherrod Brown (D-OH) and Rep. Maxine Waters (D-OH). (2)

During the administration's first 100 days, Secretary Fudge will be responsible for creating a road map to make housing a right.

First Time Home Buyers' Tax Credit

As the National Association of Realtors reported, first-time homebuyers represent 32% of all home purchases in October 2020. (3) One of the key hurdles that first-time homebuyers face is accumulating a down payment. Joe has a plan for that: he will give them money to fund part of a down payment on a home.

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Now that the Democrats are in control of the Presidency and Congress, home building analysts have focused on the impact of Biden's proposed tax credit. The credit will give first time home buyers up to $15,000. Though not exactly like the tax credit enacted during the financial collapse of 2008-2009, home buyers would receive the new tax credit at the time of purchase. This will possibly include down payment assistance. Homebuilders who focus on the first-time homebuyer market, such as D.R. Horton and KB Home, will benefit from paying attention to this market. The tax credit would provide an industry tailwind if enacted.

With demand stretching the industry at the seams, some think this will not give the desired boost. Ivy Zelman, a leading home building analyst, was quoted in Barron's stating, "As good as Biden's tax plan may be to juice demand, it's not what the housing market needs. Demand is not the problem, there is a bottleneck in bringing land to market." (4)

David Howell of McEnearney Associates in Washington agrees with Zelman's views, "we don't have a demand problem, we have a supply problem. We anticipate that this will push prices higher. Pretty basic economics." (3)
With time, new home buyers will likely end up paying more paying for their homes. This is a concern of John Wake, a Forbes real estate contributor. "It seems obvious that Biden's proposal […] would eventually jack up house prices in many markets and would hurt first-time homebuyers who buy after the $15,000 subsidy is capitalized into higher house prices, especially where the subsidy causes the home prices to increase more than the subsidy. (5)

Fighting Exclusionary Zoning and NIMBYism

The bias toward approving only single-family zoning in municipalities exacerbates delays created by the slow grind of local government zoning and permitting processes. Higher density housing, which would provide more affordability, is either prohibited by municipalities or attacked by NIMBYism (an acronym for "not in my back yard"). Charles Marohn, a Minnesota P.E. and activist, states that there is no greater distortion of the market than local zoning codes and that local zoning offices significantly harm property rights and freedom. (6)

In recent decades it has become increasingly clear that the U.S. patchwork of restrictive land-use and building regulations have exacerbated inequality and sent housing costs soaring in economically dynamic regions. Zoning, land-use, and building policies that prevent housing construction, especially multi-family development, drive up home costs, strain the government's limited subsidy programs, and stifle economic growth. The federal government has not been equipped to influence local zoning laws. (7)

Biden addresses zoning issues several times in his housing plan when it concerns discrimination (caused by exclusionary zoning) where federal funds are involved. The Biden plan seeks to eliminate local and state housing regulations that perpetuate discrimination. Biden's proposal requires states receiving community development block grants to incorporate inclusionary zoning into their planning, setting aside a portion of new construction for affordable housing.

The legislative process necessary to accomplish Biden's plan, even with the Democrats in control, does not mean reform legislation would pass easily. Many regions most burdened by exclusionary zoning are in states where the Democrats have not brought change in their own back yard. Democrats could reject reforms to which their most influential constituents are hostile. (7)

Ed Pinto at the American Enterprise Institute doesn't think that Biden's plan goes far enough to eradicate the supply constraints caused by terrible zoning. He argues that single-family zoning promotes NIMBYism, which drives up housing prices tremendously in low-cost areas. Biden's plan doesn't go far enough. You still end up with a housing shortage, nowhere to live, and federally guaranteed loans that increase demand against limited supply. (8)

Labor Scarcity and Immigration

Residential construction employment grows along with the overall economic recovery. After a combined loss of 426,300 jobs in March and April 2020, the sector gradually rebounded, adding 388,600 positions from May through September. That labor force totals 2.9 million, including 827,000 builders and 2.1 million residential specialty trade contractors based on a National Association of Home Builders (NAHB) analysis. More skilled workers are needed to ramp up construction to meet consumer demand. (6)

Immigrants drive the construction labor force, as well as the American economy. According to the American Community Survey, foreign-born workers accounted for 16.6% of all U.S. labor and 24.3% of construction workers. Many experts claim that allowing qualified workers to legally enter the country, while providing a path to legal status for undocumented workers, would invigorate the labor pipeline. Besides helping with the worker shortage, immigration reform would curb the degree to which contractors exploit undocumented workers by denying them benefits and offering unfair wages. (6)

Jim Tobin, chief lobbyist for the National Association of Home Builders, said, "with President Biden, we will see an immigration plan that would open our borders and give us access to the international workforce that we need." (6)

... Continued in Part Two.


  1. Joseph Biden for President: Official Campaign Website. "The Biden Plan for Investing in Our Communities Through Housing." n.d. 14 January 2021.
  2. Kingsella, Mike. "" 11 December 2020. 11 January 2021.
  3. Lerner, Michelle. "" 15 December 2020. 10 January 2021.
  4. Mishkin, Shaina. "" 28 October 2020. 14 January 2021.
  5. Wake, John. " proposals-in-joe-bidens-640-billion-housing-plan/?sh=40b3fa657dae." 5 September 2020. 16 January 2021.
  6. Centopani, Paul. "" 27 October 2020. 16 January 2021.
  7. Blumgart, Jake. "" 31 December 2020. 14 January 2021.
  8. Campisi, Natalie. "" 9 November 2020. 14 January 2021.

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Jeff Whiton Housing Tides Research Team Member

About Jeff Whiton

Jeff formerly headed operations for Lennar and KB Home in Colorado building nearly two per cent of the state’s total single-family housing stock. He was honored as Colorado’s Home Builder of the Year in 2001. Whiton also served as the CEO of the Home Builders Association of Metro Denver for eight years reviving the association from near bankruptcy after the Great Recession.

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