Housing industry participants gave a mixed reaction to
"On the surface, the president's proposals all seem reasonable, though it's unclear what some of them would actually end up looking like if enacted into law," LendingTree Senior Economist Jacob Channel said in an email. "Moreover, these proposals are unlikely to be met with universal praise."
The attention to housing affordability problems is welcome, but ignores the role government mandates at all levels play in creating the inventory shortage, a statement from Ed DeMarco, president of the Housing Policy Council, said.
"Adding more individual, demand-side tax credits and limits on pricing for legitimate closing costs will further increase house prices and the cost of providing credit," DeMarco said. "Simply put, demand continues to outpace supply and subsidizing more demand inflates house prices."
Instead, the White House should examine how the "deep and complex regulatory environment" drives up housing costs and limits supply, DeMarco said.
The National Multifamily Housing Council had a similar reaction to DeMarco's, coming out in support of expanding use of
"We are very disappointed that the Administration has, at the same time, chosen to focus on creating a heightened regulatory regime that will reduce consumer choice by limiting fee for service arrangements," a press release from the organization declared. "These efforts are concerning because they will hurt renters by undermining the Administration's objectives of lowering housing costs, driving new housing development and creating more affordable rental housing."
The government should not be blaming housing providers for the affordability crisis, because it is counterproductive and will not solve the problem, NMHC added.
"The increased federal investment in housing supply as the president proposes and a regulatory environment which incentivizes more investment in rental housing will make a difference," the group said.
Those who supported the initiatives pointed to the wealth-building effect homeownership provides.
The Center for Responsible Lending noted that the down payment assistance the White House wants mirrors a prior proposal it made, as well as the
"Targeted first-generation down payment assistance would open doors of opportunity for families who have not benefited from intergenerational transfer of wealth," said Mike Calhoun, CRL president, in a press release. "This policy would expand the economic security that homeownership brings, and it would help narrow the racial homeownership and wealth gaps."
Meanwhile, the Community Home Lenders of America targeted Biden's pitch for the mortgage relief tax credit for praise.
"In a time of
Ed Pinto, co-director of the AEI Housing Center, said if this credit were to be implemented, it would make housing less affordable.
"This proposal would increase demand for starter homes, which are already in short supply, thereby driving up prices," Pinto said. In addition, many of the 3.5 million beneficiaries would have been able to buy a home without the credit. "These families will have additional purchasing power to bid up the price of homes."
The down payment assistance proposal suffers from the same issues, Pinto added.
But for Rob Chrane, the CEO of Down Payment Resource, the frustration is that existing resources are being underutilized, because consumers are unaware that this help is available.
He pointed to
"Why did they know it?" Chrane said in an interview. "Because, the government's housing stakeholders — trade orgs, real estate community, mortgage lending community, they all used their collective megaphones and blasted out a very simple message."
It worked because the program was extended. That messaging can be used to promote the approximately 1,700 DPA programs already in existence.
"Again, it's a simple public service announcement, 'down payment help is available; see if you're eligible,'" Chrane said. "That's news to most people."
Down Payment Resource did a study with the Urban Institute that found almost 80% of Federal Housing Administration borrowers that lived in the nation's 10 largest metro areas who closed a loan in 2022 were eligible for some form of DPA.
But based on FHA's annual report to Congress only 15% actually utilized DPA.
"I'm not saying we shouldn't do some of these things, but what does it cost to promote something that's already there?" Chrane asked.
As for the controversial title waiver program, Bose George, an analyst from Keefe, Bruyette & Woods came out with a follow-up note to one issued before the speech stating he didn't expect the pilot to get any meaningful traction in the market.
The pilot program would waive the requirement for a lender's title insurance policy on a limited set of refinances purchased by the government-sponsored enterprises.
"We expect any title pilot to have modest usage," George wrote. "We think any attempt at a broader reduction in the use of title insurance will likely run into meaningful political opposition related to charter creep since the related risk will be moving to the GSEs."
Fitch Ratings analysts Douglas Baker and Christopher Grimes concurred, stating "The ultimate usage of this product and the impact on title insurance policy issuance and premium volume remain uncertain. Similar efforts have not had a material impact on the industry, including Fannie Mae's Title Waiver Pilot which the American Land Title Association reported as being abandoned in August 2023."
Fitch is not expecting any impact from the pilot to the title insurers it rates.
LendingTree's Channel noted past mortgage industry opposition to eliminating title fees.
"Opponents of such a proposal argue it will make transactions riskier for homeowners," Channel said. "Of course, many who oppose this measure have financial incentives to keep insurance fees high…so, take from that what you will."
The National Fair Housing Alliance doesn't think the Biden Administration goes far enough.
"While the President's remarks in his address pinpointed some of the challenges presented by the nation's fair and affordable housing crisis, there is still much work to be done," Nikitra Bailey, the NFHA executive vice president said in a statement.
Specifically HUD needs to update the Fair Housing Initiatives Program to remove administrative barriers, streamline the process, and ensure funds flow to communities more quickly. The government must crack down on discriminatory tenant screening algorithms and other AI that perpetuates bias.
It needs to order the Federal Home Loan Banks to increase their investments in affordable housing development by increasing the amount of funds they contribute to 20% of their profits.
The White House also needs to finish the work of
In general, much of what the White House is proposing needs to be approved by Congress.
"Given how dysfunctional Congress is, the unfortunate truth is that many of the things we need to do to make housing more affordable probably won't be implemented anytime soon," Channel said.
But one item on improving housing affordability the Biden proposal does not address is making the tax deduction for private mortgage insurance premiums permanent.
U.S. Mortgage Insurers called on the president, as part of his push with Congress,
When in effect, it was "claimed more than 43 million times, and delivered an average annual deduction of more than $1,400 to these homeowners," USMI President Seth Appleton said in a statement. "It was a deduction that was targeted toward homeowners who could use the help the most, and it worked."
But no matter which side of the aisle Americans are on, it is a positive that housing is back as a topic in the political debate, said Marty Green, a principal at the law firm of Polunsky Beitel Green.
"This industry is too critical to our economy and as a wealth builder for Americans to be ignored," Green said. "It will be interesting as we move closer to the November election whether we see meaningful proposals for policy support that addresses the chronic undersupply of new homes."
