HUD Launches Affordable Housing Supply Initiative
HUD Secretary Marcia Fudge recently announced “Our Way Home,” a new national initiative to increase and preserve affordable housing supply. As part of the initiative, HUD is seeking to learn from and elevate lessons from communities that are building and preserving affordable homes. HUD intends to engage communities in discussions on housing supply policies and resources in the coming months.
“The shortage of affordable housing has been growing for decades—but this is a solvable crisis,” said Secretary Fudge. “Across the country, we are seeing many communities ending exclusionary zoning, building affordable housing in communities that previously did not allow it. We are seeing communities use innovative building models and materials, and design homes that are sustainable and resilient. And we’re seeing communities tackle homelessness by building permanent affordable housing with services. These are the types of community wins that we want to elevate with Our Way Home and encourage others to follow.”
HUD’s Our Way Home initiative builds on the Biden Administration’s Housing Supply Action Plan announced in May. The comprehensive plan included over a dozen legislative and administrative steps aimed to create and preserve hundreds of thousands of affordable housing units in the next three years and help close the country’s critical housing supply shortfall within five years.
The plan calls on Congress to increase funding for successful HUD housing subsidy programs that can pair with the low-income housing tax credit (LIHTC) to produce and preserve housing that’s affordable for very- and extremely-low-income renters. These programs include the Housing Trust Fund, the HOME Program, Housing Choice Vouchers, and the Project Based Rental Assistance program.
The President’s 2023 Budget proposes $50 billion in mandatory funding to increase the supply of affordable housing, including $35 billion for a new Housing Supply Fund to be administered by HUD. The Housing Supply Fund would provide funding to state and local housing finance agencies and their partners for grants, revolving loans, and other streamlined financing tools to increase housing supply, as well as grants to advance state and local jurisdictions’ efforts to remove barriers to affordable housing.
Under the Biden Administration's plan, the administration would implement regulatory actions to accomplish its housing supply goals. For example, the plan seeks to improve alignment between HUD housing program requirements and the LIHTC program. Affordable housing development projects often require more than one federal source of funding. The most common pairing is LIHTC and HUD funds, such as FHA Multifamily, the Housing Trust Fund, or HOME. But each funding source comes with its own set of requirements and procedures.
To reduce transaction costs and duplication, and to speed development, the plan states that the administration will make changes to harmonize federal requirements across programs as much as possible—including through programs like HUD’s LIHTC Pilot Program, which streamlines FHA processing of mortgage insurance applications for projects with LIHTC equity.