U.S. Treasury Secretary Janet Yellen revealed a $100 million financing initiative Monday in a bid to address soaring housing costs ahead of the Nov. 5 presidential election.
The plan, aimed at increasing the availability of affordable housing, is part of the Biden administration's broader strategy to tackle the ongoing housing crisis, a significant factor in inflation and a source of public dissatisfaction with the administration's economic policies.
Yellen announced that the $100 million, to be distributed over three years, will be funded by repayments from previous Covid-era investments, according to Reuters.
The funds had been allocated to community lenders to support small businesses, consumers, and affordable housing projects. The announcement was made during Yellen's visit to a public housing development in Minneapolis.
The initial Emergency Capital Investment Program of 2021 saw an infusion of over $8.57 billion into community lenders.
According to Treasury data, these lenders have since invested $1.2 billion in 433 affordable housing projects.
The newly announced funds are expected to finance thousands of additional affordable housing units through a new program managed by the Community Development Financial Institutions (CDFI) Fund.
Yellen cited the persistent housing supply shortfall as a major factor in rising housing costs, which have disproportionately affected low-income and Black households.
From 2000 to 2020, median housing rents have increased faster than median incomes in areas covering 97% of the U.S. population, she said.
"We face a very significant housing supply shortfall that has been building for a long time," Yellen said. "This supply crunch has led to an affordability crunch."
Yellen added that the Democratic administration is "pursuing a broad affordability agenda to address the price pressures that families have been feeling."
She also urged the 11 Federal Home Loan Banks to increase their contributions to housing programs. She called for these banks to allocate at least 20% of their net income to housing initiatives, up from the current legal requirement of 10% and their voluntary commitment of 15%.
Had this higher commitment been in place over the past five years, it would have resulted in nearly $2 billion more being directed to housing programs.
The Biden administration has also taken other steps to boost the housing supply, including launching a multi-agency effort to encourage states and cities to convert empty office buildings into housing units.
