By David Lawder
WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen announced $100 million in new financing on Monday to increase the supply of affordable housing, as the Biden administration seeks to address high housing costs ahead of the Nov. 5 presidential election.
The measure is one of several moves by the Treasury to try to address a chronic housing shortage, which has been a contributor to lingering inflation and a source of voter dissatisfaction with President Joe Biden's handling of the economy.
The additional $100 million over three years will come from payments that the Treasury is receiving from prior COVID-era investments in community lenders to support small businesses, consumers and affordable housing projects, Yellen said in remarks at a public housing development project in Minneapolis.
The 2021 Emergency Capital Investment Program injected over $8.57 billion into community lenders, who in turn invested $1.2 billion in 433 affordable housing projects, according to Treasury data.
The additional funds could support the financing of thousands more affordable housing units through a new program housed at the Community Development Financial Institutions (CDFI) Fund, Yellen said.
HOUSING SUPPLY SHORTFALL
The Treasury chief said she expects shelter inflation to moderate, but noted that from 2000 to 2020, median housing rents have outpaced median incomes in counties covering 97% of the U.S. population.
"But we face a very significant housing supply shortfall that has been building for a long time. This supply crunch has led to an affordability crunch," Yellen said in excerpts of remarks. She added that the burden was greatest on low-income and Black households.
Christopher Tyson, president of National Community Stabilization Trust, which advocates for increased affordable single-family home ownership, called the additional funding a good start towards bridging the gap between what people can afford and where the market sets prices.
"Distortions in the housing market because of the lack of supply have just pushed homeownership out of reach" for many potential buyers, Tyson said, estimating a U.S. shortage of about 2 million housing units.
Yellen also is calling on the 11 Federal Home Loan Banks to devote at least 20% of their net income to housing programs, up from the legal requirement of 10% and the banks' voluntary commitment of 15%.
Had this commitment been in place over the last five years, the 11 government-sponsored enterprises would have contributed nearly $2 billion more to housing programs than legally required, the Treasury said.