Later this month, the 46th president of the United States, Joe Biden takes office. It remains to be seen what he will do to shape up the housing market in the country. Joe Biden’s immediate concern is going to be addressing peoples’ anxieties about paying rents and mortgages.
Among the first few issues to focus upon are job losses and saving homes of people who are having trouble paying rent and mortgage. He needs to take decisions related to the issue of forbearance and foreclosure proceedings that were put on hold due to the pandemic.
On the COVID-19 Vaccine Front
On the Covid-19 vaccine front, the developments have been very encouraging. The world is closely watching how the world’s largest economy reacts. Economists have warned that a vaccine will not result in an “instant stimulus” for the economy and will need greater fiscal support.
On the employment front clearly, the number of job losses is really huge and those that remain unemployed may have to wait longer to get back to full employment. Even when the vaccine is eventually rolled out, no one can be certain about how quickly life will get back to normal. It will depend on a number of factors as experts say, including the vaccine’s effectiveness, how many people are willing to take it, and how quickly. Till then, it is yet to be seen when all the jobs lost will return, when people can expect to be gainfully employed and how soon can they start making payments on the mortgages they are behind on.
Record Low-Interest Rates
Interestingly, the housing industry is experiencing record-low interest rates along with a shortage of home inventory and high prices for homes. It is truly an exceptional time and the environment has made it tough for middle- and low-income Americans to buy a home, and entry-level housing has become extremely competitive.
The Federal Housing Administration (FHA) is, meanwhile, putting in efforts to address this issue. Recently, it launched a new automated underwriting system through its new FHA Catalyst single-family origination module. The technology aims to provide lenders with immediate and expanded responses with regards to insurance eligibility based on FHA policy. The FHA has been working to update its legacy systems so that it can offer lenders more modernized automation such as validation services technology.
Experts opine that Biden will have an ambitious agenda to try and create opportunities for more low- and middle-income Americans. Market watchers feel that the Biden administration would focus more on housing initiatives on policies that would help those who have struggled to attain homeownership in the past.
Besides helping homeowners, Biden has also expressed his commitment to assist struggling renters. It is possible that under the Biden administration, low-income renters could receive a tax credit which would help them to pay up to 30% of their total income on housing.
The new president has also promised to increase the housing supply by giving out $100 billion towards constructing and upgrading affordable housing. He will leverage tax incentives towards setting up affordable housing in areas where the supply is short and will also try to limit local and state government restrictions on the amount of new construction.
There’s also news that Biden intends to work with the Congress to establish a new renter’s tax credit, the aim of which will be to reduce rent and utilities to 30% of income for low-earning tenants who make too much to qualify for housing vouchers.
Housing experts are optimistic about these promises because many feel that these developments have been overdue. Most think that it is necessary since we are in the middle of a housing crisis and have affordability issues all over the country.