Jared Bernstein on a Plan to Rapidly Increase U.S. Housing Supply

The U.S. Housing Affordability Crisis

• 🏠 A significant portion of American households, one-third, are spending over 30% of their income on housing costs.
• 📈 Rents have surged by 35% since the beginning of COVID-19 lockdowns.
• ⏳ The median age for first-time homebuyers has risen to 40, up from 31 in 2014, indicating increasing difficulty in homeownership.

Proposed Solution: Affordability Contracts

• 🤝 The core proposal involves federal "affordability contracts" with states and localities to rapidly increase housing supply.
• 💰 The federal government would help finance affordable housing construction and provide rent assistance.
• 🚫 In return, communities must reduce regulatory barriers that hinder quick and efficient building.
• ⚖️ A "carrot and stick" approach is proposed: communities that fail to meet their obligations risk losing federal grants (e.g., transportation, commerce).

Addressing Infrastructure and Planning

• 🏗️ The plan emphasizes building housing in a way that aligns with existing infrastructure, avoiding the pitfalls of cramming units into underserved areas.
• 🛠️ A supportive fund is included to help localities with infrastructure needs like sewers, roads, and school capacity.
• 🤝 This approach, part of the bipartisan "Road Act," acknowledges the need for federal support to overcome local dysfunction.

Alternative Housing Solutions

• 🏘️ The discussion touches on auxiliary dwelling units (ADUs) but highlights the importance of proper planning and infrastructure to avoid overwhelming communities.
• 🏭 Manufactured and modular housing are identified as crucial, underutilized solutions for increasing supply and affordability.

Critiquing 50-Year Mortgages

• 📉 A 50-year mortgage is dismissed as ineffective because it does not address the fundamental issue: a shortfall of at least 2 million housing units.
• 💸 While potentially offering lower monthly payments, the extended term and potential interest rate increases would negate benefits and delay home equity building.