The Biden administration wants to increase affordable housing options in downtown areas by converting vacant commercial buildings into residential units, officials said Friday.
On Friday, the administration announced a slew of federal financing and other incentives to convert high-vacancy commercial buildings around the country into residential use to boost housing supply.
Citing both high housing costs and high office space vacancies, administration officials highlighted a shortage of affordable housing units.
“Office and commercial vacancies across the country are affecting urban downtowns and rural main streets,” reads a White House fact sheet. “A new blog released today by the Council of Economic Advisers finds that office vacancies have reached a 30-year high from coast-to-coast, placing a strain on commercial real estate and local economies.”
The plan would deal with a decades-old problem of a shortage of affordable housing units, high rental costs, and communities trying to tackle ways to cut emissions, the White House stated.
Converting vacant downtown office spaces into affordable housing would represent a “win-win,” Lael Brainard, director of the National Economic Council, said on a call with reporters. She claimed the program would revitalize downtown areas with unused office space while expanding the number of affordable housing units.
“We know that commercial building vacancies are at an all-time high in some cities and communities across the country, while housing supplies in those same communities remain constrained,” Ms. Brainard told reporters on a call previewing the program on Thursday.
“This presents an area of opportunity to both increase housing supply while revitalizing Main Street,” she added.
Ms. Brainard said that many households face housing affordability challenges, “so the president has asked us to take a whole-of-government approach to making sure that we have affordable and accessible housing.”
On Friday, the Biden administration released new guidance on how state and local officials can get financing for loans and technical assistance to convert commercial space to residential space.
These new actions will be partially supported through the sale of federal properties, according to a White House fact sheet.
The Department of Transportation is set to issue new guidance for over $35 billion in loans designated for transportation-oriented development projects.
The administration believes that the new guidance due to be released by the Department of Housing and Urban Development will not only boost the housing supply, but also incentivize state and local governments to enhance their zoning, land use, and transit-oriented development policies.
On Friday, the White House also unveiled a guidebook detailing over 20 federal programs from six agencies that offer resources like low-interest loans, grants, and tax incentives for converting commercial properties into residential spaces.
These resources will be available through the Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation and Improvement Financing programs.
The new program is intended to solve the issue of people living either too far from work in affordable areas, or close to work in unaffordable areas, according to administration officials.
Administration officials acknowledged that many Americans either live far away from their work because of housing costs, or live somewhere unaffordable so they can be close to work. The new investments announced Friday are intended to help remedy those conflicts.
“These announcements will create much-needed housing that is affordable, energy-efficient, near transit, and good jobs, and reduce greenhouse gas emissions, nearly 30 percent of which comes from the building sector,” read a fact sheet released by the White House.
While overall inflation has decreased in the United States over the past year, housing costs have remained high. In August, housing expenses rose by 7.2 percent annually, surpassing the 3.7 percent headline inflation rate. The 30-year fixed-rate mortgage is currently at a 20-year high of 7.5 percent, leading to increased expenses for homebuyers.
In September, home sales hit a 13-year low due to high interest rates and escalating home prices, making it difficult for many buyers to afford a home, per data from the National Association of Realtors. Low housing inventories also drove prices up.
On Thursday, Transportation Secretary Pete Buttigieg said the pandemic changed how many people work, live, and commute; as well as high vacancy rates in downtown office spaces.
“We’re seeing decades-high levels of office vacancies in many downtowns, while at the same time, many of America’s cities and towns face a steep shortage of housing, and families are struggling to afford housing and transportation,” he told reporters on a call on Thursday.
