Both Democratic and Republican members of the Senate Banking Committee drew attention this past Thursday to the ongoing effect of low housing supply on prices.
Both labor shortages stacked on supply chain bottlenecks which have been induced by a massive worldwide cascade of lockdown mandates have spiked input costs and thusly increased housing inventory shortfalls that have long plagued American would-be homeowners. Legislators for the Senate Banking Committee then spoke about the phenomenon during their first hearing of the newly established Congress.
“There just isn’t enough quality housing at prices that people can afford,” explained Sen. Sherrod Brown (D-OH) as part of their opening statement. “And because there aren’t enough homes, renters, and homeowners are stuck paying more every month or living with peeling lead paint or leaks.”
The housing market had experienced a massive shortage of 3.8 million houses as of 2019, according to data posted by the government-backed mortgage company Fannie Mae. The National Association Of Realtors has highlighted estimates that state that homebuilders have built between 5.5 million and 6.8 million more houses over the past two decades to match current demand.
Sen. Tim Scott (R-SC) officially asserted that policies like rent control and wholesale inaction in regard to the crisis around the supply chain from the Biden administration which has worsened the housing inventory problem.
“It’s past time to rethink the tax-and-spend strategies that keep families trapped in generational cycles of poverty and find real solutions to meaningfully impact all households,” he stated in his opening statement. “Government must begin responsibly helping families rather than doubling down on programs that fail to generate results. We need to leverage the successes of American capitalism by encouraging private investment in the housing sector and eliminating needless barriers that artificially restrict supply.”
Senior Biden administration officials have called on Freddie Mac and Fannie Mae to create affordable financing for multifamily housing construction, streamline regulations in order to make the building of “mixed-income housing” and “housing that includes very low-income tenants” far more simple, and support housing projects being set up near mass transit. Inflation rates for shelter costs spiked by 7.5% year-over-over as of December of this past year, heavily outrunning the 1.8% year-over-year rate charted one month before President Joe Biden assumed office, according to data sets which have been released by the Bureau of Labor Statistics.
The number of homes currently on the market has “stayed near historic lows” despite the intense slowdown of the market, as reported by Harvard Joint Center for Housing Studies Christopher Herbert, who testified before the Senate Banking Committee. He spotlighted that buyers who managed to lock in favorable terms with their mortgage before the recent spike in the cost of borrowing are unlikely to sell.