CRE pins the affordable housing crisis on the difficulty of building housing amid high prices for materials and labor as well as stringent regulation. New money from the Department of Housing and Urban Development aims to eliminate some of those hurdles.
The federal government is awarding $100M in total grant money to 18 recipients across 15 states to build more affordable housing and mitigate the high costs associated with buying and renting, HUD announced Tuesday.
The grants are the second round of funding from the Pathways to Removing Obstacles to Housing program, which is intended to cut out barriers to housing production. President Joe Biden allocated $100M for the program in his FY 2025 budget.
PRO Housing gives grants to local governments, major city planning organizations and multijurisdiction areas across the country in amounts ranging from $1M to $7M, according to a press release. This round of awardees includes San Francisco, Oakland, Sacramento, Austin, Cincinnati, Detroit, St. Louis, Louisville and Tuscon.
Recipients are required to use the funding to boost affordable housing production by updating housing plans, revising land use rules and streamlining housing construction permits.
Funds from the program can also be used to preserve affordable housing that has already been built, increase homeownership access and give subsidies to developers to boost affordable housing production.
The U.S. has a housing shortage between 1.5 million and 2 million units, separate estimates from Moody’s Analytics and Freddie Mac stated in 2024.
Applications for the program said barriers to affordable housing include high development and land costs, aging infrastructure and units, lack of available units, underutilized land and property, displacement, the effects of severe weather and outdated land-use and permitting policies.
“It’s really difficult to build that middle-income housing,” Cindy Chetti, senior vice president of government affairs at the National Multifamily Housing Council, told Bisnow last year.
Chetti said a workforce housing tax credit from the government could help mitigate the challenge.
In the first round of the PRO Housing program, $85M was awarded in June to 21 major metropolitan areas, including the Bay Area, Denver, D.C., Philadelphia, Fort Worth, Nashville, Seattle, Milwaukee and New York City.
“New Yorkers also need deeper affordability, expanded pathways to affordable homeownership, strengthened tenant protections, the removal of barriers to housing vouchers, investments in their neighborhoods, and more,” New York City Council Speaker Adrienne Adams said at an October hearing to decide if New York City should be rezoned to allow for housing development. The proposed legislation, dubbed City Of Yes, passed on Dec. 5.
Los Angeles, which received $6.7M in the initial round of funding, is also looking to smooth out its development processes as it looks ahead to rebuilding from devastating wildfires that have caused an estimated $150B in damage. Gov. Gavin Newsom has announced a robust Marshall Plan to rebuild the area and issued an executive action suspending environmental reviews to make property repairs and rebuilds easier.