Affordable housing sector is poised to receive a strong growth impetus in the United States in 2023

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National and state governments, around the world, are facing a severe affordable housing problem. Growing urbanization, impact of the Covid-19 pandemic, and inflation are among the many factors that have resulted in a severe shortage of affordable housing units globally. To overcome the shortage and boost the supply of affordable units in the market, government bodies are expected to increase their investment in the sector in 2023.

In the United States, the government has been playing a critical role in supporting the affordable housing sector. In 2023, several initiatives have been announced by central and state governments to address the growing affordable housing crisis. The Biden administration, in 2023, has proposed a budget of US$175 billion for affordable housing investments.

This funding is expected to boost the affordable housing sector growth in the United States by addressing the housing crisis that has been affecting low-income families and individuals for years. The proposed funding will be allocated to several programs and initiatives aimed at increasing the supply of affordable housing and improving housing conditions.

• The funding will be used to aid the construction activities of new affordable housing units and the renovation of existing ones. This will boost the supply of affordable homes, while improving the quality of existing units. Furthermore, the budget proposal also includes funding for housing vouchers and rental assistance programs aimed at helping low-income families and individuals pay for housing.
• The Biden government has also announced funding for homeownership assistance programs, which is aimed at helping low-income families and individuals purchase homes. This will enable them to build wealth and stabilize their housing situation. As part of the US$175 billion affordable housing investment, the government is also aiming to reduce housing discrimination and promoting fair housing practices. This will ensure that everyone has equal access to safe and affordable housing.

The proposed funding will have a significant impact on the affordable housing sector in the United States. Apart from increasing the supply of affordable housing and make it accessible to those who need it the most, the funding will also create jobs and stimulate economic growth from the short to medium-term perspective.

At the state level, several authorities have also announced increasing investment and measures that are aimed at boosting the supply of affordable housing units in their respective regions.

• In March 2023, Oregon lawmakers have approved a US$200 million housing and homelessness package. The money will be used for increasing shelter capacity, addressing youth homelessness, and funding rapid rehousing efforts. To meet the target of constructing 36,000 units per year, Oregon will also invest US$20 million in the construction of prefabricated units.

Like many other states in the country, Oregon has struggled with the rapid surge in homelessness, which has been driven by higher construction costs and lack of affordable housing options. According to federal data, homeless population in the state has increased by 22% since 2020.

The homeless crisis is affecting people in both rural and urban areas. Consequently, the package will provide US$27 million for rural areas, thereby assisting the homelessness fight in remote areas of Oregon. Like Oregon, the San Jose City Council has also been taking significant steps to support the affordable housing sector.

• The Council, in March 2023, approved loaning US$21.35 million to Resources for Community Development, a Berkely-based affordable housing non-profit, to build 99 affordable apartment complexes.

These initiatives and policies are expected to boost the growth of the affordable housing sector significantly in the United States in 2023. Increased investments in the sector will lead to the construction of more affordable housing units, thereby increasing the supply of affordable housing. This will, in turn, lead to a reduction in housing costs, making housing more accessible to low-income families and individuals.

It is essential that policymakers continue to prioritize the affordable housing sector and take further action to reduce the supply demand gap, not just in the United States, but globally. The growing investment in the sector will, therefore, keep aiding the growth of the construction market over the next three to four years.

To know more and gain a deeper understanding of the construction market in the United States, click here.