The Biden administration on Friday announced federal financing and other incentives designed to convert high-vacancy commercial buildings in downtown spaces around the country into residential use in an attempt to increase housing supply.
Administration officials said office space vacancies have hit a 30-year high, while housing costs remain high for millions of Americans and there is a shortage of affordable housing units.
Lael Brainard, director of the National Economic Council, said on a call with reporters that converting empty commercial buildings into residential use represents a “win-win” opportunity to simultaneously revitalize downtown areas with unused office space while increasing affordable housing units.
“Housing affordability is a challenge for many American households, so the president has asked us to take a whole-of-government approach to making sure that we have affordable and accessible housing,” Brainard said.
To make it easier for state and local officials to convert commercial space to residential space, the Biden administration released new guidance on how they can get financing for loans for those conversions through the Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation & Improvement Financing programs.
The Department of Housing and Urban Development (HUD) is releasing new guidance on how the Community Development Block Grant fund can be used to boost housing supply, while the Department of Transportation is releasing guidance to make it easier for transit agencies to transfer properties that are no longer needed, such as underutilized storage facilities that could be converted to affordable housing.
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.
Even as inflation has come down over the past year in the United States, the cost of housing has remained high.
Housing costs were up 7.2 percent annually in August, compared with the headline inflation number of 3.7 percent.
The housing sector is also one of those most closely tied to interest rate hikes. The 30-year-fixed rate mortgage is at a 20-year high of 7.5 percent, creating increased costs for those seeking to purchase a home.