What a Biden Reelection Might Mean for Rent Prices
The cost of housing — both rentals and home purchase — has skyrocketed over the years. Currently, the average rent on an 897-square-foot apartment is $1,718. Mortgage rates are near 7% and the average sales price of a home is $417,700, according to the St. Louis Fed.
Unaffordable housing is a major issue in the United States, one President Joe Biden said he intends to address if reelected. In response to this issue, Biden has proposed expanding the available tax credits and investing in new, affordable housing units.
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All of this sounds like good news, but it’s one thing to say and another to follow through. While only time will tell what happens, here are some of the Biden-Harris Administration’s proposed plans and what a Biden reelection might mean for home — and rent — prices going forward.
New Homes Could Lead to Lower Rent Prices
Part of President Biden’s solution to the high cost of housing is to construct over 2 million new homes to lower rental costs. Not only does this make homes more affordable to new buyers, but it reduces apartment rent and promotes fair housing nationwide.
But many other factors can influence rental costs, not just the availability of new, affordable homes.
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“The direct impact on rent prices would likely depend on various factors, including the implementation and effectiveness of these proposed policies,” said Emma Davidson, a finance advisor and high-risk payment consultant with Emerchant Authority.
“It’s essential to consider that rent prices are influenced by a complex interplay of market forces, housing supply and demand dynamics, and local regulations,” Davidson said. “While governmental interventions can certainly have an impact, they might not necessarily lead to immediate or uniform reductions in rent prices across the board.”
New Tax Credit Programs Could Reduce Rental Costs
Another possible solution under the Biden Administration is the expansion of the Low-Income Housing Tax Credit.
With this tax credit, builders could construct or preserve around 1.2 million more affordable rental units. In turn, this would make it easier for people currently living at these properties to afford their rent — potentially saving them hundreds monthly.
“The expansion of low-income housing tax credits could incentivize the development of more affordable housing units,” said Jonathan Rosenfeld, the founder and managing attorney of Rosenfeld Injury Lawyers. This could increase housing supply and potentially put more pressure on landlords to lower rent prices in some areas.
Allen Feliz, vice president of Affordable Housing Managed Services at MRI Software, added that the issue of affordable housing has less to do with a Biden or democratic policy than with the expansion of the federal low-income housing tax credit (LIHTC) program.
There are, he noted, advocates for LIHTC on both sides of the aisle. The key to more affordable housing is a more functional and cooperative Congress, which could expand the LIHTC program.
Biden also proposed a new Neighborhood Homes Tax Credit, allowing new affordable constructions and renovations on existing properties. This could make hundreds of thousands of starter homes more affordable.
As an indirect effect of these tax credit program expansions, Davidson said rental prices could drop and people currently struggling with housing prices could see some financial relief. But again, the exact effect — and how far-reaching it is — depends on the local market, supply and demand and similar factors.
Cracking Down on Unfair Policies and Junk Fees
Under the Biden-Harris Administration, another plan is to keep corporate landlords and private equity firms from engaging in illegal practices leading to higher rents. This includes sharing private information, inflating prices beyond set limits and engaging in other unfair or fraudulent practices. By cracking down on these things, rental prices could decrease or remain more consistent.
The current Administration plans to combat rental “junk” fees, including online rental application fees and other fees incurred during a lease — like mandatory trash pickup or parking fees. All of these costs add up and impact overall affordability.
Expanding Housing Choice Vouchers Could Lower Rents
Biden also has indicated plans to expand housing choice vouchers, helping with housing costs. In his current term, he has aided over 100,000 households with their rent.
He’s also calling for additional rental assistance — to as many as 500,000 households. With the expansion of existing vouchers — and the new ones geared toward low-income veterans and those aging out of the foster care system — people save hundreds on their monthly rent.
Rosenfeld noted that these changes signal a commitment to addressing housing affordability issues. However, how effective they are depends on several external factors.
“Measures aimed at providing direct rental assistance or subsidies to low-income households could offer immediate relief to renters facing financial strain,” Davidson said. “[However,] the actual impact on rent prices and renters’ experiences would depend on the effectiveness of policy implementation, broader economic conditions, and ongoing efforts to address systemic inequalities in the housing market.”
Potential Challenges to Biden’s Proposed Changes
If Biden is reelected, renters might benefit from increased access to affordable housing and more stable — or even reduced — rental prices. But it’s not a guarantee, and not everyone’s likely to be impacted equally.
“It’s crucial to recognize that addressing housing affordability requires a multifaceted approach, and no single policy or administration can solve the issue entirely,” said Rosenfeld. Some potential issues to these changes include local housing shortages, income inequality, trends in urbanization, and systemic barriers that keep people from getting out of the rental cycle.
For true change to be made, Rosenfeld suggested that all of these things be addressed.
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This article originally appeared on GOBankingRates.com: What a Biden Reelection Might Mean for Rent Prices
