The Biden administration announced an ambitious new goal to close the affordable housing gap in just five years. The plan includes financial incentives to build more housing, along with changes to zoning and land use regulations to potentially make it easier to create new housing. It also includes new financing policies for things like accessory dwelling units and manufactured homes, and solutions for the supply chain crunch that’s making it difficult for builders and renovators.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The White House released details of its Biden-Harris Administration Housing Supply Action Plan on May 16th. (1) It falls under President Biden’s effort to tackle inflation as a top priority and the need to address housing costs. According to the Consumer Price Index, housing accounts for about 30% of the prices increases we’re seeing today.Housing Supply Action PlanWith this new plan, the administration hopes to create and/or preserve hundreds of thousands of affordable housing units. The government would not build any homes directly. It would all be done with the help of government policies, financing, and incentives for the private sector. This plan is also in addition to a previous one announced in September of last year, to create 100,000 homes in three years.There are five main categories to the Biden-Harris plan:1 - The first category provides incentives for cities and districts to loosen zoning and land-use rules. Districts that do this will rank higher during the competitive process for securing federal grants.2 - The second category includes new financing programs for the creation or preservation of small-scale housing. That includes ADUs, manufactured homes, and small multi-family buildings.3 - Third on the list is a plan to expand and improve existing forms of federal financing. That includes more access to so-called “construction to permanent loans,” promoting the use of surplus COVID-19 recovery funds for the creation of affordable housing, and reforms to the Low Income Housing Tax Credit which would benefit investors who create affordable housing. 4 - Fourth, is a plan to give priority to homebuyers who plan to live in the homes and non-profits when disposing of federally-owned land and homes, including FHA foreclosures. The idea is to steer these deals away from large institutional investors.5 - And last, to work with the private sector to fix supply chain issues. The goal is to get supplies moving again and allow builders to finish construction on the most new homes this year than in any year since 2006.Some of the provisions in this plan will also rely on approval from Congress, which is never a given. But some steps could also be implemented right away, including a policy at the Department of Transportation that grands higher scores during the federal grant process to districts that encourage more housing density.The Federal Housing Administration and the Federal Housing Financing Agency can also help lenders launch and expand financing programs for the construction of ADUs, manufactured homes, and the renovation of single-family homes. The FHA will also be investigating the Fannie Mae purchase of construction-to-permanent multi-family loans which would help fast track the development of multi-families, and lower the cost for builders.Affordable Housing CrisisAccording to Moody’s Analytics, we need at least 1.5 million more homes to meet current demand. As you know, the housing gap grew during the Great Recession and was made worse by the pandemic. Because of this massive shortfall, housing expenses have gone sky-high, making homeownership unaffordable for many Americans. That’s creating a bigger demand for rentals, which is great for investors, but rising rents are also becoming more of a burden on tenants.As reported by CNN, almost eight million Americans are spending at least half of their monthly income