Housing Forecast: Sunny with a Side of Federal Funding
Despite rising interest rates and uncertainty over future market conditions, housing industry experts remain cautiously optimistic.
After experiencing meteoric growth during COVID, the housing sector is normalizing. While a few analysts are predicting a full-blown market crash, most housing economists recognize that the current “right sizing” is merely a stabilization that will bring the pace and costs of building back to earth.
With that said, COVID certainly changed the housing market for good. Not only did it bring the topic of healthy home to the forefront of our national dialogue, but it also yanked the veil from the housing sector’s dirtiest little secret: the complete lack of “attainably” priced homes to satisfy the massive built-up demand.
With Millennials and older Gen Zs hitting their peak home-buying potential, the mushrooming demand for “missing middle” homes is expected to bolster the sector for years to come.
And today’s home buyers are forcing the conventional building industry to transform at a rapid clip, as they demand homes that are net zero, electric, healthy, resilient, connected, solar powered, and cost-effective.
But here's the rub: While demand is at a record high, the supply of homes that meet the needs of today’s homebuyers is falling woefully short. Not only are home prices out of control, but housing products that may have been acceptable to Boomers or Xers seem downright medieval to younger generations.
So, how do we shift from inefficient, unhealthy, dumb legacy homes to ones that meet the moment, especially in the face of runaway mortgage and rental costs?
As outlined by Chris Castro, Chief of Staff for the Office of State and Community Energy Programs at the U.S. Department of Energy (DOE), an unprecedented amount of money is about to be unleashed through the combination of the recently passed Infrastructure Act and the Inflation Reduction Act.
According to Castro, the DOE alone has $100 billion (beyond its normal budget) earmarked to deploy clean energy technologies, catalyze local economic development, enhance workforce training, decrease emissions, reduce energy costs, and weatherize homes and buildings.
$37 billion in tax credits has been allocated for energy-efficient construction and renovation projects, and additional funding will be provided in the form of incentives and rebates for technologies like heat pumps, induction cooktops, smart electric panels, solar systems, battery storage, and high-performance building envelope solutions.
Another $4.3 billion has been reserved for energy-saving retrofit rebates (targeted at low- and moderate-income households), $4.5 billion has been earmarked for electrification projects, $200 million has been allocated towards training contractors involved in the installation of home energy efficiency and electrification improvements, and $1 billion will be awarded to states and local governments to adopt the latest building codes and zero energy provisions.
Want to learn more about the funds coming down the pike and how they’ll drive transformation in the housing sector?