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A Rare Bipartisan Housing Bill Just Became Law – but Americans Will Still Struggle With Affordability
Despite the bipartisan support, however, even supporters say it doesn’t do enough to ease America’s housing affordability crunch.
Many of the 60 provisions in the wide-ranging bill are regulatory in nature, such as streamlining environmental impact reviews and reducing the frequency of inspections for homes with tenants receiving federal rental assistance. Others seek to make it easier for homebuyers to acquire financing.
These elements and more could help move the needle on the nation’s housing morass.
But as housing policy scholars, we believe the improvements will be only marginal. That’s because the reforms do not address the main source of the nation’s housing problem: that millions of renters and homeowners lack the income necessary to cover their housing costs.
Promising changes
The bill does include several important reforms.
The provision that has received the most attention limits the ability of private equity firms and other institutional investors to acquire and operate single-family homes as rental properties.
Although institutional investors account for about 2% of all single-family rentals nationally, they have a bigger presence in certain housing markets, mostly in the South. These firms will typically purchase homes in cash, disadvantaging individual homebuyers who need to take out a mortgage. They’ve also been known to more aggressively raise rents and initiate eviction proceedings than other landlords.
The legislation also includes several measures aimed at reducing home prices and increasing housing supply.
One reduces the cost of manufactured housing – often known as mobile homes – by eliminating the requirement to include a steel chassis that can be attached to wheels. This is expected to reduce building costs by around US$5,000 to $10,000, or about 4% to 8% of the average cost of a new unit.
Other cost-saving elements include streamlining environmental reviews for proposed housing developments and encouraging new designs for midsize apartment buildings that would allow for just one stairway. Fire safety regulations have long required multifamily buildings to contain two or more staircases so that residents can exit their homes safely if one staircase is impassable because of smoke or other reasons.
However, improvements in fire safety have largely eliminated the need for the second staircase in midsize buildings. By eliminating the two-stairway requirement, developers can reduce their construction costs and have more flexibility in their architectural designs.
Another component requires the Department of Housing and Urban Development to issue guidelines and “best-practice frameworks” for zoning and land-use policies, presumably to nudge cities and towns to allow developers to build smaller homes on smaller lots.
To further facilitate housing construction, the bill requires local governments that receive federal funding for community development to publish a “searchable online database of undeveloped land parcels,” which is intented to make it easier to identify potential low-cost development sites.
The bill also encourages the Federal Housing Administration and other lenders to issue “small dollar mortgages” of less than $100,000. Currently, when low-priced homes are available, it can be difficult for interested homebuyers to obtain financing because it is more profitable for lenders to underwrite larger mortgages.
Finally, the law reauthorizes for three years the Community Development Block Grant Disaster Recovery program. This program helps cities, counties and states recover from disasters declared by U.S. presidents, focusing on low- and moderate-income households.
While most of the legislation focuses on homeowner housing, a couple of provisions address important challenges for subsidized rental housing. One seeks to encourage landlord participation in the Housing Choice Voucher Program by making it easier for landlords to satisfy the federal government’s housing inspection requirements.
Another provision helps protect low-income rural renters from losing their homes when the federally funded mortgages on their buildings expire. Currently, these rent subsidies, which are provided by the Department of Agriculture, can only be used in the buildings it finances. Many of these mortgages are due to expire over the next few years, putting residents with rental assistance at risk of eviction. The legislation will enable these households to remain in place or move to other buildings without federally funded mortgages.
Americans are still being crushed by costs
Yet as sweeping as the bill is, its impact is likely to be modest.
Nearly all of the legislation involves regulatory changes. The bill does not increase subsidies available to low-income renters and homeowners, or to potential homebuyers.
The majority of all renters are cost burdened, meaning they currently spend more than 30% of their income on housing. Over a quarter of all homeowners are cost burdened, too. The legislation almost certainly will not diminish this affordability crisis.
Sens. Tim Scott, R-S.C., and Elizabeth Warren, D-Mass., were key architects of the bipartisan ROAD to Housing Act. Tom Williams/CQ-Roll Call via Getty Images
Several measures aim to reduce the cost of new housing. But with few exceptions, they are contingent on the support and participation of states, cities and suburbs.
For example, nothing in the bill requires localities to change their zoning and building codes to allow more apartment buildings or smaller single-family homes to be built at higher densities. Homeowners are usually strongly opposed to development if they fear it will change the character of their community or lower the value of their property. Existing homeowners do not want – and almost certainly will not allow – a wholesale erosion of their home equity. They will continue to fight to preserve the valuations of their homes.
Nor does the House’s passage of the bill mean that Congress has become more supportive of low-income housing. On the same day that the House passed the bill, the House Appropriations Committee released its fiscal year 2027 budget proposal for Transportation, Housing and Urban Development. It included cuts to public housing, Community Development Block Grants, the Home Investment Partnership Program and the Housing Choice Voucher Program.
Now that it is law, the 21st Century ROAD to Housing Act will hopefully accelerate reform efforts. But on its own, it’s less a speedway that will supercharge housing supply and provide immediate relief for the most cost-burdened Americans, and more a modest on-ramp that reflects the limits of what’s politically feasible in a divided and polarized Congress.
A Rare Bipartisan Housing Bill Just Became Law – but Americans Will Still Struggle With Affordability was originally published by The Conversation and is republished with permission.
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