President Biden has been a strong advocate for affordable housing, but recent decisions on housing-related issues, and a deafening silence on housing as a key priority in the Build Back Better negotiations, raise troubling questions. The President and senior staff must adopt clear and vocal support for making housing affordability a top priority. The gap between what the President has said and what is done must be closed.
Housing must be a top priority, and not just because housers say so. As I noted in my January 21 Member Note, if there is one unalterable fact in market economics, it is that the law of supply and demand is never repealed. Less supply and more demand mean higher prices, and that’s exactly what we’ve seen. The median existing-home sales price rose 13.9% year-over-year 2021 to a new high of $353,900. The national median rent increased by 17.8%. This compares to 2017-2019, when rent growth averaged just 2.3%. According to the Bureau of Labor Statistics, increases in the cost of shelter and transportation were the largest contributors to inflation, which increased to 7.0% for the 12 months ending December 2021, the largest increase since 1982. Even if you take out food and energy, inflation is 5.5%, the largest 12-month change since 1991. As the White House Council of Economic Advisors warned in a recent report, “even small increases in rent and home prices can, in principle, have noticeable effects on overall inflation.”
This viewpoint was reinforced in a January 31 op-ed in the Washington Post by Moody’s Chief Economist Mark Zandi and former Obama administration official Jim Parrott. They were clear, “If policymakers are serious about reining in inflation, then they have little choice but to take on the shortfall in housing supply,” emphasizing that inflation “has become a brutal headwind for the recovery, with rising prices tempering the benefit of strong gains in jobs, wages and investments,… a frustrating dynamic that is undermining consumer confidence and slowing economic growth.”
On January 20, 2021, President Biden became the first president in US history to talk about the fear of losing one’s home and did it in deeply personal terms. “I understand that many of my fellow Americans view the future with fear and trepidation,” he said in his Inaugural Address. “I understand they worry about their jobs. I understand, like my dad, they lay in bed at night, staring at the ceiling, wondering: Can I keep my health care? Can I pay my mortgage? Thinking about their families, about what comes next. I promise you,” he said, “I get it.” This line wasn’t in his prepared remarks. It was in his heart.
Last summer, President Biden tweeted: “We need to deal with the shortage of affordable housing in America. With my Build Back Better Agenda, we’re going to make a historic investment in affordable housing — increasing and improving the housing supply by building or rehabilitating more than 2 million homes.” Today, housing advocates fear the President’s negotiators don’t even have housing on their list. Last fall, House Financial Services Committee Chairwoman Maxine Waters openly expressed concern the administration might leave housing investments behind. She penned a letter to the President, co-signed by every Democrat on the committee, which noted that “national polling conducted by the Tarrance Group shows that… 89 percent of respondents, including 79 percent of Republicans, reported that our government should ensure our country has an adequate supply of affordable housing.”
This concern was bolstered recently in a February 1 open memo from Patrick Gaspard, CEO of Center for American Progress Action Fund. His three-page list of priorities in a smaller Build Back Better package includes no mention of housing.
President Biden has one of the best housing teams I have worked with in 30 years: HUD Secretary Marcia Fudge has exceeded all expectations, especially given the huge number of vacancies among HUD career staff she inherited. Her senior team includes some of the most respected affordable housing and community development leaders in the country: Deputy HUD Secretary Adrianne Todman, who has spent her life leveraging HUD’s funds on behalf of those most in need of them; Ginnie Mae president Alanna McCargo, who led Urban Institute’s research on the growing homeownership gap for people of color; and Federal Housing Administration Commissioner-designate Julia Gordon, one of the leading authorities on preventing foreclosed properties from destroying the value of neighboring homes. Federal Housing Finance Agency Director-designate Sandra Thompson has already made a big difference in her acting leadership role, moving Fannie Mae and Freddie Mac back towards affordable housing leadership while maintaining their safety and soundness. And the Domestic Policy Council’s Erika Poethig has played a critical role in advocating for housing within the White House and communicating broadly with housing leaders.
Yet, when housing has to compete with other priorities, it is far too often left behind. Here are a few noteworthy examples:
- Tariffs on Canadian lumber are unacceptably high due to a recent ruling by the International Trade Commission. The administration has not prioritized a long-term softwood lumber agreement with Canada.
- Buy America provisions in the infrastructure bill could dramatically increase the cost of home building, driving housing costs even higher, fueling inflation and contributing to housing instability in cities that are increasingly unaffordable for the first time.
- The housing supply chain crisis continues to contribute to rising housing costs and delays.
- CFPB regulations on mortgage underwriting remain opaque, despite broad support for adopting an agreement that was carefully negotiated between the housing industry and fair housing and consumer groups in 2020.
- Department of Justice and HUD guidance on the False Claims Act remains uncertain and discouraging to banks who are ready to reenter the FHA market.
NHC has been the consistent voice for housing in identifying issues as well as opportunities for every administration since Herbert Hoover. This one is no different. We see the opportunities for this administration to make an impact. And we know that it’s time that the administration’s housing policies match the President’s commitment. Anything less is bad economics, bad policy and bad politics.