Weekly update from the National Housing Conference
In this issue
January 23, 2022
Issue 91-3

• NFHA publishes report on appraisal bias 
• Enterprises report on 2021 multifamily financing 
• HUD announces funding and disaster assistance
• Comments due on HUD Strategic Plan Focus Areas

• Chart of the week: Housing materials costs rise across the board
Fight inflation with housing

By David M. Dworkin, NHC president and CEO

The recent rise in housing prices is not new to the pandemic but has been accelerated. The devastation of the home building industry during the Great Recession resulted in a deficit of nearly 2 million homes needed to catch up to a healthy inventory.

If there is one unalterable fact in market economics, the law of supply and demand is never repealed.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%.

These surging housing costs are not limited to cities like New York, Boston, Los Angeles and San Francisco. According to the National Housing Conference’s Paycheck to Paycheck database, increasing home prices contributes to rising inflation for the first time in a generation. 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.”

Last week, President Biden addressed the failure to pass Build Back Better and suggested that it was clear to him “that we’re going to have to probably break it up.” He noted that different elements have various levels of support. BBB includes several proposals that can significantly impact one of the biggest drivers of inflation – the lack of affordable housing production. Many have strong bipartisan support. They should be included in any smaller package. If no bill emerges, they can be pursued as an independent housing bill to address the growing housing affordability crisis. More...
News from Washington | By Luke Villalobos
NFHA publishes report on appraisal bias

On Wednesday, the National Fair Housing Alliance (NFHA) published a new report detailing bias and systematic barriers in real estate appraisals. The report was commissioned by the Appraisal Subcommittee of the Federal Financial Institutions Examination Council and conducts a comprehensive review of whether or not the Uniform Standards of Professional Appraisal Practices and Appraiser Qualifications Criteria encourage systematic bias. The report, titled Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria, is considered the most comprehensive review of appraisal bias to date. 
 
The report ultimately makes a wide range of recommendations to address persistent inequalities and biases within the appraisal process. Included within this list is addressing gaps in Fair Housing training and requirements, amending the appraiser qualification requirements, expanding outreach to women and people of color to join the industry, and collecting needed data to properly analyze and respond to issues within the industry. 
 
In a press release, President and CEO of NFHA Lisa Rice stated, "Our report details a comprehensive analysis of structural challenges in Appraisal Standards and Appraiser Criteria that impacts every homeowner in the United States. It also highlights the deep inequities and systemic issues of bias in the appraisal industry that restricts homeownership and important lending opportunities for people of color. While we've done the work of identifying the obstacles and outlining a number of fixes, we call on federal regulators, Congress, the industry, and fellow advocates to work together to enact the meaningful changes called for in our report."
Enterprises report on 2021 multifamily financing 

Last Thursday, Fannie Mae and Freddie Mac (the Enterprises) released their multifamily financing numbers for 2021, totaling nearly $70 billion and $70.7 billion, respectively. Freddie Mac hit the Federal Housing Finance Agency’s (FHFA) volume cap of $70 billion and estimates that they financed 650,000 rental units, the majority of them affordable to families making 120% of AMI and below. Freddie Mac further highlights its $674 million in Low-Income Housing Tax Credit investments, $9.6 billion in Targeted Affordable Housing Loans, $5.9 billion Small Balance Loans, and $2 billion in Senior Housing Loans. They exceeded all of their mission-driven goals for 2021.
 
Fannie Mae did not hit the $70 billion volume cap but noted an increase in affordable multifamily financing by 23%. The increased funding marks the highest volume for Fannie Mae in 33 years. They further highlight $11 billion in Affordable Housing Loans, $5.4 billion in Small Loans, $3.3 billion in Manufactured Housing Community Loans, and $800 million in Senior Housing Loans, among others. 
 
FHFA set the 2022 multifamily loan cap at $78 billion. 
HUD announces funding and disaster assistance

On Tuesday, the Department of Housing and Urban Development (HUD) announced an $83 million award for the Indian Community Block Grant-American Rescue Plan (ICBG-ARP) grant program. The funding will go to 74 Tribal communities to prevent, prepare for, and respond to the COVID-19 pandemic. This is the third award of ARP funds to Tribal communities, with HUD having previously received $74 million and $52 million to the program under the 2021 pandemic recovery law.
 
On Wednesday, HUD also announced disaster assistance for Alaska in response to severe storms from October 29th through November 1st, and for Tennessee in response to severe storms, wind, and tornadoes on December 10th and 11th. 
Comments due on HUD Strategic Plan Focus Areas

Comments on HUD’s draft Strategic Plan Focus Areas for 2022 through 2026 are due on Friday, January 28. The focus areas, which include supporting underserved communities, ensuring access to, and increasing the production of affordable housing, promoting homeownership and advancing sustainable communities, are meant to guide HUD activity over the next four years.
 
The focus areas are a departure from the 2018-2022 set, which emphasized advancing economic opportunity, protecting taxpayer funds and streamlining agency operations, reflecting a broader turn toward equity across the Biden administration.
Chart of the week
Chart of the week: Housing materials costs rise across the board

The National Housing Conference collected data from the Bureau of Labor Statistics that shows consistent rising producer price indexes (PPIs) for various construction materials. Lumber, which has dominated the national conversation on cost increases, has been joined by steel, gypsum, copper, and concrete in fueling skyrocketing costs for housing construction. NHC spoke with member organization and nonprofit developer, Eden Housing, about the challenges surrounding these rising costs and the impacts on developing affordable housing. Overall, Eden Housing is seeing 10-20% total cost increases, inevitably decreasing the number of affordable units built. Along with increased costs, relationships between developers, contractors, and subcontractors are increasingly strained by the inability to commit to costs and provide materials based on agreed-upon timelines. They describe further complications from supply chain bottlenecks, especially with elevators and electrical components, delaying occupancy certificates sometimes up to six months. 
What we're reading
Connecting COVID-19 test shortages to shortages and price inflation in healthcare, education, transportation and housing, the Atlantic’s Derek Thompson makes the case for the “abundance agenda.” “A mainstream liberal might look at [rising inflation] and think: The government isn’t spending enough money to help people out; spend more!” He further writes, “The typical conservative might think: The government is spending too much money and inflating the cost of these services; slash taxes and spending! What I’d prefer to focus on is perhaps the real problem: a national failure to increase the supply of essential goods.”
 
Vox’s Jerusalem Demsas discusses Century Foundation senior fellow Richard Kahlenberg’s proposal to amend the Fair Housing Act to ban economic discrimination along with discrimination based on race, national origin and family status. Kahlenberg argues that much of the racial discrimination the Fair Housing Act was meant to combat has morphed into discrimination based on class, giving disparate impact litigators much purchase against harmful exclusionary zoning regulations. 
 
CityLab covers the effort to pass a “good cause” eviction bill in New York following the expiration of the state’s eviction moratorium last week. The bill would ban no-cause evictions for paying tenants and cap rent increases at 3% per year or 150% of annual inflation, whichever is higher, a provision critics say is no different from statewide rent control. However, advocates argue that the bill is necessary after years of pandemic-related turmoil revealed the extent of New Yorkers’ housing insecurity. 
The week ahead
Monday, January 24
 
Tuesday, January 25
 
Wednesday, January 26
JCHS: Making Our Neighborhoods, Making Our Selves book talk with George Galster, 2 – 3 p.m. ET
 
Thursday, January 27
 
Friday, January 28
The National Housing Conference is a diverse continuum of affordable housing stakeholders that convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest.
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