Weekly update from the National Housing Conference |
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In this issue
April 17, 2022
Issue 91-15
• White House holds virtual convening on equity
• FHFA finalizes strategic plans
• HOME letter circulating
• Mortgage rate hits 5 percent
• Opportunity Zone reform bill introduced
• HUD releases fact sheets
• Proposed changes to Uniform Rules of Practice and Procedure
• Chart of the week: Latest PPI data shows increases in services costs
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NHC Annual Member Meeting Info
Annual Meeting (online)
June 14, 2022 12:00 p.m. ET
Questions?
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Five of the most important “housing” jobs in Washington need to move forward now
By David M. Dworkin, NHC president and CEO
Over the next several months, the United States Senate will be considering the nomination of several of the most important housing officials in the U.S. government. Together, they will guide federal housing policy in highly consequential areas, regardless of which party wins the elections of 2022 and even 2024.
The five nominees, all of whom have the support of the National Housing Conference, are Jerome Powell, for Chair of the Federal Reserve Board (FRB), Lael Brainard for Vice Chair of the FRB, Michael Barr for Vice Chair for Supervision at the FRB, Julia Gordon for Assistant Secretary of Housing and Urban Development (HUD) and Commissioner the Federal Housing Administration, and Sandra Thompson for Director of the Federal Housing Finance Housing Agency (FHFA).
NHC has strongly endorsed these appointees, and we urge you to consider doing the same. Centrist Republicans and progressive Democrats need to know that their vote is essential to ensuring these positions are filled by good stewards of the American economy, particularly when it comes to housing. Some may have reservations along ideological lines, but given the political landscape in front of us, this may be one of the last opportunities to show that the perfect need not be the enemy of the good. In my opinion, all five are great.
During his tenure, Chair Powell has carefully balanced the need to stimulate the economy while simultaneously rebuilding its tools to address future crises, ensuring economic growth for all communities. He has successfully navigated a range of challenges presented to him as we continue to grapple with the economic repercussions of the COVID-19 pandemic. As we all know, the Federal Reserve Board has painful choices to make to address rising inflation, a supply chain crisis, labor shortages, and climate change. Chair Powell has the expertise and experience necessary to fight inflation while avoiding recession.
Governor Brainard is an experienced financial regulator who would bring both deep technical expertise and an understanding of how the Board’s actions impact American communities. She has played a pivotal role the effort to modernize the Community Reinvestment Act (CRA). As Vice Chair, she will be optimally positioned to lead a joint rulemaking process that brings CRA into the 21st century, ensuring that it continues to combat inequality in a fast-changing financial industry.
President Biden announced his intention to nominate Michael Barr on Friday, April 15. During the Clinton administration, Barr helped strengthen CRA and launch the New Markets Tax Credit, and in the Obama administration he was a driving force behind the creation of the Consumer Financial Protection Bureau. Barr’s academic work, while teaching at the University of Michigan, has focused on advancing racial justice, including the creation of the Entrepreneurs of Color Fund and the Detroit Neighborhood Entrepreneurs Project to support minority-owned small businesses in Detroit. Barr’s understanding of the needs of Wall Street and Main Street gives him the right mix of centrist expertise and progressive policy views to help the FRB navigate the difficult challenges ahead.
Julia Gordon brings deep experience to address the significant challenges that face FHA. If we are going to succeed in closing the racial homeownership gap more...
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News from Washington | By Luke Villalobos
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White House holds virtual convening on equity
The White House held a virtual Convening on Equity on Thursday, announcing the release of over 90 Equity Action Plans across the federal government as well as a new web page dedicated to government equity. President Biden reflected on his Executive Order on "Advancing Racial Equity and Support for Underserved Communities Through the Federal Government" in his opening comments, which directed his holistic approach to new equity initiatives. “Delivering the promise of America is not the work of one department,” he said. “It has to be the business of the whole of the federal government.”
President Biden and Ambassador Susan Rice, Director of the Domestic Policy Council, emphasized housing in their remarks. President Biden noted the need to close the racial homeownership gap. Ambassador Rice called out current efforts to address housing discrimination. Secretary of the Department of Housing and Urban Development Marcia Fudge highlighted both issues in her remarks as top priorities for HUD’s Equity Action Plan, focusing on the historic importance of the recently released PAVE report.
The U.S. Department of Agriculture's (USDA) Equity Action Plan highlights their newly formed Equity Commission, an internal commitment to diversity, equity, and inclusion, and a wide range of specific actions for USDA to take to advance equity in their programs. Secretary Tom Vilsack stated that the USDA will focus on increasing access to programs through technical assistance grants, focusing on persistent poverty counties, and better serving people of color by emphasizing civil rights compliance and strengthening trust and treaty obligations with Native American tribes.
Secretary of Commerce Gina Raimondo spoke of making sure that underserved communities are benefiting from policies and programs within her department. Commerce’s Equity Action Plan focuses on closing the digital divide, ensuring community development dollars support underserved communities, growing minority-owned businesses, strengthening small businesses in those communities, increasing access to patent and trademark systems, and focusing on making data more accessible and usable.
“The bottom line. Advancing equity is not a one-year project. It’s a generational commitment. These plans are an important step forward…to make the promise of America real for every American. And I mean every American,” President Biden said.
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FHFA finalizes strategic plans
The Federal Housing Finance Agency (FHFA) issued its finalized Strategic Plan for Fiscal Years 2022-2026 on Thursday. The plans are very similar to the drafted version released in February and are organized with the same three overarching goals: securing the regulated entities’ safety and soundness, fostering housing finance markets that promote equitable access to affordable and sustainable housing, and responsibly stewarding FHFA’s infrastructure.
“This Plan emphasizes FHFA’s commitment to safety and soundness and will further position FHFA’s regulated entities to provide equitable access to affordable and sustainable housing opportunities as the country emerges from the pandemic,” said FHFA Acting Director Sandra Thompson.
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HOME letter circulating
The National Council of State Housing Agencies’ HOME Coalition is currently circulating a sign-on letter urging Congress to invest at least $2.5 billion for HUD’s HOME Investment Partnerships (HOME) program for FY23. As housing costs continue to increase and supply challenges persist, investments in flexible programs that make affordable housing production financially feasible are critical. According to the letter, $6.5 billion in HOME has been invested in Housing Credit projects from 2010-2021, with HOME providing an average of $933,000 on a project.
“For nearly three decades, HOME has been one of the most effective and flexible tools states and localities have had to meet their affordable housing needs, including rental home production and preservation, single-family home construction, homeowner rehabilitation, and tenant-based rental assistance,” the letter states. Organizations can sign on to the letter until April 22.
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Mortgage rate hits 5 percent
Freddie Mac reported that the 30-year fixed mortgage rate averaged 5 percent for the first time in over a decade. The data comes from Freddie Mac’s Primary Mortgage Market Survey (PMMS) and showed that the 30-year rate averaged 5 percent, up from 4.72 percent last week. One year ago, the average was 3.04 percent.
“As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices and tight inventory are making the pursuit of homeownership the most expensive in a generation,” said Freddie Mac’s chief economist Sam Khater.
According to George Ratiu, an economist at Realtor.com, this amounts to a 38% increase in monthly mortgage costs for homeowners when compared to a year ago. A median mortgage bill of $1,223 is now up to $1,700 due to rising rates alone based on his calculations.
The implications of rate changes have contributed to overall inflation in recent months. The Federal Reserve has actively been trying to rein in inflation rates, betting that higher interest rates will help to lower inflation and steady the job market.
“This rapid increase in rates, caused by a much more rapid pace of rate hikes and balance sheet reduction from the Federal Reserve, is in response to the booming job market and inflation being at a 40-year high. The jump in mortgage rates will slow the housing market and further reduce refinance demand the rest of this year,” said Mike Fratantoni, Mortgage Bankers Association’s Senior Vice President and Chief Economist, in their April forecast.
Shelter contributes to about a third of the consumer price index, further driving overall inflation and making affordability a major challenge. Bankers and economists are hoping that pricier mortgages will cool the market down through higher corporate financing costs and lowered investment incentives. The Federal Reserve is allegedly planning several 50-basis-point rate increases this year.
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Opportunity Zone reform bill introduced
Last week, U.S. Senators Cory Booker (D-NJ), and Tim Scott (R-SC) joined Representatives Ron Kind (D-WI) and Mike Kelly (R-PA) in introducing a bipartisan, bicameral reform bill, the Opportunity Zones Transparency, Extension, and Improvement Act. The bill is cosponsored by Senators Mark Warner (D-VA), Chris Van Hollen (D-MD), and Todd Young (R-IN) and Representatives Terri Sewell (D-AL), Dan Kildee (D-MI), and Jackie Walorski (R-IN).
The bill seeks to improve Opportunity Zones by reinstating and expanding upon reporting requirements that were present in the original bill that were stripped out in the 2017 Tax Cuts and Jobs Act. It would also sunset a small percentage of Opportunity Zones that are in tracts with median family incomes at or above 130 percent of the national median, create pathways for small dollar impact investments, provide operating support and technical assistance to high-poverty and underserved communities, and extend the tax incentive for two years.
“The Opportunity Zone program represents the good that leaders can do for communities across the country when we work together toward common sense solutions,” said Senator Scott. “Independent reporting shows that investments in Opportunity Zones are making a huge impact across the country, with billions of dollars flowing into impoverished neighborhoods. I am glad to build on that success with this legislation to make the program stronger, so that we can ensure this incentive is benefitting the Americans who need it most.”
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HUD releases fact sheets
HUD released two fact sheets commemorating the 54th anniversary of the Fair Housing Act and National Community Development Week.
The Community Development Block Grant (CDBG) program and the HOME Investment Partnerships (HOME) program were highlighted in the community development fact sheet. They describe how each has made significant contributions to community development and how the programs have helped to uplift underserved communities, with HUD providing several data points demonstrating their impact. In 2021, CDBG provided grants to 1,235 state and local governments. Funding through CDBG has rehabilitated 1,300,027 units of housing since 2005 and assisted 16 million through housing and infrastructure projects, as well as an additional 161 million people through public services. The programs have ultimately expanded affordable housing. HOME has created 1.3 million affordable units since 1992 and provided direct rental assistance to 363,000 low-income families. The press release notes that the President’s FY23 Budget request asks for increases in both programs.
The Fair Housing Act fact sheet also highlights the fair housing actions of HUD under the Biden-Harris Administration. These actions include fighting housing discrimination related to the COVID-19 pandemic, protecting the LGBTQ+ and disabled communities, restoring the affirmatively furthering fair housing requirement and discriminatory effects rule, upholding the use of special purpose credit programs, and more.
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Proposed changes to Uniform Rules of Practice and Procedure
An interagency Notice of Proposed Rulemaking (NPR) for changes to the Uniform Rules of Practice and Procedure was issued on Wednesday by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve Board), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) (Uniform Rules). The NPR recognizes the use of electronic communications and technology in formal administrative proceedings. The proposal adds a definition of “electronic signature” to the Uniform Rules, codifies the current practice of permitting electronic service and filings, and allows for remote depositions, among other changes. The OCC also proposes combining its Uniform Rules and Local Rules into a single set that would apply to both national banks and federal savings associations. The proposal will be open for public comment until June 13, 2022.
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Latest PPI data shows increases in services costs
The National Association of Home Builders (NAHB) Eye on Housing examines new data released by the Bureau of Labor Statistics. The newest residential construction goods prices show another increase of 1.4%, marking an 8% jump since the start of the year. NAHB graphs the 15.2% rise in the price index of services for home building such as trade services, transportation, and warehousing, against the increases in goods, showing steeper inclines amidst rising costs overall, and surpassing March 2021 service-cost highs.
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A working paper by Urban Institute finds that spending on K-12 education is highly correlated with local housing resources through local tax policies. Key findings of the paper show that a one percent increase in school spending increases home prices by 1.03 percent. Salary spending translated more into housing prices than non-salary spending, suggesting that households are willing to pay more in housing costs when salary funding is increased.
A post in Fannie Mae’s Perspectives Blog examines consumer affordability and the impact of remote work on housing preferences. Fannie examined this as part of their Q3 2021 National Housing Survey®. According to the survey results, there is a growing perception that housing is becoming less affordable and that finding affordable housing is becoming more difficult. The post further explores data on reasons for moving and buying, and changes in housing features from remote work.
A new study by the National Association of Realtors (NAR) revealed that the lack of affordable housing is a top obstacle for potential new homebuyers. The study partnered NAR with Morning Consult to produce a report on 2022 Obstacles to Homebuying, revealing the biggest obstacles are limited supply, lack of homes that fit their criteria, competitive offers, and saving for a down payment.
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Monday, April 18
Tuesday, April 19
Wednesday, April 20
Thursday, April 21
Friday, April 22
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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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