Weekly update from the National Housing Conference
In this issue
July 31, 2022
Issue 91-30

· Treasury unlocks funds for housing
· Manchin, Schumer reach deal on Inflation Reduction Act of 2022
· OCC solicits fintech research
· Ginnie Mae seeks manufactured housing feedback
· HUD publishes draft support services procurement
· HUD announces funding awards
· OCC updates policy statement on MDIs
· USDA invests in broadband

· Chart of the week: Single-Family Rent Index at record high
"Stagflation" is once again public enemy number one

by David Dworkin, NHC President and CEO

This week, we heard more economic news that suggests inflation will be stubbornly resistant, and a recession is increasingly likely. As a result, one of the hottest political issues of the next year could be the most dreaded word in incumbent politics – stagflation, the combination of high inflation during a recession. 

The president’s opponents won’t waste any time jumping on the stagflation narrative, and many have already done so. But the facts do not support this argument yet. Two consecutive quarters of decline in the Gross Domestic Product (GDP) is an indicator of a recession, but it is not the only one. Given continued robust job creation, solid consumer spending and record numbers of job openings, no one can credibly say we are now in a recession. As the Trump Administration’s National Economic Director Gary Cohn said on CNBC this week, “you can’t be in a recession when you have 11.4 million job openings.” That means there is still time to prepare to fight inflation and recession, which should be the highest priority of the Biden administration. There are increasingly promising signs that it is.

Of course, the opponents of any incumbent will beat the stagflation drum given half a chance, and an incumbent’s allies will waste precious time claiming it isn’t the case. This is one of the most bipartisan aspects of American partisan politics and has been for over 100 years. Take it from me. I lost my job as a political appointee in the first Bush administration because we were on the wrong side of the slogan, “it’s the economy, stupid.” It still is.

For housing industry and advocacy organizations, this crisis presents a rare opportunity. Successfully addressing housing supply and equity issues is the most effective way to fight inflation and recession. Unfortunately, the Inflation Reduction Act of 2022, which is the product of a deal between Senator Joe Manchin (D-W.V.) and Majority Leader Chuck Schumer (D-N.Y.), does not include any housing supply legislation (though it does include much-needed investments in repairing existing housing stock and improving home energy efficiency). Failing to include housing supply is a tremendous, missed opportunity to address inflation, job creation, and racial equity. But it is not the only one.

Fortunately, the Biden administration isn’t waiting for Congress. This week, the Treasury Department announced new guidance to increase the ability of state, local, and tribal governments to use American Rescue Plan (ARP) funds to boost the supply of affordable housing in their communities. Through March 31, 2022, over 600 state and local governments had budgeted $12.9 billion in ARP funds to meet housing needs and lower housing-related costs, including $4.2 billion for affordable housing development and preservation. The change could result in significantly more ARP funds going to housing supply.

In May, the administration announced a Housing Supply Action Plan that more...
News from Washington | By Luke Villalobos
Treasury unlocks funds for housing

On Wednesday, the U.S. Treasury Department issued new guidance for using unspent American Rescue Plan (ARP) State and Local Fiscal Recovery Fund (SLFRF) money for housing development. The new guidance allows more flexibility for long-term loans with SLFRF funds. Before this guidance, SLFRF money was challenging to use for housing development. The new guidance creates more flexibility with presumptive eligible uses for the funds by expanding the range of programs that can use the funding to include HOME, the National Housing Trust Fund, the Low-Income Housing Tax Credit (LIHTC), public housing capital funds, Section 202, Section 811, project-based rental assistance, and USDA multifamily preservation. Treasury is further updating its guidance to clarify that SLFRF funds can finance the development, repair, or operation of any affordable rental housing unit that provides long-term affordability for 20 years or more to households at or below 65% of the local area median income. The guidance is effective immediately.
 
The new guidance is part of the Biden Administration’s Housing Supply Action Plan to increase the supply of affordable housing. SLFRF currently has $350 billion of funds and $4.2 billion explicitly budgeted for affordable housing development and preservation. Treasury and HUD also jointly released a “How To Guide” for using these funds to encourage state and local governments to use the flexible funding.
 
“Increasing the nation’s housing supply is essential to lowering shelter costs over the long-term,” said Deputy Secretary of the Treasury Wally Adeyemo. “Treasury continues to strongly encourage state and local governments to dedicate a portion of the historic funding available through President Biden’s American Rescue Plan toward building and rehabilitating affordable housing in their communities and the actions being announced today will make it even easier for them to do so.”
 
“Treasury’s announcement will quickly unlock significant amounts of financing, encourage states and cities to invest additional funds, and establish new sources of long-term capital for affordable construction around the country,” said NCSHA Executive Director Stockton Williams. “We are grateful to the Biden-Harris Administration for this significant action in its continuing efforts to address the housing affordability crisis.”

 
Manchin, Schumer reach deal on Inflation Act of 2022

After months of negotiations, a compromise between Sen. Joe Manchin (D-WV) and Sen. Majority Leader Chuck Schumer (D-NY) was made public. The White House endorsed the agreement on a reconciliation package on Thursday called the Inflation Reduction Act of 2022. The new package focuses sharply on climate change and energy and tax provisions, includes $433 billion in new spending, $739 billion in raised revenue, and a $300 billion deficit reduction, according to a released summary. 
OCC solicits fintech research

The Office of the Comptroller of the Currency (OCC) is currently soliciting academic and policy research on financial technology’s (fintech) impact on banking. The request comes one week after FHFA created a new Office of Financial Technology. The OCC’s announcement says the office is interested in expert research exploring how the banking system, in particular community banks, leverages technology and responds to the growth of banking services.
 
Submissions are due by Aug. 21, 2022. Papers must present original, unpublished research. OCC will invite selected authors to present their research in November.
Ginnie Mae seeks manufactured housing feedback

On Wednesday, Ginnie Mae announced a new Request for Input on enhancements to the Title I Manufactured Home Loan Program. The request is in coordination with the FHA. It responds both to the Biden Administration’s Housing Supply Action Plan and HUD’s FY 2022-2026 Strategic Plan, which identified manufactured housing as a tool for increasing the affordable housing supply. Specifically, the request seeks comment on how the FHA Title I manufactured housing program, and the Ginnie Mae securitization program can be more competitive and how the proposed changes would improve the financing market for manufactured housing.
 
Responses to the request are due on Sep. 26, 2022. 

 
HUD publishes draft support services procurement

HUD published a draft solicitation on Wednesday of its proposal to procure contractors for Housing Assistance Payment support services. The contracted support would provide service for 16,000 project-based rental assistance contracts. Currently, Performance Based Contract Administrators are the primary providers for overseeing compliance, renewing contracts, and managing tenant interactions. Most of these contracts expire in 2023.
 
“Our ultimate goal is to ensure that the needs of the 1.3 million residents in HUD Section 8 properties are met on a daily basis,” said HUD Office of Multifamily Housing Deputy Assistant Secretary Ethan Handelman. “We are seeking feedback from the public on our proposal for soliciting services in order to develop a final solicitation that is fair, compliant with federal contracting laws, and promotes the highest quality of services for residents and HUD.”
 
Comments are due to HUD within 30 days. 
HUD announces funding awards

HUD announced several funding awards on Wednesday.
 
In recognition of the anniversary of the Americans with Disabilities Act, HUD announced over $36 million to support people living with disabilities to 218 public housing agencies (PHA) across 46 states. The funding includes $23 million allocated for mainstream vouchers, which help people find housing as they transition from institutional settings, and $13 million in administrative fees to help PHAs support tenants’ housing navigation and move-in costs.
 
HUD’s Foster Youth to Independence Program receives $621,000 through 14 PHAs. The funds will provide housing assistance to youth aging out of foster care and make 60 housing choice vouchers available for those at risk of or experiencing homelessness.
 
Finally, HUD also announced new steps to lower electricity bills for residents in HUD programs by connecting them to solar power. In addition, the department issued new guidance on connecting families to community solar and reducing their energy bills. HUD also launched new outreach and education campaigns supporting the Small Rural Frozen Rolling Base program, which enables small rural housing authorities to retain utility cost savings, and the FHA 203(k) Rehabilitation Mortgage Insurance Program, which helps to rehabilitate and repair single-family properties. 
 
OCC updates policy statement on MDIs

The OCC announced it’s revising its policy statement on minority depository institutions (MDI) on Wednesday. The announcement notes that OCC has seen increased interest from banks in working with MDIs, and the revised statement is a result of the review and seeks to streamline policies, procedures, and programs.
 
“MDIs are on the frontlines serving low-income, minority, rural, and other underserved communities. They are a critical source of credit to support the financial needs and economic vitality of their communities,” said Acting Comptroller Michael J. Hsu. “The OCC has a long history of recognizing the value of these institutions, and we will continue our efforts to ensure they remain a bedrock of financial access and inclusion.”
 
USDA invests in broadband

The U.S. Department of Agriculture (USDA) announced $401 million to provide high-speed internet access to rural areas. The funding is estimated to provide internet to 31,000 people and businesses in 11 states. In addition, several awards will also help rural people and businesses on Tribal lands and socially vulnerable communities.
 
“Connectivity is critical to economic success in rural America,” USDA Secretary Tom Vilsack said. “The internet is vital to our growth and continues to act as a catalyst for our prosperity. From the farm to the school, from households to international markets, connectivity drives positive change in our communities. The investments I am announcing today will help 31,000 people and businesses in large and diverse regions across the country access new and critical opportunities. Under the leadership of President Biden and Vice President Harris, USDA knows rural America is America’s backbone, and prosperity here means prosperity for all.”
Chart of the week
Single-Family Rent Index at record high

According to Bill McBride at the Calculated Risk Blog, annual U.S. single-family rent growth remained at a record high in May 2022, posting a 13.9% increase from May 2021. This growth matched April’s increase, representing the first time that price growth did not accelerate from the previous month since January 2021. Sustained high rent prices are partially due to a robust labor market, with the national unemployment rate at 3.6% in May, down by 2.2 percentage points on an annual basis and the lowest recorded since before the start of the (coronavirus) COVID-19 pandemic. “Increases in mortgage rates and high home prices can be headwinds to the for-sale housing market but may be continually pushing up single-family rents,” said Molly Boesel, principal economist at CoreLogic. “While the annual increase in the SFRI for May matched April’s growth rate, the gain remains at a record-high level. Furthermore, the month-over-month growth rate for rents in May was well above that month’s 19-year average.”
What we're reading
The National Low Income Housing Coalition released its annual report, Out of Reach: The High Cost of Housing, which shows record-breaking rent increases across the nation. It notes new rent data from Redfin showing that for the first time, the median rent in the 50 most populous metros is over $2,000 while the minimum wage value reaches its lowest point. The report also generates a national “Housing Wage” that estimates the wage a full-time worker must earn to afford a modest rental. The 2022 Housing Wage is $25.82 per hour for a two-bedroom home and $21.25 for a one-bedroom home, numbers well above the current federal minimum wage of $7.25 per hour.

A video from Low Income Investment Fund (LIIF) discusses the role of race in the Community Reinvestment Act (CRA). The video features discussion between Lucy Arellano Baglieri, Chief Strategy Officer at the LIIF, and Marla Bilonick, President & CEO of the National Association for Latino Community Asset Builders. The two discuss how to make advances in racial equity without subjecting CRA to legal challenges. Comments on CRA are due on August 5.
 
A new study shows the U.S. needs to build 4.3 million new apartments by 2035, Multifamily Executive reports. The report, commissioned by the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA), says that to keep up with demand, we need to build 266,000 new apartments each year. NMHC and NAA launched a tracking website alongside the study.
 
An article in The Hill examines four ways we can begin addressing the housing shortage. The article discusses updating zoning laws to remove restrictive policies, investing in manufactured housing as an innovative tool, closing the racial homeownership gap, and invigorating a depleted workforce. The article mentions passing the Neighborhood Homes Investment Act, which NHC strongly supports.
 
An article by the Brooking Institution explains how the Consumer Price Index accounts for housing costs, noting that housing represents a third of the value used to track inflation. The article explains exactly which data points from the Bureau of Labor Statistics contribute to the calculation and how that data determines shelter prices. It predicts that inflation will increase by 7% in 2022 and 2023, with housing costs accounting for 1.1 percentage points above their historical average. 
The week ahead
Monday, August 1

Tuesday, August 2

Wednesday, August 3

Thursday, August 4
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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