With rapidly worsening housing affordability in America, where half of all renters and a quarter of homeowners pay more than 30% of their income for housing, the time is ripe for congressional action. Even amid a divided Washington, housing policy comes out as perhaps the only touch of bipartisan cooperation on Capitol Hill. It is encouraging that recent legislative currents, from enlargement of the Low-Income Housing Tax Credit (LIHTC), to reform of restrictive zoning regulations, are pointing in a clear direction: There is an increasing consensus that a combination of supply-side constraints and regulatory impediments need to be overcome by creative, collective will.
Foundations of Bipartisan Agreement
Both sides see that the housing crisis is an emergency and one created by a chronic shortage of dwellings made worse by skyrocketing construction costs, difficult local laws. Proposed housing bills such as the Affordable Homes Act in Massachusetts illustrate that investments in housing can be an economic engine, pumping billions into local economies and creating jobs and tax revenue. The following are some particular points of convergence at the federal level:
1. Expanding LIHTC: Permanently expanding tax credits that support development of affordable housing — as proposed in recent budget reconciliation packages — could double the production of low-income units over the next decade.
2. Zoning and Land Use Reform: Bills such as the PRO Housing grants, that would help states to end local exclusionary zoning, have had support on both sides of the aisle. Likewise models at the state level, like California's SB 79, which accelerates denser housing around transit nodes, provide precedent for federal policy.
3. Regulatory Streamlining: Both Republicans and Democrats call for removing barriers to construction, such as lengthy permitting processes and restrictive density limits.
Innovative Solutions on the Horizon
Housing policies of tomorrow probably will combine inducements with federal planning so that the supply-demand imbalance, and also price, can be moderated. There are three emerging strategies that Bar-Yam said are making inroads:
1. Creating Incentives For Local Compliance: There can be programs similar to the Pro-Housing Communities Program which reward local governments for enacting pro-housing policies by providing preferential access to state funding. That could be replicated at the federal level to encourage zoning changes and growth.
2. Using Transit-Oriented Development to Its Full Potential: Based on California's SB 79, federal regulations could require or incentivize more housing near public transportation that would mitigate lack of housing supply, environmental objectives and issues of equity.
3. Enhance Tax Credits and Financing: Permanent LIHTC allocations increases and bond financing threshold decreases would leverage billions in private investment for affordable housing. The Affordable Homes Act shows that when tax credits are combined with infrastructure investments, public-private partnerships are possible.
Challenges
For all the common ground, there are still some substantial challenges. And a more deregulatory-minded administration or declarations of housing emergencies could be pitted against Democratic preferences for robust federal funding and tenant protections. For instance, whereas Republicans tend to advocate reducing Fannie and Freddie standards relating to regulations and barriers (such as overly restrictive applicable laws) and allowing for more product types of manufactured housing, Democrats typically propose subsidies for individual renters or renter protections. Slim congressional majorities complicate sweeping legislation as well, limiting the path for ambitious policies like a national housing trust fund. But there is a workable middle ground in narrower bipartisan bills, including an effort that would tie housing reforms to infrastructure grants.
Conclusion
The US housing policy of the future will need to be built upon common ground and rely on practical solutions. By offering up incentives to local governments to reform their zoning, by using more of what works (like LIHTC), and by encouraging dense development in high-opportunity areas, lawmakers can start to close the housing gap. And as the Massachusetts Affordable Homes Act demonstrates, these investments in housing not only have a profound impact on our economy overall, from job creation to increased tax revenues, but also provide an attractive ROI for both capital and labor. If our nation's leaders choose to prioritize collaboration rather than conflict, America could enter an era of housing abundance and affordability.
