▶ 0:25:31Committee on Financial Services will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. Today's hearings entitlement roadblocks to housing supply. Without objection, all members will have five legislative days within which to submit extraneous material to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement.
▶ 0:25:56Today's hearing will explore the various factors contributing to the high cost of housing and examine the tools the federal government might wield in order to alleviate some of that burden. Over the last decade, housing affordability has rapidly become one of the main issues facing our American families, which have been primarily driven by a persistent lack of supply needed to meet a growing demand.
▶ 0:26:22The delta between supply and demand has resulted in an affordability challenge many Americans face in looking to purchase a home. This committee has held numerous hearings on critical aspects of this issue, including barriers to building middle class housing, better utilization of modular and manufactured housing to meet urgent needs, and the unique housing challenges that rural America faces.
▶ 0:26:47More recently, our housing and insurance subcommittee held a hearing reviewing the urgent need to modernize the federal housing construction program, the home program, to make it the most effective and responsive to today's market demands. Each of these discussions has highlighted a severe decadesl long shortfall in housing inventory that has hindered many Americans access to affordable homes.
▶ 0:27:13Our goal today is to chart a path toward greater development capacity and a more simplified regulatory framework. Regulatory complexity, particularly those locally designed and approved rules, remains a significant obstacle for property owners and builders, complicating the development process and often resulting in delays and increased expenses.
▶ 0:27:37Rather than helping development, overburdensome building regulations have made it nearly impossible for many housing providers to navigate a maze of federal, state, and local rules, leading to less housing development across the Likewise, homebuilders and hopeful home buyers are being crushed by the tailwinds of the 40-year high in inflation brought about by trillions in new spending from the Biden administration and excessive
▶ 0:28:07laxity on the part of the Federal Reserve in late 2020 and 2021. This inflationary spike elevated the cost per square foot, pushed down real incomes, contributed to higher insurance premiums, and obviously higher interest rates as the Fed behind the curve fought to overcome these errors.
▶ 0:28:30Inflation is down to 3% from its ugly peak of 9% in In line with the committee's make a community banking great again agenda, committee Republicans have been working alongside the Trump administration to ensure that community community banks remain viable, competitive, and able to serve their local needs to combat rising housing costs.
▶ 0:28:54Greater capital, better deposit funding, and lower compliance costs mean greater credit availability by our bank banks for our construction industry. We're committed to finding new ways to foster home building and buying environment that's conducive to supply growth and prudent lending practices. Our focus today is not about expanding government control.
▶ 0:29:18It's about how our government can work through to cut red tape that's stifling innovation and discouraging investment in housing projects. My Republican colleagues and I understand that the first step in creating well functioning h a well functioning housing market starts with streamlining regulatory processes and eliminating redundant layers of bureaucracy. By doing so we can create a more predictable environment for builders, lenders, buyers, and renters.
▶ 0:29:47After we take feedback from today's hearing, we plan to hold a markup later this month on a package of housing and banking reform solutions for our banking our nation's housing challenges. I want to thank our witnesses and I look forward to our discussion today. I now recognize the ranking member of the committee, Mrs. Waters, for four minutes for an opening statement.
▶ 0:30:07Thank you very much, Mr. Chairman. The cost of living is skyrocketing and workingclass families are struggling to pay their rent and mortgages. And what is Donald Trump doing to solve this crisis? Raising housing cost.
▶ 0:30:22He's imposing tariffs on lumber and other building materials, gutting the key civil rights protections meant to end housing discrimination, and unleashing mask ICE agents on American cities. wreaking havoc on families and communities and fueling labor shortages at places like home construction sites.
▶ 0:30:48And now Trump wants to gut permanent supportive housing funding which would 170,000 people back onto the streets. A move that will significantly harm people with disabilities, veterans, survivors of domestic violence, and women with children. Mr. Chairman, I don't have to tell you how severe the housing crisis has come.
▶ 0:31:13As it stands, nearly 800,000 people are experiencing homelessness and most American families use the bulk of their paycheck for their rent or mortgage. This is a serious problem and requires serious solutions. FHFA director Bill Py who spends more time launching baseless political witch hunts than solving the housing crisis have proposed a 50year mortgage.
▶ 0:31:44This is the most preposterous housing policy anyone has ever come with. What's what is the next brilliant idea? A 100year mortgage. We shouldn't expect any progress on the housing crisis when people in charge are unserious and out of their depth. Committee Democrats are serious about solving this crisis.
▶ 0:32:07Right after the administration proposed gutting funding for permanent supportive housing, I demanded HUD Secretary Scott Turner to reverse the decision in a letter that I led with 52 other House Democrats.
▶ 0:32:23At the same time, my Democratic colleagues and I in the House and Senate have worked in a bipartisan manner to get the road to housing bill included in the NDAA, a common sense legislative package that would chip away at the crisis. While we all work in good faith to reach a deal, I know there have been some concerns and uh Mr. Mr.
▶ 0:32:48Hill, I know uh that some of your concerns are my concerns and I know that you walked away from the negotiations. Well, while I'm disappointed in that decision, I'm encouraged that you want to work with me and committee Democrats to finally get something done on housing. What you just said this morning is very encouraging. And so, I'm looking forward uh to working with you to solve the problem that we all know exists.
▶ 0:33:17We must move quickly because while Congress bickers, rents are still going up, home prices are still rising and mortgage rates are still too high. I also encourage my friends on the opposite side of the aisle to not play around with the margins of housing policy. Let's go big. While road is an important and incremental step, we need serious and substantial government intervention to build the housing units needed to end this crisis. The private sector can't do it alone and certainly won't build housing for our lowest income families.
▶ 0:33:47So, we have to be bold with this. And my housing package is just that. It is a sing the single largest and most comprehensive investment in affordable housing in US history and will finally tackle the affordable housing crisis, end homelessness, and eliminate the racial wealth and ownership gaps. So, I look forward to today's conversation and working with my colleagues, get a bipartisan h house housing bill passed into law. It's going to cost some money.
▶ 0:34:17Please don't start telling me we're going to do it without paying for it. We got to pay for it. I
▶ 0:34:22gentleman yields back. I now recognize the chair of the subcommittee on housing insurance, [clears throat] Mr. Flood, for one minute for an opening statement.
▶ 0:34:29Thank you very much, Mr. chairman and especially thank you for your leadership on housing. Housing costs, as we've noted today, have been rising for the last several years. And this problem is taking its toll. Housing affordability affects everyone. For example, the American dream of buying a home is out of reach for many of our country's young people.
▶ 0:34:53Did you know the median age of a firsttime home buyer today is astoundingly 40 years old? The reason for this affordability problem is simple. We are not building enough homes in this country to meet the demand. We have a 5 million unit shortage. This committee and the housing and insurance subcommittee have been working on solutions that will cut costs, remove government barriers, and unleash more building across the country.
▶ 0:35:19This hearing today is the latest step in our work this year. You'll note that almost every hearing [snorts] the subcommittee has had has been on housing this year. We have a wide range of bills that have been noticed today that will address different aspects of the problem. I'm excited and honored to be a part of this process and have enjoyed working with my colleague Mr. Clever from the great state of Missouri. I look forward to our markup at the end of this month. With that, I yield back.
▶ 0:35:46Gentleman yields back. I recognize the ranking member of our subcommittee on housing insurance. Mr. Cleveland, you're recognized for a one minute opening
▶ 0:35:52Thank you, Mr. Chairman. I've been on this committee for over 20 years, and there are at least two things I found to be unquestionably true. One, housing affordability has worsened over the past two decades, and it creates an increased affordable housing supply need. Number two, there's always a reason for Congress not to work together to get something done. Congress now has perhaps one a once in a generation opportunity to advance housing legislation of consequence.
▶ 0:36:22This includes road to housing which includes House legislation such as my own and dozens of other bills under discussion today. It is right to ask whether Congress can overcome harmful administrative action, but I've learned that the reasons not to work across the aisle will always be there and so will be the and so will the need. I thank all the members of this committee who are working in a bipartisan manner and look forward to open debate on the legislation before us today. Thank you, Mr. Chairman.
▶ 0:36:50Gentleman yields back. Today we welcome the testimony of Mr. Kevin Sears, immediate past president, National Association of Realtors, Miss Julie Smith, chief administrative officer at Bazito here on behalf of the National Multif Family Housing Council, the National Apartment Association, and the Real Estate Technology and Transformation Center. Mr. Tobias Peter, senior fellow and co-director at AEI's Housing Center, and Nita Bailey, executive vice president, the National Fair Housing Alliance. We thank all of you for being with us today.
▶ 0:37:20Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. And Mr. Sears, we're going to start with you. You have five minutes for your presentation. Chairman Hill, Ranking Me, Member Waters, members of the committee, thank you for inviting me to testify today. My name is Kevin Sears. I am the 2024 2025 president of the National Association of Realtors.
▶ 0:37:46I'm also a practicing real estate broker in Springfield, Massachusetts, where I've worked for over 30 years helping families and individuals achieve the American dream of home ownership. Today, I'm here on behalf of our nearly 1.5 realtor member, 1.5 million realtor members, representing nearly every zip code across this great nation. Every day, realtors watch families struggle to find homes that they can afford. These are families who have done everything right. They've saved for years.
▶ 0:38:16They have stable jobs. They have good credit. But buying a home is slipping out of reach because they cannot find one they can afford. We constantly see teachers, nurses, firefighters, police officers priced out of the very communities that they serve. This isn't anecdotal. We surveyed real estate firms from across America and nearly 60% of them told us that housing affordability is their single biggest challenge.
▶ 0:38:42The lack of affordability in the market is a systemic crisis, locking entire generations out of home ownership. At the root of America's affordability crisis is an undeniable fact. Our nation has a severe lack of housing supply. The numbers tell a stark story. There were more homes available for purchase in 1995 than there are today.
▶ 0:39:06Although there are millions more Americans, we have seen uh after the Great Recession, uh we experienced 14 consecutive years of severe underproduction, creating a shortage, as Chairman Flood said, of nearly 5 million homes nationwide. The impact on families is profound. First home buyers have fallen to a record low of 21% of purchases.
▶ 0:39:32According to N's data, the median first-time home buyer is now 40 years old. Let that sink in. An entire generation is waiting more than a decade longer than their parents did to buy homes. Many may never get there at all. And this 10-year delay translates to more than $150,000 of lost wealth, equity that could help them educate their children or support them in their retirement.
▶ 0:39:57The housing shortage also drives rents to record highs, limiting ability for families to save for home ownership. And according to N's 2025 analysis, the median net worth of a US homeowner is approximately while the median net worth of a of a renter is $10,000. So what that means is that a typical homeowner is 43 times wealthier than a typical renter.
▶ 0:40:22This shortage is a result of specific policy choices and market barriers that we can and must address. Homeowners are increasingly locked in place. The capital gains exclusion set in 1997 at $250,000 for a single owner and $500,000 for married couples has never been updated even as home prices have surged.
▶ 0:40:44At the same time, rising interest rates mean that homeowners who secured a 3 to 4% mortgage rate just a few years ago may not be able to afford today's rates if they were to move. Millions of households with FHA, USDA, and VA loans are also staying put rather than giving up their low mortgage rates. Improving buyers ability to use existing assumable loans would allow them to make take over a seller's lower uh mortgage rate, increase mobility, and unlock more homes on the market.
▶ 0:41:15Builders face barriers at every level of government, restrictive zoning, unpredictable permitting and rent control at the local level, along with federal red tape, and high financing costs, all of which slow construction and limit supply of affordable and rental homes. Realtors have taken action. We're working to empower communities to remove barriers, expand supply, and help our clients achieve the American dream of home ownership. But local action alone cannot close the housing shortage.
▶ 0:41:45Federal leadership is essential. We recommend the bipartisan leadership. We commend the bipartisan leadership of this committee, particularly subcommittee chair Flood and Ranking Member Clever, who have championed practical solutions. We must build on this momentum by unlocking existing homes through modernizing the capital gains policy, boosting new construction, federal and state local reforms, and expanding financing for affordable and innovative housing.
▶ 0:42:12My written testimony details the bipartisan legislation to do just that, including the More Homes on the Market Act, the Housing Supply Frameworks Act, and the Home Reform Act, and other solutions this committee has championed. The housing supply crisis demands action at every level of the government. This crisis is not a red or blue issue. It's a red, white, and blue issue. NR members stand ready to work with Congress and the administration to deliver real solutions. Thank you.
▶ 0:42:43Gentlemen yields back. Miss Smith, you're now recognized for five minutes for your presentation.
▶ 0:42:48Chair Hill, making ranking member Waters, members of the committee. My name is Julie Smith. I'm the chief administrative officer of the Bazudo Group. Founded in 1988, Bazudo develops, builds, and operates over 130,000 apartments nationwide. This morning, I am here on behalf of the 95,000 members of the National Multi Housing Council, the National Apartment Association, and the Real Estate Technology and Transformation Center.
▶ 0:43:14Today, policymakers, housers, and most critically, the residents we serve agree on two things. one, we do not have enough housing, and two, now is the time to address our nation's housing crisis. We are grateful for today's hearing, and we hope it will result in further consideration of legislation focused on stimulating housing supply. Our goal is to ensure that apartment providers can meet the long-term housing needs of the 40 million Americans who identify as renters.
▶ 0:43:45It is time to take meaningful steps to ensure that everyone can have a safe and decent place to call home at a price they can afford. Regrettably, the current economic and regulatory environment makes building incredibly difficult, and that is unlikely to change without action that makes production more economically viable. Co-star reports that multifamily starts were down 32% year-over-year in the third quarter of 25.
▶ 0:44:11On the economic front, continued instability poses a serious threat to our ability to leverage private capital markets necessary to finance new housing. Elevated interest rates have served to drive up the cost of building new housing. And additionally, operating expenses have risen by an average of annually over the last 5 years. The regular regulatory burden is also inhibiting housing production.
▶ 0:44:38Many regulations go far beyond ensuring the health and well-being of the public. And regulations imposed by all levels of government account for an average of of multifamily development costs. There is a clear path to solving this challenge. Rental housing providers stand ready to help. And we ask Congress to prioritize and support pro-ousing policies that will in turn ensure greater housing stability and affordability for renters of all income levels.
▶ 0:45:07Congress took a strong step earlier this year by substantially enhancing the low-income housing tax credit, but there is more to do. Several bills within the committee's jurisdiction would be particularly impactful in boosting housing supply and affordability. And while a full list is included in my written written statement, I'd like to highlight three. Representatives Flood and Cleaver have introduced the Home Reform Act of 2025 to make it easier and faster to build affordable housing.
▶ 0:45:36The bill would expand who qualifies for home assistance, allow funds to be used for infrastructure, and streamline the National Environmental Policy Act, and Build America by America requirements. NMHC is also advocating for the bill to let communities use home dollars for tax abatements and for studies that help remove local barriers to building and preserving housing.
▶ 0:45:59Representatives Flood and Peterson have introduced bipartisan legislation through the identifying regulatory barriers to housing supply act aimed at reducing discriminatory land use rules that restrict housing production. The bill would require CDBG recipients to regularly report how they are addressing these barriers and advancing inclusive affordable housing. This added transparency is intended to encourage better, more equitable local development practices.
▶ 0:46:27And three, legislation introduced by representatives Louderdermilk and Gonzalez through the Respect State Housing Laws Act would strike CARES Act's 30-day notice to vacate requirement and return eviction policies back to the state and local levels where they are more effectively administered. I would also like to address three other areas where the committee has a role to play.
▶ 0:46:49One, while we have seen stabilization in the property insurance market this year, rates remain at historic highs after 27 consecutive quarters of rate hikes over the past seven years. And while insurance is generally state regulated, we encourage Congress to provide long-term reauthorization of the National Flood Insurance Program and the Terrorism Risk Insurance Act of 2002. Two, capital is the lifeblood of the multif family industry.
▶ 0:47:16It is critical that policymakers continue to support Fanny May and Freddy Mack which play a vital role in financing housing. Policymakers must must maintain the liquidity they provide and retain at least an implicit guarantee. Otherwise, there is significant risk that borrowing costs will increase. And finally, emerging technologies are helping providers improve affordability, enhance resident experiences, and modernize operations.
▶ 0:47:42These innovations are governed by robust existing laws and consumer protections ensuring responsible use. Thank you. I look forward to answering the committee's
▶ 0:47:53Thank you very much. Mr. Peter, you're now recognized for five minutes for your oral presentation.
▶ 0:47:58Chill. Ranking member Waters, members of the committee, thank you for the opportunity to testify today. Housing unaffordability is real and worsening. Home prices have been rising faster than incomes for years. Lower income households and today's first-time home buyers now face record high prices and much higher interest rates, leaving many stuck renting instead of climbing the first rung of the housing ladder. This is stunting family formation and economic growth. The causes are straightforward. Zoning rules often mandate large lots spanning multiple homes on a parcel and put more land off limits.
▶ 0:48:27While regulations at every level of government add costs and complexity. In short, buildable land has become scarce and home building expensive. As a result, we now face a nationwide shortage of several million homes. The good news is that the problem is fixable with the right policies. But we must focus on solution that truly move the needle while avoiding costly unintended consequences. The answer is to build more homes on smaller lots.
▶ 0:48:54Because land cost is costly, smaller lots mean smaller, more attainable homes, reducing cost and increasing the supply of familysized starter homes. Consider that since 2000, the country has built about 12 million single family homes in subdivisions. Had we built them on slightly smaller lots instead, we could have roughly 9 million more homes today, and those homes would be priced about 15 to 20 20% lower. Smaller lots are essential to improving housing supply and affordability.
▶ 0:49:22zoning and land use um determine these outcomes are fundamentally state and local responsibilities, but many states have already begun to address these issues by changing minimum lot sizes, legalizing town homes, and allowing homes to be built where jobs are. I applaud Congress and the sponsors of the road to housing act of 2025 for recognizing the urgency of housing affordability and for including some useful elements such as that targeted NEPA and manufactured housing reforms. However, road is too federal, too subsidy driven and too apartment ccentric.
▶ 0:49:53Instead, we need a greater focus on familysiz starter homes. Road also risk pushing the federal government deeper into state and local zoning decisions. Washington should not override or micromanage these reforms that are already underway in many At the same time, the federal government does have powerful levers, several of which are squarely within this committee's jurisdiction that can support, accelerate, and reward states and local reforms without unintended First, to spur new home construction, HUD should offer a bounty for
▶ 0:50:23states when they plat smaller lots, paying for results when they achieve this plain and simple goal. This would give states a strong incentive to reform while allowing them flexibility in how to use these funds. HUD should also expand the supply of starter homes by adopting targeted FHA mortgage insurance pricing reductions tied to modestlysized new homes. These efforts should be funded from already existing hot grants and programs. This committee can also help by accelerating efforts to sell underutilized federal land.
▶ 0:50:53Second, the committee can help unlock existing homes. HUD should phase out FHA's um home retention options, partial claims in particular, which have ballooned to over 1 million borrowers today. Many of these borrowers could sell and walk away with on average over $100,000 in cash while reducing risk to taxpayers and freeing up muchneeded homes. Beyond this committee's direct jurisdiction, Congress can further further unlock existing homes through targeted tax changes and I highlight several of them in my written testimony.
▶ 0:51:22Third, Congress must avoid counterproductive approaches so we do not repass repeat the past mistakes of the past. Federal involvement in state and local zoning decision decisions as proposed in several road act provisions is counterproductive. It risks poisoning the bipartisan momentum underway in many states and pushing policy towards subsidy driven governmentcentric solutions that crowd out private and smaller builders.
▶ 0:51:46Also before expanding federal housing programs, HUD should conduct a full audit of existing subsidies so we understand what we are getting for the more than 100red billion a year we spend across HUD treasury and And we should also resist demand side gimmicks. We cannot fix a supply side problem by focusing on the demand side. We will only bid up the prices of the same limited number of homes. In conclusion, each level of government should focus on what is properly within its purview to expand supply.
▶ 0:52:13The strong foundations playbook released by the AA housing center and the US Chamber of Commerce provide practical customized paths to affordability for over 6,000 jurisdiction across the nation. By focusing on just four key plays, um we could add more than 1.6 million additional homes a year without new subsidies or federal micromanagement. Over 30 of our case studies show that builders can overcome labor shortages and high interest rates, but they cannot overcome restrictive government regulations.
▶ 0:52:42If we legalize home building by allowing more by allowing more smaller lots, builders will deliver the attain attainable homes American families need. Thank you.
▶ 0:52:52Thank you so much, Mrs. Ao. You're now recognized for five minutes for your oral remarks. [snorts]
▶ 0:52:58Ranking member Waters and other distinguished members of the United States Committee on Financial Services. Thank you for the opportunity to testify during today's hearing. I am Nikita Bailey, executive vice president of the National Fair Housing Alliance. NAFA leads the fair housing movement by working to eliminate housing discrimination and ensure equitable housing opportunities for all people and communities. NAFA also represents over 200 community-based nonprofit fair housing agencies throughout the nation.
▶ 0:53:28Our nation is in the throws of a fair and affordable housing crisis and it's impacting millions of people. The actions of the current administration have caused chaos, fear, insecurity, dysfunction, and rising prices around the country.
▶ 0:53:43Instead of providing everyday people with practical solutions to the housing crisis, the Trump administration is removing rungs on the ladders of opportunity for essential workers, including police, teachers, firefighters, and others who dedicate their lives to serving their communities. The administration's haphazard executive actions are causing serious economic and personal injuries that will undermine our already fragile housing market and ultimately our nation.
▶ 0:54:10Housing is fundamental to the American dream, and voters want elected leaders to quickly implement solutions to ensure they can fairly access opportunity and share in our nation's prosperity. People are seeking solutions that will drive down the skyrocketing cost of housing, and provide fair market rents, expand fair access to mortgage credit in underserved communities, reduce homeowners insurance costs, and produce the development of millions of desperately needed affordable housing units.
▶ 0:54:38The Trump administration's actions are leaving people seeking housing free of discrimination unprotected, including disabled veterans, seniors, people with disabilities, families with children, survivors of domestic violence, and more. Congress established fair housing as a national policy of the United States with the passage of the Fair Housing Act of 1968 after the horrific assassination of Dr. Martin Luther King Jr.
▶ 0:55:02Yet, the Trump administration is dismantling our nation's fair housing and fair lending infrastructure and making it costlier for everyday people to afford the American demand American dream despite demands for affordability. The administration has failed to live up to its pledge to make housing cheaper and increase access to home ownership. Prior to the start of the administration, home ownership was on an upward trajectory for all communities. The black home ownership rate grew 14%.
▶ 0:55:29The Asian-American and Pacific Islander home ownership rate grew nearly 9%. The Latino home ownership rate grew nearly 5% and white home ownership was up by 1.57% and those are home ownership rates. This momentum is being reversed. The United States Department of Housing and Urban Development rolled back critical fair housing rules, eviscerated the Office of Fair Housing and Equal Opportunity, closed field offices, and fired whistleblowers.
▶ 0:55:56It is leaving renters everywhere vulnerable to discrimination at a time when renters already face soaring rents and nowhere to go. The Federal Housing Finance Agency has abandoned special purpose credit programs that have provided $82 million and reduced costs to nearly 60,000 borrowers of all races and help lenders circumvent systemic barriers that limit fair credit access for people of color.
▶ 0:56:19The Consumer Financial Protection Bureau issued a proposal to gut a 50-year-old fair lending rule that ensures that women can get a loan without needing a male co-sponsor. The actions are injecting unnecessary risk, locking out the people that the health of the housing system depends on. And over the next 10 years, all future net household growth will be from households of color. If they are locked out of the housing finance system, the system will fail.
▶ 0:56:45The Fair Housing Act provides the blueprint to increasing our nation's supply of affordable housing. It is key to reforming exclusionary zoning that locks out renters, low-income people, and people of color from certain neighborhoods. It can drive inclusionary practices that permit entry-level home ownership opportunities and miss and middle housing, including condominiums and triplexes, quadplexes, and accessory dwelling units. Fair housing laws improve people's lives.
▶ 0:57:13They also improve neighborhoods block byb block. These vital protections also strengthen our economy and make the nation more prosperous. Now is the time for Congress to increase its oversight of the administration's actions so that more people in America do not end up homeless.
▶ 0:57:28Congress must also pass comprehensive legislation with supply side and demand side solutions like the ranking members housing crisis response act and other measures to ensure that the housing needs of people living in rural urban and suburban communities are met. Only in all of the above strategy can trick can truly tackle the crisis. Thank you and I look forward to answering your questions.
▶ 0:57:54Thank you so much. We appreciate our panel's contributions to our hearing today. We'll now turn to member questions. I recognize myself for five minutes for questioning. Across our country, families, as we've both the ranking member and I've noted and you've noted, our families are facing housing costs that have really climbed out of reach.
▶ 0:58:14outline outlined several of the macro reasons I believe that that cost per square foot's gone up and now they're confronted with higher financing cost as a result of the inflation I talked about. But also government subsidies originally intended to support households have ended up helping prices rise faster than wages.
▶ 0:58:34While outdated and duplicative regulations, particularly at our state and local areas, have slowed development and created a bottleneck that actively prevents homes we need from getting built. We've got to do better, and I believe we can do better. And I'm committed to working with my colleagues across the aisle to advance these kinds of meaningful reforms that result in increasing supply and responsibly restore uh more attainable housing results in our communities.
▶ 0:59:05Uh Mr. Sears, you you've got your experience your whole career in in realtors, so you know people in all price points in Springfield. Um and there's a supply gap in many communities. What does the data tell us about why this gap persists and how that's impacting exist existing inventories and home purchases? Thank you, Chairman Hill. Uh so you asked two parts to the question. Uh the lack in uh existing inventory.
▶ 0:59:34I can boil it down to to three very specific reasons. Um as I mentioned in my oral testimony, we have underbuilt significantly over the last decade and a half since coming out of the Great Recession. We also face significant regulatory and zoning barriers at the local and state level as well as a little bit at the the the federal level.
▶ 0:59:52But also higher higher interest rates, the construction costs um delays that can be um implement impacting um builders has also driven up costs because there is a time value to money and so when it takes longer it's going to cost more. But you also ask about home purchasing and and you said something very significant. I purchased my first home in 1996 as a 24 year old. I paid $83,000 for it.
▶ 1:00:18Yesterday, I received a text from my 25-year-old son who is looking to buy a home in the Boston area. A starter home. The price 10 times as much in 30 years. What's happened in 30 years? A lot has happened, but there's also been some stagnation. Over 30 years ago, I was a college athlete, a division one athlete.
▶ 1:00:41I won't I won't guess I won't have you guess the sport, but I'm going to tell you. I was a diver. And what did I do with with that skill set? In the summertime, I worked at a small amusement park, Riverside Park. So that was Six Flags, New England. I worked in a stunt and high dive show. I used to get do high dives from 75 ft, get lit on fire, and paid for it. I don't do that anymore. A lot has changed in 30 years.
▶ 1:01:01But what hasn't changed in 30 years is the fact that the more uh the capital gains exclusion has remained stagnant at 250,000 for a single person, 500,000 for a married couple. It was not indexed for inflation. We've significantly underbuilt as we said.
▶ 1:01:19Now, you probably wonder why I I I talked about my my diving career because I used to get lit on fire and pay for it. As I said, what I can tell you is that that taught me getting lit on fire. You can never quite prepare yourself for the first time you get lit on fire, but what it taught me is not to panic.
▶ 1:01:34Athletics is a great training ground for
▶ 1:01:37It and I was able to help people solve these problems, but I have a great concern for my children, your children, my grandchildren who might panic and their inability to be able to purchase a
▶ 1:01:48Thank you, Mr. Sears. Appreciate that. And your views, Mr. Peter, um, both in Miss Smith's testimony, she talked about 40% plus cost per unit comes from essentially rules, regulation, local zoning, land use restrictions. And you talked about that federal policy spent too much time focusing on subsidizing demand instead of focusing on these supply constraints.
▶ 1:02:14And I agree and we all understand that's kind of how the built here. But you talked about accelerating local, you know, competition and local change. Can you name who you think is doing an outstanding job of, as you say, putting, if we have a traditional 50-foot lot, you know, maybe doing a forplex instead of a single family. Talk to me about who you think's doing a good job on that.
▶ 1:02:40Yeah. So, we have done over 30 case studies um where we've studied these examples and um Texas just recently passed a bill SB15 where they're allowing um a new residential subdivision smaller lot sizes of 3,000 square feet. Um so that's that's number one. Number two, another example is Seattle. So Seattle in 1994 allowed single family detached homes to be torn down and replaced with town homes on the same parcels.
▶ 1:03:06So over the last 20, 30 years, they've torn down 5,000 single family detached homes and not replaced them with opulent McMansions, but they replaced them with four, five, six town homes in that same parcel. And as a result, because they've built more housing, the housing has been lower
▶ 1:03:22I hope all of you will respond in writing on good examples of how that's working around the country. And with that, let me recognize the ranking member, Mrs. Waters, for five minutes of
▶ 1:03:32Thank you. I wish I had five days for questioning. I tell you, this is so exciting. Uh, you know, I'm hearing testimony of witnesses brought here by my representatives on the opposite side of the aisle that I've never heard before.
▶ 1:03:48So, Miss Bailey, if local governments, today's hearing will consider my draft bill that would require local governments to keep a public searchable database of undeveloped land that they own. For far too long, communities have been left in the dark while public land sits unused. We should be putting that land to use.
▶ 1:04:17Without a clear accounting, local officials, developers, and the public are missing key opportunities to plan and build. And housing advocates should not have to waste precious time trying to track down available housing locations that are right in front of them.
▶ 1:04:35Miss Bailey, if local governments that receive CDBG funds maintain these land databases, what specific opportunities could be unlocked for affordable housing production? And what do we lose when this information is scattered, outdated, or never collected at all?
▶ 1:04:54Thank you so much for the question. It provides the opportunity to provide workforce housing so that we can ensure that teachers and police and firefighters can actually live in the communities where they work. Oftent time local jurisdictions have a preference for single family development. So we can see the development of quadplexes. We can see the development of triplexes and we can see your legislation really solve the nation's fair and affordable housing crisis and be a key solution as part of a broader package.
▶ 1:05:23your tremendous leadership on the housing crisis response act. $150 billion dollars to address the nation's fair and affordable housing crisis would be compleimemented by that legislation and they should move forward together.
▶ 1:05:36Now, thank you very much. Now to Mr. Sears, Miss Smith and Miss Bailey. I appreciate our Senate colleagues have introduced the bipartisan road to housing package to begin to address our nation's affordable housing crisis. And of course, I urge my Republican colleagues to help us include it in NDAA and quickly pass it into law.
▶ 1:06:01But I believe Congress must do much, much more if we're serious about solving this crisis for the American people. For decades, HUD programs have chronically been underfunded and forced to make do with limited resources. When I was chair of this committee, I introduced the housing crisis response act along with my ending homelessness act and the down payment toward equity act.
▶ 1:06:28This package represents the single largest most comprehensive investment in affordable housing in history. So, let me ask you directly. In addition to the road to housing bill, can we address the affordable housing crisis comprehensively without substantial injection of federal funding? Mrs. Sears, you first.
▶ 1:06:54Thank you very much for the question. Um, we at the National Association of Realtors support uh your bill. Obviously, what it would do is help to to cut red tape and allow us to build more homes. uh which would allow uh open doors to home ownership for many more people. You know, affordability is a key issue and and the housing supply is is part of that. And so we support any innovation that could be um come through this bill in order to help Americans get into uh home ownership.
▶ 1:07:24Okay. Uh I guess I'm back to Miss Bailey. According to the Bloom Well, did anyone else want to respond to that about funding? Sure, ma'am. If I could if I could chime in here. Yes,
▶ 1:07:37you are absolutely correct that we need a full and comprehensive package if this Congress would follow your leadership. This committee already passed meaningful legislation, originally the bill back better act, which is now the housing crisis response act. You have put together a very comprehensive package, $150 billion that will help prevent homelessness, that will provide the type of support to subsidize renters who need it today and increase the housing choice voucher program.
▶ 1:08:03You have done intentional things to really solve our nation's fair and affordable housing crisis and everything that you've proposed today will really help us ensure that we don't see official additional families end up in
▶ 1:08:16Thank you very much. Um I only have a few uh minutes left and I just want to say how important it is for all of you to be here today. uh when we talk about what is going on in this country and we're certainly talking about health care and Medicaid and all of that housing is the number one crisis in the country and we need to do something substantial about it. Thank you for being here.
▶ 1:08:43Ranking member yields back. Now recognize the gentleman from Texas, Mr. Sessions, chair of our oversight committee is now recognized for five
▶ 1:08:52Mr. Mr. Chairman, thank you very much and I really appreciate you having this hearing today. I think both you and Ranking Member Waters agree we have a problem. So the question is what does this committee do to help us focus on that problem? As a regular uh part of the National Association Realtors, when they visit me, this is the conversation. When the homebuilders visit me, this is part of the conversation.
▶ 1:09:20I think it has gone away from the the problems that we had with supply chain to actual rules and regulations as Mrs. Sears has talked about is the problem. Certainly, if you look at industry data, it says that government regulations add nearly $94,000 to the price of a new single family uh being from Waco, Texas, I will remember with a few years ago with
▶ 1:09:50cities that were struggling to add tax on top of what was required for them to prepare for new homes, roads, bridges, infrastructure, water, pipes, and all these things.
▶ 1:10:05Uh I think that this panel has brought a a country uh viewpoint of this as opposed to just my viewpoint in Texas where we have a huge housing problem and one that has been talked about certainly Mr. Peter talked about. It's across the country. I think we ought to focus on getting more investment money into the pot.
▶ 1:10:33And I don't think that that is federal money. I think that that is looking at streamlining, and I've talked to Secretary Turner about this, streamlining housing authorities instead of them holding the bulk of the money and them building buildings and them controlling the circumstances. I think HUD should look at the rules and regulations about rebuilding, what the rules are related to replacing existing housing.
▶ 1:11:01I tried to do this with Secretary Fudge to no advantage three years ago when we suffered taking away current housing to build new housing rather than adding to that availability. Mr.
▶ 1:11:20Sears, please tell us what do you believe is the number one thing this committee should do on a bipartisan basis to stop the problems that we have with government regulations, whether they be federal government, state, or city government.
▶ 1:11:38Mr. Sessions, thank you. Um, you nailed it on the head. when it costs 20 uh when it costs $100,000 approximately before the shovel uh gets in the dirt, that is a significant issue and it leads to the affordability crisis. And the way that I believe this committee and Congress can help is by uh helping uh incentivizing uh localities, states to streamline their uh the the red tape, their zoning if there's anything you can do in funding. Uh help with infrastructure costs.
▶ 1:12:07One of the things that and you touched on this, investors are a little reticent when there is a lot of red tape. They need certainty that projects are going to be approved and that the shovel is going to get in the ground to produce the housing. And so, anything we can do to help with those issues uh would be welcomed by the National Association of Realtors and my 1.5 million realtor members.
▶ 1:12:28In Texas, Mr. Sears, and I'm sure Mrs. Smith knows this. In Texas, there is this huge pent up demand for housing. When interest rates that President Trump is attempting to get the Fed to lower, when interest rates fall to a level that they need to be, not are, but should be.
▶ 1:12:52It is going to create, I think, could create an investment opportunity to where if we do our job here to support Chairman Hill, then that means that the investment community will come in and spend that money with streamlined opportunity for them.
▶ 1:13:11And I think it is off of of a deal that you and the homebuilders understand better than I, but an opportunity to control that property, make it available today, streamline the red tape, and get people their housing today without the federal government or a housing authority getting in the way of that opportunity. Mrs. Smith, please tell me more about what you think we ought to be doing.
▶ 1:13:41I'm sorry about that. Um, thank you for the question. There are a lot of um, sort of proven strategies that have worked. I was talking with a developer who is working on a project in DC right here where we are um, last night and they uh, DC has put together a lot of uh, incentives to um,
▶ 1:14:04M. Smith, I'm going to ask you to respond in writing if I might.
▶ 1:14:07Mr. Chairman, thank you very much. I think that the the that the opportunity for us to see this in writing will enable us to approach this on bipartisan bas. Mr. Chairman, I
▶ 1:14:17thank you, Mr. And now the gentleoman from New York, Miss Velasquez, the ranking member of our House Small Business Committee. You're recognized for five minutes.
▶ 1:14:25Thank you, Mr. Chairman. And um so I um I heard from the other side that the Biden era interest rate uh is responsible for the um one of the roadblocks to housing supply. Then I heard $60 billion in regulations.
▶ 1:14:49I would like to add $30 billion and that is the Trump tariffs. According to Brookings is adding $30 billion to the cost of construction of residential homes including multifamily. I didn't hear any of the members of the panel mention or discussing the impact that tar is having in the in construction of housing.
▶ 1:15:20Uh Miss Smith, one of the issues that multifamily property owners in my district are currently struggling with is the rising cost of insurance premiums. whether they be for general liability insurance or for a specific peril.
▶ 1:15:39For example, a hot section 236 property in my district was recently forced to increase rents by 6% in part because of these premium increases. As insurance premiums continues to rise, more and more property owners are questioning the financial feasibility of participating in HOTS programs.
▶ 1:16:04First, if this is a problem HOT multifamily property operators have expressed to you and second, what steps do you think this committee should take to reduce premiums and increase coverage specifically for hotback property owners? We could spend a whole lot of time talking about insurance. You're absolutely right. Insurance has um become so so expensive.
▶ 1:16:31Just to illustrate that, I I can remember a time not too long ago where you might spend $300 on insurance per unit and today it might be $1,300 per unit. So, the availability insurance um and the cost of insurance has been extremely high.
▶ 1:16:48So anything that the government could do to ensure or even subsidize the insurance um at properties would be uh would be very helpful but it's become a very large um uh a part of the operating expense calculation.
▶ 1:17:03Thank you. Mr. Sears, can you speak to the high cost of insurance whether it be homes insurance or insurance for a specific peril like fire or flood acting as a barrier to home ownership? Certainly, Miss Velasquez, uh, we have seen over the last five years, me personally, I've seen my own insurance double in cost. Um, on the rental properties I own, it's been more than doubled. Uh, we cannot pass along those increases to the tenants. We just can't.
▶ 1:17:33So, mom and pop landlords are really feeling the pinch. And when insurance costs for homeowners equals or exceeds the cost of their mortgage, we know there's a fundamental problem. So given the constraints of Maren Ferguson, what steps can we here on the federal level take to reduce those premium costs in order to increase home ownership?
▶ 1:17:55Seeing as insurance is regulated at the state level, what I believe the federal government could do is offer incentives, grants, um lowinterest loans for homeowners to uh reinforce their homes, strengthen their homes, uh harden their homes against natural disasters. Uh, with this being done, interest rates, I'm sorry, insurance rates should
▶ 1:18:15Okay. Well, uh, Mr. Chairman, I have been a longtime supporter of our statebased system of insurance, but when it comes to hot backed multifamily properties, I think we need to do more here at the federal level to regulate the cost of insurance.
▶ 1:18:35The federal government has a vested financial interest in these properties and if the insurance premiums become too costly for landlords or worse if insurance becomes unavailable, we will lose our affordable housing stock. So, um I think that we need to look into that and uh otherwise we going to be here again and again and again uh discussing this very same issue. Thank you.
▶ 1:19:05I yield back.
▶ 1:19:06I thank the gentleman. She yields back. Now recognize the gentleoman from Missouri. The and Wagner, the chair of our capital market subcommittee, and you're recognized for five minutes.
▶ 1:19:15I thank you, Mr. Chairman. Uh, welcome witnesses. Earlier this year, the National Association of Realators, or NAR, released its housing affordability and supply report, which found that while housing inventory is increasing, middle inome buyers are still having difficulty finding an affordable home.
▶ 1:19:37This difficulty was especially pronounced for prospective home buyers making less than $75,000 uh who according to this report have seen little to no benefit from rising supply. In 2024, the St. Louis Federal Reserve uh reported that the medium household income in Missouri was just over the threshold where affordable housing becomes uh nearly inaccessible. In fact, in the St.
▶ 1:20:07Louis metro area, NAR found that over 2500 more affordable listings would be needed to make demand or to meet demand for households making $75,000 or less. Uh, Mr. Sears, as former president of NAR, you are aware that our housing supply problem isn't just about building more housing.
▶ 1:20:32It's about building the right kind of housing that would give millions of Americans the opportunity to own their own home. A slice of the American dream. Uh, one issue that we've heard is that capital is increasingly flowing toward refurbishing existing housing stock rather than new construction. What incentives could redirect private investment toward the construction of new homes?
▶ 1:21:03In the last 5 years, uh construction costs have increased anywhere between 8 and 77%. And so, what can we do to uh help with that? Uh the the other thing is uh when I I talked about earlier before a shovel goes in the ground the red tape and regulations approximately $100,000 um in in red tape cost and for a single family resident that's about 25% of the cost for multif family uh units it's about 40% of the cost and so what we need to be able to do is
▶ 1:21:33with the median uh price of a home across the country around 400,000 the typical buyer would need six figures $100,000 to afford that and so based on the statist stat statistics you're citing that means it's not affordable and when builders costs are increasing red tape causes delays they're going to focus more on high-end homes where the profit margin is greater and they can absorb those costs we need to incentivize them to build the starter homes and the the missing middle the town homes the
▶ 1:22:02as as as I said you know to the extent that you can can give us some some ideas that you either do legislatively or otherwise to to somehow redirect private investment toward construction of new homes that are the right kind for that middle inome uh buyer would be great. Again, Mr. Peter uh Mr. Peter, let me ask you this.
▶ 1:22:24Middle- inome home buyers often fall through the cracks, making too much to qualify for assistance, but also not making enough to compete in a hyper competitive housing market. What reforms could expand attainable home ownership for middle-income buyers?
▶ 1:22:39Um, excellent question. Um, smaller lots. The answer is very simple, smaller lot sizes. And HUD could incentivize states by bribing them by provide offering a bounty um to plot smaller lots below 5,000 square feet or even lower town homes below 2,000 2,000 square feet. And if you have smaller lots, you're going to be the land is costly, but then also you're going to be building commensurately smaller homes. And if you're building smaller homes, the cost goes down.
▶ 1:23:07And typically, and we found this across the whole country, if you're building on smaller lots, the homes the the price points drop by about 20% or more.
▶ 1:23:15Thank you very very much. I I appreciate that. That and we need to take that uh under advisement here. For many families, home ownership remains for the most reliable path towards wealth building and long-term financial stability. Let's just all be honest. Unfortunately, what has long been a core tenant of the American dream has become harder for younger Americans to achieve as recent data shows that the average first-time home buyer is now 40 years old. Uh, Mr.
▶ 1:23:42Sears, what role can federal credit and lending policy play in helping responsible buyers deliver more entrylevel homes like we just spoke about with Mr. Peter um for first-time Yeah, as I mentioned with my my own son, this is an issue when we've seen uh the average age of a median home buyer up to 40. Uh what can we do? Can we offer programs with uh down payment assistance?
▶ 1:24:09Um are there low interest loans loans that we can uh give for these first-time home buyers? Can we add incentives for momand- popop landlords who might have some units that they would like to sell but are afraid of paying the capital gains tax and incentivize them to sell them to first-time home buyers? There's multiple different solutions, different ways.
▶ 1:24:26My time is expired. Thank you, Mr. Sears. If any other ideas, please proceed in writing. Mr. Chairman, I yield back.
▶ 1:24:31Gentleman yields back and we recognize chair recognizes the gentleman from California. Mr. Sherman, ranking member of our capital market subcommittee, you're recognized for five minutes.
▶ 1:24:41Mr. Chairman, thank you for holding this important hearing. In fact, I think housing is so important that perhaps the name of this committee should be financial services and housing. Um, housing today is built very similar to the way that it was built 50 and 100 years ago. There's nothing or very few things in our society for which that's true. We face nimiism.
▶ 1:25:07Uh we need to have higher density where there's transit and we need to have transit where there's density. Transit uh uh density without transit is a parking j uh uh is is a parking disaster, but it's especially a traffic jam. And uh transit without some density is a bunch of unused transit.
▶ 1:25:29Um, I hope that I can find one or two members here to work with me on a bill to require insurance companies to identify what resiliency improvements will result in lowerc cost insurance. Right now, too many insurance companies, they just pick a zip code, they pick a rate.
▶ 1:25:50They should be looking at the individual property because it's their job not just to write a check but to be of assistance so that we don't to make our our pro properties more resilient. There are a host of small things we can do one at a time. The appraisal industry improvement act uh the yes in my backyard act.
▶ 1:26:12um the supply act so that you can finance additional uh auxiliary dwelling units and I believe uh Mr. Sears you mentioned the importance of changing our tax laws. Uh I used to be an estate planning attorney. I understand well how many of my former colleagues are telling people boomers you got to you got to stay in the big house till you die or at least till one of you dies.
▶ 1:26:39And uh we adopted last century a $250,000 exclusion on the sale of property and we haven't changed it since last century. So it was either bad policy then or it's bad policy now because it's very different policy. Um we uh uh I want to build homes a bit differently and focus on manufactured housing.
▶ 1:27:03Uh the manufactured housing standards act would clarify that only HUD has the authority to establish energy efficiency standards and uh the housing uh supply expansion act would eliminate the outdated permanent chassis requirement. Um Mr. Sears, is manufactured housing a way to go to be able to build these units uh uh more efficiently and at lower cost?
▶ 1:27:31Mr. Mr. Sherman, great seeing you again. Thank you for uh what you had to say because we as the realtor support a lot of uh the bills and acts that that you mentioned. Um as I mentioned uh you know you you talk about the the um modular uh housing. Uh 1974 was a long time ago and we've seen a lot of technological advances uh since then. And so I think reforming that act for um these types of housing, it's more efficient to build.
▶ 1:28:00it can be done quicker and it will cost less. So, anything we can do to encourage that, we are for.
▶ 1:28:07Is there any purpose to requiring a a fixed chassis?
▶ 1:28:11I'm not an engineer. I'm sorry.
▶ 1:28:13I I think it's just there to to to be there from again last century. Um tariffs on building materials is something Miss Velasquez uh brought up. Uh I had the opportunity to confront the president face tof face um and in public on this.
▶ 1:28:33He promised he would at least consider um exempting building materials, at least those that would be used in the Palisades where we have to rebuild the town uh from uh uh these t uh from tariffs on building materials. Uh labor is already subject to a 14.5% tariff. And now Trump wants to add another 39%. Uh Mr. Sears, uh what do tariffs on building materials do to housing availability and cost?
▶ 1:29:02Uh representatives, tariffs are a 2025 issue. We've seen uh construction cost escalating almost unchecked and uncontrolled in the last 5 years. And so uh the lack of supply during uh the COVID certainly um has hurt and impacted uh cost of construction. And Mr.
▶ 1:29:22Peter, we studies indicate that 24% of the cost of a single family home, 40% of a multifamily home is sub the the result of regulatory costs. Uh what regulations are most burdensome and add most of the cost.
▶ 1:29:39Yeah, I mean for that I would have to I would have to um direct you to the National Association of Real Builders who has um homebuilders who have the who have compiled the
▶ 1:29:48Thank you, Mr. Peter. Appreciate Mr. Sherman's good question and I hope you'll respond and share that index and the components of it with the full committee. The chair now recognized the gentleman from Kentucky, Mr. Bar, who chairs our financial institutions subcommittee. You're recognized for five
▶ 1:30:05Thank you, Mr. Chairman.
▶ 1:30:06Thank you, Mr. Chairman. That's a good segue because my first question is for Mr. Sears and it's about it's about bank regulation. Uh, banks and credit unions play a critical role in providing access to affordable home ownership. In the aftermath of the 2008 financial crisis, regulatory burdens like DoddFrank disproportionately hammered these institutions, especially community banks and credit unions that are often the primary lenders for first-time home buyers, low to middle inome families, and local developers. You talk about the American dream going away. We want the American dream.
▶ 1:30:36We want that American dream for home ownership and we need lenders to to to create that American dream. In testimony to this committee yesterday, Federal Reserve vice chair for supervision Michelle Bowman noted that quote, "The capital treatment of mortgages and mortgage servicing assets has resulted in banks reducing their participation in this important lending activity potentially curtailing access to mortgage credit. Mr.
▶ 1:30:58Sears, given your understanding of the mortgage market and local housing dynamics, I'd like your perspective on whether reducing the regulatory burden on financial institutions would have a positive impact on competition in the mortgage lending market.
▶ 1:31:12Thank you, Mr. Power. Good to see you again. Anytime regulation can be streamlined, uh, shrunk or eliminated, I think is a good thing for the capital markets. We have consumers right now that are struggling to find financing and opening it up to more credit unions, local banks uh and the large uh national uh companies as well gives a consumer choice which is a good thing.
▶ 1:31:34Well, thank you. And this is especially important regarding the regulatory capital requirements and the finalization of Basel 3 endgame. We're going to be watching the regulators to make sure that they improve on the previous version of of the proposal which uh where we saw punitive treatment of certain mortgages that would have reduced lending and access to mortgage credit. Let me ask you all about um and Mr. Peter, I'll direct this at you. Uh shared appreciation mortgages. This is an innovation that I think uh we ought to we ought to really consider.
▶ 1:32:03The median down payment for firsttime buyers is 10%, the highest recorded level since 1989. Clearly, Americans need innovative solutions to finance a down payment. And one solution is a shared appreciation mortgage. Now, what is this? It's a type of home loan where the borrower agrees to give a lender or co-investors a portion of the future appreciation of the home's value in lie of a set interest rate.
▶ 1:32:26Using a no payment shared appreciation mortgage as down payment assistance can bridge the affordability gap and empower low-income or working-class borrowers to qualify for and afford a conforming first mortgage. I think we should incentivize private capital providers to invest in these shared appreciation mortgages to encourage this down payment assistance for new home buyers. Uh one way to do this is to make the returns attributable attributed to pools of shared appreciation mortgages tax exempt. So this would be a tax change outside of our committee's jurisdiction.
▶ 1:32:57But do you agree that such a tax exemption that would encourage co-investing um and sharing in the appreciation of mortgages, is that a solution for affordability? Yeah, I think it's certainly a very innovative idea and I don't I I know enough about it to be dangerous.
▶ 1:33:13Um but I don't know all the all the gory details and um to the extent that this that these shared um um the these these mortgages can be used to um go along with shorter shorter loan terms that would be very very beneficial to borrowers because then they build up equity much faster and they have the staying power to stay in their homes even when when home prices decline.
▶ 1:33:35There's an innovative startup called Homeium that I've become aware of and acquainted with and and they uh would use blockchain technology to actually um aggregate uh co-investment capital uh to help uh with uh uh these this down payment assistance and and also unlock home equity uh in ways that are uh uh less um or more consumerfriendly than say a reverse mortgage. Um so I think we ought to explore that. Let let me finally get to uh the the tenure.
▶ 1:34:04Uh mortgages, 30-year fix, they're tied to the tenure. Uh it's not the Fed funds rates, it's it's the tenure. So, uh for my friends across the aisle who think we need to spend more money, more HUD money, more spending, the national debt is driving the tenure up. If you want to if you want to really achieve affordability on the on a 30-year fixed rate mortgage, let's send a virtuous signal to the bond market and start living within our means. Reduce the tenyear.
▶ 1:34:33That's going to improve housing affordability. Not blowing up the bureaucracy and spending more money, but live within our means, lower the tenure. Um, can someone uh on the panel uh talk a little bit about this and how does the Fed's interest rate policy and a rising 10-year Treasury yield impact the availability and affordability of especially for first-time home buyers?
▶ 1:34:57Yeah. Yeah. We've seen it during the pandemic um when the Fed lowered interest rates and then slammed the brakes and now we have high home prices and um um people are are dealing with higher mortgages and it's unsustainable and people can't afford housing. Um but ultimately um the implicit guarantee is also um provide providing competition to the 10 to the 10 year treasury.
▶ 1:35:19Thank you very much Mr.
▶ 1:35:20Yield back.
▶ 1:35:21Gentleman yields back. Recognize the gentleman from Georgia. Scott recognized for five minutes.
▶ 1:35:27Thank you.
▶ 1:35:29Thank you chairman. Ladies and gentlemen, I want you to hear from me this morning. For more than 50 years, our Fair Housing Act has stood as a civil rights cornerstone meant to guarantee that where you live is not determined by the color of your skin, your disability,
▶ 1:36:00your family status, or your zip code. But under this rule, under what President Trump and his hut secretary are witnessing today, a disturbing shift away from enforcement, away from any real accountability, away from the core mission of our distinguished HUD department.
▶ 1:36:30So, Miss Bailey, let me come to you. One of the most troubling acts is this roll back of HUD's affirmative furthering fair housing rule. Please explain why this is the Archilles heel of this legislation.
▶ 1:36:57Thank you so much for the question. The affirmatively furthering fair housing act provision of the fair housing act simply requires that every dollar federal dollar used for housing and community development is used to further fair housing which is inclusive and thriving communities that all of us can live in. This is not spending money. This key piece of the Fair Housing Act can actually reform local exclusionary zoning laws.
▶ 1:37:24And in fact, many of our homebuilder friends are using it in court to sue localities so that they can build more affordable units there. And I'm so grateful for the question that we just had regarding the Federal Reserve. We knew for a long time that the Federal Reserve could not solve our nation's houses crisis. And during the pandemic, the Federal Reserve pumped in over $300 billion dollars on a monthly basis into our housing market. Those funds were pumped in in a way that was exclusionary.
▶ 1:37:53black, Latino, Asian-American, Pacific Islander, or Native communities could not benefit from those funds. And as a result, we have people who could have at that time gotten 2% interest rate, mortgages, affordable housing, and stayed home. They were locked out. So many of the ways that our Fair Housing Act applies extends to the Federal Reserve.
▶ 1:38:13And if Congress provided oversight over those funds and made sure they were equitably distributed, part of the challenges that we see now today would not be the result. So, it's it's very important that Congress continues to provide the oversight that it provides. And ladies and gentlemen, I represent uh Gwynette County and Clayton County.
▶ 1:38:38uh two of the very many very prosperous, very exciting counties in this nation, but are highly diversified in their and HUD's attack on this fair housing rule will ensure that there is nothing to stop a local jurisdiction from banning new apartment buildings near our schools
▶ 1:39:08and near our parks. Now this is very serious legislation and we have got to understand we are a nation of many different types of people and we need to be careful in Congress to stop this but use our legislative
▶ 1:39:39abilities ies to pull our racial populations together. I'm at the forefront of that. I represent, as I said, everybody in my district. I got a re even Republican minorities in my district.
▶ 1:40:02So, I want us to use this not to dismantle this vital civil rights measure. Let us use that. There is a time here.
▶ 1:40:19In the words of that great Apostle Paul, I say to you, finally, put on the whole garment of God because we've got to fight now in a difficult time. Thank you, Mr. Chair.
▶ 1:40:38Thank you, Scott. Another gentleman from Georgia. Chair recognizes the gentleman from Georgia, Mr. Loudermilk, for five minutes. Well, thank you, Mr. Chairman, and thanks everyone on the panel. Been looking [clears throat] forward to this discussion uh for quite some time, especially about how Congress uh can actively remove barriers to increase our housing supply.
▶ 1:40:59And one of the areas I've been focused on is uh the cost of ownorous government regulations and preventing the federal government from encroaching into areas which the states have traditionally and constitutionally held that primary jurisdiction. Now, prior to the passage of the CARES Act in 2020, each state had different notice to vacate requirements for rental properties.
▶ 1:41:20While the federal government uh federal moratorium on evictions imposed in the CARES Act expired, as they were intended to do, some activist attorneys have argued that section 4024 C pertaining to the federal 30-day eviction notice requirements remain in effect, primarily due to an error in drafting.
▶ 1:41:39Despite the expiration of the public health emergency on May 11th, 2023, the Biden administration extended this temporary provision, thusly nationalizing an eviction process historically and constitutionally governed by the state and local laws. Continuing the temporary CARES Act notice to vacate provision bypasses Congress and undermines the clear intent that that provision be temporary.
▶ 1:42:04Now, I have a bill entitled the Respect for State Housing Laws Act that would strike this provision in the CARES Act that was never intended to be permanent and would return authority to of notice to vacate back to the states where it had been prior to the CO 19 pandemic. Mr. Chairman, I'd like to insert for the record a letter from the National Association of Residential Property Managers uh in strong support of my bill. Without objection. Thank you, Mr.
▶ 1:42:32It's important that Congress provides clarification here. The inability to collect rent ultimately hurts the tens of millions of Americans who work in the industry, renters, and communities across the country. Mr. Sears, the Iowa Supreme Court unanimously ruled earlier this year that the CARES Act's 30-day notice provision was temporary and expired in 2020 alongside the federal eviction moratorum.
▶ 1:42:55From the National Association of Realtors perspective, how has the continued uncertainty around this expired provision affected real estate markets and property owners?
▶ 1:43:05Thank you, Mr. Lowdermilk. Uh, the National Association of Realtors supports your legislation. Um, and my testimony is longer than what your actual bill is, but at the end of the day, anytime these mom and pop landlords who are already um, if they're taking someone to eviction likely are owed money with the federal government imposing an extra loss of rent for a month onto this, it can it can cause irreparable harm to these small property owners. And and that's what we're seeing.
▶ 1:43:33And I will just mention that through the car's act the eviction moratorum was struck down by the US Supreme Court.
▶ 1:43:40What impact do you expect HR1078 would have on providing clarity on the housing market by formally ex repealing this expired mandate?
▶ 1:43:50It would give the states back the the rights to oversee the eviction process which is currently the the way that it should be.
▶ 1:43:57Thank you. Uh, Miss Smith, you represent organizations that manage millions of multif family rental units across the country. Uh, can you explain how the continued existence of this expired CARES Act provision has created operational challenges for multif family property managers, particularly given that local courts may still be interpreting the provision as active?
▶ 1:44:17Well, I would agree. Um, first of all, we the National Multi Housing Council and NAA is very supportive of your bill and I agree with Mr. Sears. it would remove some of the confusion. Um, eviction is always an act of last resort. It's the last thing we want to do is is to move someone out of their home and there's so many discussions that take place before that actually happens.
▶ 1:44:39So adding that additional confusion of uh local laws which are very very clear on evictions um would uh would would really help would make a big
▶ 1:44:50Based on your answer, this bill would help clarify. It would absolutely help
▶ 1:44:55Thank you. And uh how would restoring these state and local local governments uh eviction procedures impact the supply of rental housing going forward?
▶ 1:45:08In our experience, we evict very few people. Um it might even be less than 1% a year. So I don't believe that that would have a significant impact on supply of rental housing.
▶ 1:45:21Okay. Thank you. And Mr. Chairman, I yield back.
▶ 1:45:26Thank the gentleman for yielding back. Gentleman from Massachusetts, Mr. Lynch, who's the ranking member of our subcommittee on digital assets, financial technology, and artificial intelligence. You're recognized for five
▶ 1:45:35Thank you very much, Mr. Chairman, and and to the ranking member. Uh this is a really important issue and and I think it is probably one of our best opportunities to to be bipartisan. uh this is affecting every one of our states and and districts and uh I think that the housing issue could really be a a golden opportunity for us to work together. Uh I want to thank the panelists uh for all all your testimony.
▶ 1:46:06Uh I I do believe that that we need a all of the above sort of uh approach here in terms of what we what we support. I certainly support Mr. Sherman's uh idea on manufacturing housing. I have a bill on modular housing. Uh I know uh Chairman Hill and and uh uh ranking member Clever have have bills as well that I I support.
▶ 1:46:30But I I do really think that there's a there's a special amount of need here among firsttime home buyers. You know, uh I bought my first home in 1983 for 14,000 bucks. And uh my cousin Sharon told me I overpaid. Uh it was it was a it was to call it a fixer uper would be generous, but uh but now that same house, I still own it.
▶ 1:46:57Uh the city just assessed it at about $900,000 and I I bought it for $14,000. It's ridiculous. And so my girls don't have a shot uh trying to trying to buy a home uh you know with that that type of burden on them. And so I really think that uh we need to focus on that firsttime homer homeowner uh demographic and and especially with them.
▶ 1:47:25They have to compete now with with private equity firms and some of these real estate investment trusts that are actually, you know, they got more leverage and they're able to uh they they pay more and uh they're driving up the costs. You know, we had a situation in this country right after World War II where we had 16 million uh American service members come home. There wasn't enough housing and and Congress and and the White House leaned into that problem. They created the the VA housing program.
▶ 1:47:55They created well they they amped up uh the Federal Housing Administration. Uh they created the GI Bill. uh they created uh the uh National Housing Act of 1949, expanded it in 54. They did a lot to make sure that that people could, you know, these returning veterans could own homes and they also uh you know, they also leaned into the production of of homes as well. I think that we need to do something like that.
▶ 1:48:24I I know that President Trump got a lot of heat because he suggested a 50-year mortgage. that that alone won't work. But I think he was on the right track. I think we got to look at that that mortgage uh that mortgage product. You know, back back after World War II, they created the 30-year fixed, which worked great for a lot of people for a long time, but that's not happening right now. We need to we need to try to re-engineer.
▶ 1:48:51Uh I wish we had a mortgage broker on the uh on the panel, Mr. chairman. But, uh, I think we really got to look at that and and try to find a way to, uh, to maximize the amount of subsidies that we're putting out there to help the most people that we can. So, uh, Mr. Sears, good to see you, uh, as a fellow Massachusetts uh, resident.
▶ 1:49:14uh we won't need a translator, but could you could you possibly talk about areas where we might be able to reach reach more people and and create a better opportunity for some of these young people, first-time home buyers, uh to get into the market.
▶ 1:49:29Yes, thank you, Mr. Lynch. Um and as you said, there's not one silver bullet to to cure this. It has to be a um approach and we need all of these different um techniques and avenues to to go down. Um you know in in the Commonwealth we passed the Affordable uh homes act last year which allows ADUs by right accessory dwelling units and this type of legislation will help with the housing inventory.
▶ 1:49:56We're seeing more multigenerational um people looking to live multigenerational in their homes. And so this is just one example, but it's only one. We need a very comprehensive approach because it's taken us 20 to 30 years to get here and we're not going to get out of it overnight. But we need to start today.
▶ 1:50:13Yeah. Miss Bailey, could you
▶ 1:50:15Yes, sir. We also need to pass the chairwoman's down payment toward Equity Act. It would provide a hundred billion dollars for first generation home buyers. This is money that would help people living in rural, suburban, and urban neighborhoods be able to beat out those allcash investors who are coming in, not only driving up costs for homeowners, but for renters, too. So, we need to do those innovative things
▶ 1:50:38That's great. Mr. Chairman, I yield back. Thank you.
▶ 1:50:41Thank the gentleman. Chair recognizes the gentleman from Texas, Mr. Williams, who's chair of the House Small Business Committee. You're recognized for five
▶ 1:50:48Thank you, Mr. Chair, and thank you all for being here today. Uh over the past several years, builders and multifamily developers have faced a financing environment that's increasingly difficult to navigate and high interest rates and layers of federal requirements have made it more expensive for lenders to extend credit and those costs ultimately get passed down to the builders and the consumers. Now, when bank capital standards are set too high, lenders are forced to pull away from housing projects that communities urgently need.
▶ 1:51:15At a time when the country is facing a serious housing supply shortage, we cannot afford policy to choke off private capital and stall new development. So, Miss Smith, uh, could you elaborate on how unnecessarily high bank capital standards prevent the flow of capital from lenders to builders or home buyers?
▶ 1:51:38One of the one of the challenges that we faced um after um after uh the COVID pandemic was the um reduction in um uh in lending that required so much more equity to go into projects. So getting um loans back up to 65% even 70% lowers actually the cost of the capital stack which um which really uh you know makes a project that much more viable.
▶ 1:52:06So that would be one thing that I think is really important is to be able to provide just a greater amount of um
▶ 1:52:15Thank you. Uh Mr. Peter, federal energy mandates have introduced significant compliance costs to the home building process, especially for new single family bills. The cumulative effect of these standards can be substantial, often raising the price of home by tens of thousands of dollars, placing a steep burden on firsttime home buyers, as we've talked about today. And for many families, these added costs shut them out of the dream of home ownership.
▶ 1:52:38In addition to home buyers, builders are also report that the added complexity of these standards show slows projects down, reducing the number of homes they can build. So, Mr. Peter, can you expand on how federal energy efficiency mandates are affecting the production of affordable homes?
▶ 1:52:55Yeah, excellent question, sir. Um, so there are studies out there that show that these new energy rules add about $30,000 to the cost to build a new house. And um if the average C house cost is 400,000, that's a significant increase. And on the margin, many more housing projects no longer pencil out. So the administration is already on the ball. Um they've paused um the implementation of the new rules.
▶ 1:53:17They should just um they should roll it back entirely and um um the same with the um appliances rules where um the um energy standards have increased the cost by $9,000 to build a new home. Um, all these things government just needs to get out of the way and let builders build more. Um, and rolling back some of these regulations is certainly the right
▶ 1:53:37Thank you. Uh, Mr. Sears, uh, small and midsize builders have historically delivered the majority of entry- level homes. Yet, they face disproportionate regulatory burdens and rising compliance costs that limit their participation in the market. So, this contributes to fewer homes again being built and less competition. So, how can Congress create an environment where small builders and private capital can reenter the entry- level housing market?
▶ 1:54:06Anytime that the federal government can uh help the local and and states uh in their zoning and and permitting process uh would be beneficial. eliminating red tape. As I mentioned earlier, you know, the we have the missing middle and uh when the builders uh have the the red tape and the delays often caused by um burdensome permitting processes, um they just avoid building the entry and the starter homes and and that missing middle, the duplexes, the town
▶ 1:54:37homes that we so desperately need. And so anything we can do to incentivize the the local municipalities to streamline their permitting and zoning process I think would be beneficial.
▶ 1:54:48Thank you for that and I yield my time back. Mr. Chair gentleman yields back. Chair recognizes the gentleman from Missouri, Mr. Clever, who is the ranking member of our housing and insurance
▶ 1:54:59Thank you, Mr. Chairman. Thank you for this this hearing. I think it's extremely important. um for the first time uh in my um political um eight years as as mayor of Kansas [clears throat] City um and my years here there is no
▶ 1:55:32by the government to assure that we practice in this country fair have accused um HUD for halting major
▶ 1:56:03HUD's Office of Fair Housing has reduced staff by 70%. you know in theology there's a a school of thought that deals with uh the human condition. What is the human condition? Um you know are we basically good basically evil?
▶ 1:56:31Uh I um maybe I maybe I'm a little uh polychi uh in my theology, but I I believe that the overwhelming um a number of Americans are good and decent people and want to do the right thing. Um the the other numbers I you know 20 or 25%. Um and this uh issue of of the human condition is embraced by the monotheistic religions.
▶ 1:57:01All three of them uh Christianity, Judaism and Islam all embrace this human condition. Um it is disappointing then to for um me to know that on the issue of federal h of of fair housing that we have just kind of back and abandon it. Now if there are those who may believe here that well that's something that happened in the 50s or 30s or whatever.
▶ 1:57:32a couple of us uh were involved deeply uh in some issues in California where uh one of the largest credit unions in the world were practicing bold discrimination in in housing loans and and but for the fact that CNN went uh and and and put it we that there is film on it audio and visual.
▶ 1:57:59It happens every day and we're abandoning it. Uh we seemingly are abandoning it. Uh I I hate to I don't want to serve you uh you know going around accusing folk. I'm telling what the facts are and I'm just interested in and from all four of you don't have much time but uh isn't that a problem that we ought to face as a nation and and you as as influential um Americans in the whole housing issue.
▶ 1:58:31Thank you so much for your question sir. Our nation's fair housing laws are the bedrock to making sure that the promises of our constitution reach everyone. By getting rid of housing discrimination, we ensure that children can live in communities with wellresourced and highquality instruction. We ensure that people can have access to clean air and clean water. We ensure that people can live and get to work at wages that will help them sustain their families.
▶ 1:59:01We ensure that people of faith can actually practice their religion without being harmed. So our fair housing laws are fundamental to the promises of our constitution and they have allowed us to make substantial progress.
▶ 1:59:14it has always had strong bipartisan support and it is it's very difficult in this moment and and my faith is of the Christian faith and one of our principles is that we are to love our neighbors as we love ourselves and when the secretary of housing set before his confirmation he pledged he would ensure that Dr.
▶ 1:59:38King's legacy which is the Fair Housing Act would be fully enforced and he has since allowed HUD under his leadership to do everything other than and because of that we are seeing people who are mixed status families being kicked out of homes. We are seeing the permission of coordinating with ICE to have human
▶ 2:00:08Thank you.
▶ 2:00:09Thank you, Miss Bailey. Gentleman's time's expired. I thank the gentleman. Our conference chair on the majority side, the gentleoman from Michigan, Miss Mlan, you're recognized for five
▶ 2:00:19Thank you, Mr. Chairman, and thank you all for being here today. Obviously, housing extremely important. um seems to be a bipartisan issue which is can I say that out loud um but which is a good thing right um I want to talk specifically Mr. series to you and um talk about manufactured homes um modular homes, manufactured homes. For me, seems like it's changed quite a bit in the past decade or so.
▶ 2:00:48Can you talk about the improvements on the manufactured uh home side and and how those changes are really benefiting all of us?
▶ 2:00:57Thank you, Miss Mlan. Yes. said, "In the last 50 years, we've seen significant technological advances in manufactured homes, and we have statistics that show that they are quicker to build, they cost less to build, they make them more affordable, and really what we need to do is cut the red tape and the regulations so that we can build more of these homes as part of an overall solution to the housing crisis and housing supply and affordability issue we have."
▶ 2:01:21And it was amazing. We had um an event on the mall and I actually went and saw some of these manufactured homes and I got to tell you they were not the manufactured homes right of of what of when I was growing up. They are beautiful. So I applaud that that industry. Um so one manufacturing homes have changed right. Two do we have a housing shortage? Would you all agree on that? especially low income housing shortage, affordable housing shortage, right?
▶ 2:01:52Anyone disagree with that concept? Awesome. Look at look at us cats and dogs living together. Okay, so improvements on manufactured homes, um housing shortage that we all agree, especially low-income housing shortage. Um let's talk a little bit about the regulations and the red tape. Can you talk a little bit? um red tape and and regulations are estimated to increase the cost the cost of a new home by maybe 60 $70,000.
▶ 2:02:22Am I accurate on that assessment that before I even put a shovel in the ground, the red tape is going to cost me about60 to $70,000? Am I accurate on that?
▶ 2:02:34You may be accurate for your district. Nationally, it's around $100,000, about 25% of the cost for a single family home. Uh there are some areas where it's more. Um the Commonwealth of Massachusetts, it's more. So, what can we do to streamline the process? Cut the red tape, make permitting easier. I mean, I've had uh rehabilitation and and new construction where we have dozens of inspectors that have to come in and it just takes too long. We need to uh be
▶ 2:03:02So, we have a time issue as well as a cost issue. So, if you're telling me it's a th it's $100,000 and we want to make sure that we have affordable housing, those two concepts are kind of working against each other. Anybody disagree with that? Okay, great. So, we're all on the same page. We got to figure out how to get the regulation down. We got to speed up the permitting process and we have to figure out a way to make sure that we have affordable housing.
▶ 2:03:32and manufactured housing may just be an answer to that. What would be the downside of my legislation, the Modular Housing Production Act? And what that piece of legislation says is let's qualify manufactured homes.
▶ 2:03:50Let's stop the personal property so it's not classified as personal property and you can go and get the same type of loan on a manufactured home that you could get on a modular home. What's the downside in doing that? Mr.
▶ 2:04:07I I I'm all in favor because ultimately in modular homes, the the construction is overseen by local building inspectors and so anything we do to open up um availability for financing products to the American consumer is a good thing.
▶ 2:04:25And and I I don't say that sarcastically. I'm really truly try and say what is the downtime? They're better, they're quicker, they're faster, they're cheaper, and they're beautiful.
▶ 2:04:33yeah. So, we need to produce more of those manufactured houses. Absolutely agree. Um, but if we don't produce more housing and we promote prom um um promote looser lending practices, we're going to drive up the price.
▶ 2:04:45But how is it looser?
▶ 2:04:46Well, by
▶ 2:04:47I mean, you're you're having a a man a manufactured home versus a regular home that's cheaper, more affordable because you're just How is that looser?
▶ 2:04:59Well, the the loan terms are going to be extended. So if you're extending the loan terms um you are bringing down the [clears throat] the monthly payment which are oftentimes get capitalized higher price
▶ 2:05:10a good thing to bring down monthly payments right because that affordability is kind of important
▶ 2:05:14we need to we need to work in concert by increasing more supply
▶ 2:05:18but wouldn't this increase the supply
▶ 2:05:22um if if it ends up if you end up producing more like the like the chassis removing the chassis requirement would be a good step in terms of of getting
▶ 2:05:30but what's the downside on the lending
▶ 2:05:32Thank you, gentleoman.
▶ 2:05:33Thank you, sir.
▶ 2:05:35Gentleoman's time is expired. Now, recognize the gentleman from Illinois, Dr. Foster, who is a ranking member on the financial institution subcommittee for five minutes.
▶ 2:05:44Thank you, Mr. Chair, and to our witnesses. You know, on a typical night, there are 800,000 homeless in America. U on the other hand, there are 22 million empty nesters with a lot more than 20 million spare bedrooms in this. So, there's no shortage of bedrooms in this country. are somehow not allocating um all the resources we have.
▶ 2:06:04So what can we do to encourage empty nesters to rent out that spare bedroom, you know, not necessarily to a homeless person, but just to say a hardworking single mom who can be, you know, trustworthy person that you'd be happy to have in your home. Uh and you know, and thereby free up a lowcost rental property that might be appropriate for curing homelessness. So, I think one of you mentioned um some sort of federal tax uh benefit as a possible solution.
▶ 2:06:32You know, if you're willing to rent out that spare bedroom, you're doing something socially useful and maybe you should get a tax break for from the income from that. Um was it you that mention it, Mr. Beer?
▶ 2:06:42Yes, I mentioned it in my written testimony. There about 32 million spare bedrooms in this country. And if we allow 10% of those, we would have created a lot of additional housing. And I personally I lived with an empty neester couple when I first moved to DC and I can attest to this. This is a a viable option. [clears throat]
▶ 2:06:59Yeah. And and so you know just even a small preference in the federal tax code for that kind of income might be enough. You don't need to get every empty neester to to do their property if we got 120th of them. That's enough to cure homelessness. Um yeah Mr. S you mentioned uh mortgage lock in as a as a big problem. Now there is a proven solution to that.
▶ 2:07:19You know, for in Denmark for more than 200 years, the Danish mortgage origination system has prevented um has prevented uh interest rate lockin in mortgages and it does that by transferring the interest rate risk from the home owner to the bond market. And there was serious consideration of that following the financial crisis as one of the only, you know, feasible proven ways that we could actually have replaced Fanny and Freddy with some safer system for the taxpayer in terms of bailout.
▶ 2:07:47you know, is that something that's been looked at recently? I I saw an article in Business Insider talking about the genius of the of the Danish system. Is that something that's getting a serious look these
▶ 2:07:58Uh I'm sorry, uh Mr. Foster, I cannot speak to um that.
▶ 2:08:03Okay. If you could, but all of you actually for the record, just go have a look. There's a Wikipedia article on it. I know that there was a lot of effort put into that, a lot written, and it was one of the only feasible ways of replacing Fanny and Freddy in ways that doesn't didn't get us right back to the same point um where you had a a taxpayer funded bailout necessary.
▶ 2:08:23If I may, sir, one of the things that we have seen is that our 30-year fixed rate mortgage has really expanded home ownership in our nation. It is the hallmark of opportunity for millions of families. Now, we didn't do it as well as we could have and we left behind a lot of people.
▶ 2:08:44And now we need to be very intentional to making sure those consumers for whom the health of the housing system will depend on can have access to that very affordable product. It allows for people to know what their monthly payment will be without having any risk of unforeseen costs associated.
▶ 2:09:05And I Yeah, I agree completely. I mean, the the 30-year mortgage, it actually was preserved under proposals for to switch over to the door the um Danish system. So, please have a look at it. It's it it was a good idea, you know, 15 years ago when we looked at it and it's still a good idea. Um let's see. Uh yeah, Mr. Peter, you repeatedly mentioned uh smaller lot sizes as a key to progress on this.
▶ 2:09:29Um so first off how much of the additional um you know $100,000 or whatever is just lot size minimum lot size requirements.
▶ 2:09:37Yeah I mean it's in Austin for example we've just studied this they in 2024 they put in place um um a new bill which allowing you to put two or three homes on the same on the same parcel. So now it used to be that a home would cost a million dollars built new but anecdotally we are hearing now if they're putting two or three homes in the same parcel they can sell each of those homes for 500,000.
▶ 2:09:56That's right. And one way to encourage this is with the land value tax, which I I presume you're familiar with. You know, this is very successful in countries that have implemented this as you transfer a lot the most of the tax load to the unimproved value of the land the properties on. So if you do what they did in Austin or Seattle, uh then you take a what used to be occupied by a big mansion and put six town houses on it. You do not pay more taxes because the tax is on the unimproved value of the land.
▶ 2:10:24And so there are things we can do in the federal tax code to encourage that sort of behavior at the state and local level. If you look at how states are changing their laws to evade the salt, that whole issue there, we could structure the federal tax code to encourage a land valuebased tax and do a whole lot of good to encourage but not mandate the the smaller lot sizes that you've identified. And I'm now have negative two seconds.
▶ 2:10:49Gentleman's time is expired.
▶ 2:10:51Gentleman from Ohio, Mr. Davidson who chairs our national security subcommittee. You're recognized for 5
▶ 2:10:56Thank you, chairman. Uh thanks to our witnesses for being here today and for your testimony and you know a critical issue when we talk about affordability. Housing is top of mind for families everywhere in our country. And when you talk about uh confronting the affordability crisis, I think it's one of the things that everyone's serious about. uh from the most basic local government to federal government to president of the United States, we're talking about affordability.
▶ 2:11:26But when I hear some of my colleagues talk about, well, the solution to affordability is more subsidies for more My mind just wants to break. I'm like, does not compute. It's like, do you understand why we have inflation? And clearly, people struggle with this cause and effect relationship. We have $7 trillion worth of federal spending roughly. We got $5 trillion that come out with revenue and we put back in 7 trillion.
▶ 2:11:55So if you think about it as a you know something as a 10 gallon jug and you take five gallons of fluid out, you dump seven gallons in well you change the level. You inherently inflated it. So it's not that the house that you've lived in for the past 15 years massively got more value more valuable if you didn't do any improvements in it. Fundamentally what happened is the unit of measure the dollar got worth less.
▶ 2:12:23Our money is worth far less and it's worth far less if you measure it measure it in most commodities. It's it's getting hurt. But where does the inflation hit the hardest? It hits the hardest in the things we subsidize the most. We've done the most subsidies for anything probably in healthcare. Look how unaffordable healthcare is. Maybe next would be education. And look at that.
▶ 2:12:48Federal government took over lending and now with no uh equity, no skin in the game, you can take out as much student debt as you can amass regardless of what your degree is. Frankly, barely consideration what your GPA is. So, we load these kids up with debt and then they say, "Well, let's go help them set up to buy a house and they can't afford it. They don't have any equity. It's all going to student loans." I said, "Let's subsidize that and pretend that they have equity." Well, who's on the hook for it? The taxpayers.
▶ 2:13:20This is a terrible plan. You got to have equity in a loan. You have to do real underwriting and you want the private sector to do that. I think that's one of the reasons I like um you know Mike Lawler and Joyce Batty working on This lets banks do more lending. It's capped at 15% right now.
▶ 2:13:37And the OC and the Federal Reserve could look at it and say, "Yeah, if you want to do uh more public welfare lending, community good, you could if you have a safe and sound bank because you're taking some of the risk. You're not just transferring it on to taxpayers." This is why I think you of common sense regulation like the no chassis bill that we've talked about a lot. But I do like when I talk with my my home builders, they I asked them, look, why do you build what you build?
▶ 2:14:06And it isn't because uh you know, we need to maximize the number of bedrooms utilized in America. They build houses that people want to buy. You know, there was a time when Ford just cranked out black Model T's, right? because they could make them faster and that met the market for a point. But people wanted to buy other things. They wanted colors. They wanted features and they're choosing to buy much more robust homes.
▶ 2:14:36And for people that have means that there's not a shortage at the high-end luxury market, right? At the low end, it's like, well, how are we going to address it? So, I am concerned that we have colleagues that their solution is that the government's going to tell you what you're going to build and how you're going to do it. I was a little relieved when I hear some of my Democrat colleagues say, "No, no, we don't want to force it.
▶ 2:14:56We just want to incentivize it." And so, while I don't like the income tax because it's a massive invasion of privacy and it is used for coercion and control, it does motivate behavior. Like one of the useful things we do with the tax code is exempt capital gains. Uh particularly for single family homes when it's your primary resident. I think that is a common sense thing. We have to go to ways and means to fix that. But I hope they get it fixed uh soon.
▶ 2:15:22It should either eliminate it if it's your primary residence or massively increase it and index it to inflation. But I think redevelopment of existing property is one of the biggest things. So historic and new market tax credits, I think that's a big win that we got this year. We made those permanent and there are a lot of things we do. But I am concerned as we look at reprivatizing the GSSE that we look at the administration. And I would just say look, if the government's going to continue to own the risk, why wouldn't the government own the cash flow?
▶ 2:15:52But if you're going to privatize the cash flow and let the profit flow out, why are you going to socialize the risk? And I don't think there's a massive demand for more risk in the market. So I'd caution my decision makers there. I yield.
▶ 2:16:07Gentleman yields back. Also from the great state of Ohio, the chair recognizes the gentleoman from Ohio, Miss Batty, who is our ranking member on the National Security Subcommittee for 5
▶ 2:16:18Thank you, Mr. Chairman, and thank you, ranking member, and thank you to all the witnesses here today. Certainly, you've had a lot to digest and you've heard a lot. I'm going to repeat what my ranking member said that we have certainly heard uh a lot about bipartisanship, all the great things that we could do and some things, Mr. Chairman, that were very inspiring uh from you that we can do.
▶ 2:16:44Uh words like new steps, new ways, um the fundamental uh being housing, fundamental to the American dream. Uh, and all of that sounds great, but it's going to take us to do some of the things or undo some of the things, Miss Bailey, that you said that this administration is doing.
▶ 2:17:05And let me thank you for being blatantly honest of painting the real picture for what so many of those Americans are seeing. And certainly black Americans and brown Americans and single women and rural Americans are seeing because this administration has been blind to them. And I say this with facts, not just words.
▶ 2:17:32So, if we look at the great state of Ohio from where I'm from and and I agree with some of the things that my colleague who just spoke about what we have to do to increase housing, will it take money? Absolutely. But will it take other partnerships? Yes.
▶ 2:17:50The latest GAP report shows that Ohio faces a shortage of some 264,083 affordable rental homes for extremely low income. Now, some of my colleagues want to go straight to home ownership. Well, in some of our districts, we can tell you the dream is to put a roof over your head because they can't afford the mortgage. They can't walk into a bank.
▶ 2:18:18So, let's get in the real world. If if we're going to fix affordable housing, yes, it's great to talk about homebuilders and to talk about all of those corporate giants, but the last time I checked, there are people who are in public housing. And yet, this administration is doing away with some parts of section 8 and public housing.
▶ 2:18:42This administration has fired HUD staffing at an unbelievable unprecedented rate of those folks who are actually doing the work to help us with no rhyme or reason. In order to afford a fair market rent twobedroom apartments in the Midwest in Columbus, Ohio, the capital, a household must earn at least $27 an hour.
▶ 2:19:11Matter of fact, $27.79 an hour. And we know that that's not in existence for those who are living in poverty above or below by a few percentages. And the administration has done absolutely nothing to improve these statistics or house more American families. Now, now let me just say this.
▶ 2:19:34While I know there is not a rule or law that allow that mandates the HUD secretary to come before us, we're almost at the end of the year and we've not had Secretary Turner come and testify. But I do applaud my Republican colleagues who have said we should change that and have them come as we beat the you know what out of Secretary Fudge who had already sent us videos and a plan.
▶ 2:20:05Now I've been on this committee with housing since the inception of my being in Congress. I spent 20 years with HUD as a housing consultant. Not one response, not one call from this secretary. So, I'm just saying we have all kind of problems within this administration that we need to deal with. Let me now go to ask the question, Miss Bailey.
▶ 2:20:32Um, when I'm back in my district, one of the primary concerns that I'm hearing is directly from my constituents about the cost of housing. And so many of my colleagues on both sides of the aisle have addressed various legislative solutions today that would make minor technical changes to our housing policy framework without allocating any additional funds to tackling this nationwide crisis.
▶ 2:21:00Can you tell me in your opinion as we look at solving the affordable housing crisis in America, can we do it without increasing resources? Can we do it with gutting the staff? Absolutely not. Absolutely not. And in fact, we're going to push more families into homelessness. You said it. There is not a town in this nation where a person making minimum wage can afford a two-bedroom apartment. Thank you.
▶ 2:21:25And I know my time is up because I asked other members to send in writing to me uh what they think about gutting the staff and not having enough money because it's in alignment with their testimony which was very favorable.
▶ 2:21:38Thank you very much.
▶ 2:21:39Thank you. Gentleman's time has expired and the gentleman from Tennessee, Mr. Rose, is recognized for five minutes.
▶ 2:21:47Thank you, Chairman Hill, and thanks to breaking member Waters for holding the important hearing and thank you to our witnesses for taking time to be with us today. Last week, I was proud to introduce HR6293, the Housing Supply Expansion Act of 2025, along with my colleagues, Housing and Insurance Subcommittee Chair Mike Flood, Subcommittee Ranking Member Emanuel Clever, Subcommittee Vice Chair Monica Dea Cruz, and Congressman Lou Koreah Koreah, and Congressman Scott Peters.
▶ 2:22:14My legislation will remove a federal chassis requirement that has served to unnecessarily raise the price of manufactured housing. Since 1974, federal law has required that manufactured homes include a permanently installed chassis. This has significantly reduced the ability of young and lowincome families to buy their own homes.
▶ 2:22:35Removing the permanent chassis requirement for manufactured homes will lower construction cost, unlock modern design flexibility, and open far more locations for quality, affordable housing. I want to thank the committee for attaching HR 6293 to today's hearing. Mr. Chairman, I ask unanimous consent to enter into the record a letter from the Manufactured Housing Institute supporting the Housing Supply Expansion Act.
▶ 2:23:02Without objection,
▶ 2:23:04Mr. Sears, your written testimony states that HR6293, the Housing Supply Expansion Act, would modernize the federal definition of manufactured housing to include modular and pre-fabricated units not built on a permanent chassis, opening financing opportunities for innovative construction methods. Could you expand on how HR6293 would open new financing opportunities?
▶ 2:23:29Absolutely. Thank you very much, Mr. Rose. Uh, as I stated earlier, uh, by uh, updating um, old and outdated laws, we can certainly open up, uh, new housing opportunities for, uh, Americans. And by eliminating the chassis requirement, uh, the permanent chassis requirement, um, as I stated earlier, uh, prefab manufactured homes, they're cheaper, they are quicker to build.
▶ 2:23:55Um, and so anything we can do to get more of these types of homes on the market uh would be better for um American consumers.
▶ 2:24:04Could you could you elaborate though on financing in particular and how this might impact financing opportunities?
▶ 2:24:12Yes. And so there is a prohibition on the the financing of the the modular homes as um Miss Mlan was talking about. So, how can we modernize uh those rules and regulations to be able to allow for more financing products to be available for these types of homes? And that's what we need to do, change existing uh
▶ 2:24:33Thank you. Uh Mr. Peter, you your prepared testimony recommends adding clarifying language on temporary chassis to the sub to the housing supply expansion act. However, the bill already expands the definition of a manufactured home to include those built with or without a permanent chassis, which I believe encompasses homes using a temporary chassis for transport since such a chassis would not qualify as permanent.
▶ 2:25:00While I remain open to technical refinements, I'm really having a hard time seeing how the housing center's proposed language would enhance the bill given that its current text already permits manufactured homes with temporary chassis. Could you elaborate or explain uh with respect to your testimony, explain why the housing center believes additional clarifying language might be necessary?
▶ 2:25:24Yeah, very simple answer, sir. um uh we were referring to the to the bill in the Senate, not to your particular bill. So I I've I've now I've heard your bill or he deals with a lot of these issues. And let me just say um from the studies that I've seen um or estimates that I've seen, the the ch removing the chassis requirement could save between5 to $15,000. So that's a you know that's that's that's a good chunk of money for a typical first-time home buyer.
▶ 2:25:47Thank you. Thanks for clarifying. Mr. Peter, how can federal policy better align with local initiatives to expand housing supply without imposing new mandates or a one-sizefits-all regulatory environment?
▶ 2:26:01Yeah, that's an also an excellent question. So, um I think at the federal level, the best the best levers we have is to pay um states for outcomes um directly. So if they plat smaller lots and um a home is being built on that smaller lot, then you receive a bounty from the federal government that the state can spend to their liking. And um what we've seen in our case studies that we've done, if the government gets out of way, the private sector is going to build more housing.
▶ 2:26:31We've done 30 case studies and um this would be a way of allowing um builders giving builders greater access to smaller lots um where they can build housing at lower price points which are going to be attainable to first- time home buyers.
▶ 2:26:44Thank you. I completely agree with that. Mr. Chairman, my time's expired. I yield
▶ 2:26:48Thank you, Mr. Rose. Now recognize the gentleman from California, ranking member on our task force on monetary policy, Mr. Vargas. You're recognized for five minutes.
▶ 2:26:56Thank you very much, Mr. Chairman. I appreciate the opportunity. I also want to thank the ranking member and all of the witnesses here today. Yesterday, we did have a hearing actually for the monetary task force and I got to listen to my colleagues talk about the debt, which is a big deal. Obviously, it is. I I agree with that. But what they and they they preached about it, but what they didn't say is they all voted for it last time.
▶ 2:27:22They all voted to raise it by $5 trillion in their big ugly bill. And after it passed, they applauded and now there's amnesia. And somehow they forgot that they're the ones that created all that debt. It's pretty interesting. And today we get to hear that, you know, 7 trillion are coming in and we're spending 7 trillion. We're we only five have five trillion coming in. Well, yeah, you voted for that. You voted for that.
▶ 2:27:52Why are you telling us you voted for that? But anyway, hate to bring that up, but boy, you you keep hearing this and there's some amnesia around here. Now, about the housing, Mr. Sears, I wanted to ask you a little more about diving. You were so excited about that. But instead, I do want to ask you about home sizes. Back in the 1920s, what was an average home size?
▶ 2:28:15That's a great question, Mr. Vargas. I don't have the
▶ 2:28:18about a,048 square feet according to AI. Today the average square the average house is 2600 square feet. It's grown dramatically. Um also the lot size. I I agree with you completely on that. I mean in San Diego they're they're looking at this finally. They have 5,000 square foot lot requirements and you know you don't need that especially near areas where you have transit.
▶ 2:28:48So I I think that that's a a really good idea. So again, I think the smaller lot sizes and smaller homes, I think, are something that's important. However, in parts of San Diego, what they did before was this. They took a single family home. They scraped it and they put in what they called a Huffman six-pack. And that is the ugliest thing you could possibly build, the cheapest way. They scraped the front of it.
▶ 2:29:14They made parking where the front yard was, and it became six units. And that's why everyone's afraid for of density because that's what they remember. And they did this for a number of years until the city stopped it. What can we do so that doesn't happen? So you do have some at least some beauty in these homes because that's what people didn't like, how ugly these damn buildings were, Mr. Sears, what can you do?
▶ 2:29:39Yeah. So we can talk about smart growth and and density. You talk about um housing near transit centers. that is very important for us especially in the metropolitan areas. And so I'm with Mr. Peters personally. I sell a lot of homes on 5,000 square foot uh lots. So density is important uh but smart growth is as well. And so how do we do this so that it can have maintain the fabric of the neighborhood without destroying it?
▶ 2:30:05And and and the other issue is this. We've all been talking about this red tape $100,000. I I was looking it up in AI. That also includes roads, sewers, parks in that infrastructure. You know, in California, you have to pay for all that because for those of us that have owned a home for a long time, we don't pay that much in taxes. I mean, I I bought a home in 1993. I paid $176,000. I pay less than $3,000 a year in tax for that home.
▶ 2:30:35And when a new home comes in, it has to pay for all the sewer. It has to pay for all the roads and the parks and everything else. And that really increases the cost dramatically. At least AI is saying that what you guys are considering red tape is infrastructure. Mr. Peters, Peter, sorry. Go ahead, sir.
▶ 2:30:55Yeah. I mean, I I agree with you and but um in California, the problem is that you have distorted the market through Prop 13. And of course, yeah, new now new new housing that's get built, it's going to be assessed at much higher much higher rates. And Prop 13 and other in California, other um impediments to building new housing has also led to a
▶ 2:31:14But that's the case in in many states where they're I'm sorry. Go ahead, Miss Bailey. Give you some time.
▶ 2:31:19One other mechanism that has included is building for weather related impacts which are increasing. Those costs are also part of making sure we have structures that can sustain the hardship of the weather related impacts.
▶ 2:31:34No, absolutely. It was talking about the code here and the code of course if you are in places like California or certainly in Florida or even in Kentucky or Kansas now because of hail other things like that. So, I agree. My time's about up and I appreciate again the opportunity and I do think that the things that we were talking about important um and we got to figure out how to do this together and quit talking about this spending when they're the ones doing it too. Thanks. Thank
▶ 2:32:00someone's time has expired. The gentleman from South Carolina, Mr. Timmans, you're recognized for five
▶ 2:32:06Thank you, Mr. Chairman. I want to thank the witnesses for being here today. Over the past decade, housing affordability has become one of the most urgent challenges facing American families. The nation has not built enough homes to meet demand. And rising costs combined with a complex web of federal, state, and local regulations have made it increasingly difficult for both builders and families. As I continue to meet with realtors, builders, and housing providers, I hear consistent concern. A patchwork of zoning rules, permitting requirements, and development restrictions, and they vary widely from one jurisdiction to another.
▶ 2:32:36This regulatory maze slows construction, increased costs, and limits the supply of attainable homes. Without a more consistent and predictable framework, we risk deepening an already severe shortage and placing even more families out of reach of home ownership or affordable rental options. Mr. Sears, realtors see these challenges on the ground every day. Regulations at every level of government now add an estimated $93,000, which is nearly one quarter of the total price of a new single family home.
▶ 2:33:03From your perspective, how does this patchwork of local and state regulations affect housing affordability and access for first-time buyers and for members of the workforce?
▶ 2:33:12Thank you, Mr. Timmons. Uh there's a lot to unpack there. Uh but let's start with um the patchwork of regulations. Uh what we have seen is there are builders who want to build and because of the disparity in or continuity in these they will walk away from projects because they don't have the the time the money the resources in order to go through the extensive permitting process um that that happens and uh so but we are you know the national association of realtors we support the the home reform act um which would cut the
▶ 2:33:42red tape um and strengthen the public private uh partnerships and that's something I think is is very important and vital for us. So, anything we can do to streamline the process to incentivize uh builders, especially the small and medium-sized builders who can help us with entry level and the missing middle uh homes, um we need to do everything we can to to help them. And cutting red tape is certainly a good start.
▶ 2:34:06In my time as a small business owner, it's actually worse than just the patchwork framework. I think some bureaucrats abuse their authority and they they cra try to find reasons to not do a project that they think might not be appropriate but is perfectly legal. Is that something you've experienced?
▶ 2:34:24That's been very frustrating in my time. Um so one follow-up question. If if federal incentives or standards are necessary, what specific actions would most effectively encourage states and localities to streamline their processes and expand the supply of housing? Well, I think uh part of it and we were talking about it with uh Mr. Vargas, uh help with infrastructure uh costs if the federal government were to be able to incentivize and and help with that.
▶ 2:34:51Uh offering uh block grants in different communities, that could certainly help with uh with with buyers. Uh when it comes to to building, it's how do we incentivize the local communities to streamline things? Um and I know there's some examples from around the country. We actually worked with the APA and the League of Cities. We have a a housing accelerator um guide book with nearly four dozen different success stories from around the country on how we can incentivize and streamline the processes.
▶ 2:35:19And so happy to supply that to you um in written.
▶ 2:35:22Thank you for that. If if good policies have the potential of positively impacting housing supply, I want to point out that bad policies do the opposite. And last um the last four years we saw trillions and trillions of dollars in spending that caused inflation to go up and they tried to run away from that. But we had unnecessary spending related to COVID and that caused interest rates to go up. I recently moved. I I was in a wonderful home that I grew out of and I needed to get a new house.
▶ 2:35:51I had a 2.3% interest rate. Selling my 2.3% interest rate was one of the most painful things ever. You know what my interest rate is now? 6.8. You know what's even funnier? I have a five-year arm because the the the cost of me locking in a 30-year note was going to be eight and a half. So, again, we can facilitate positive outcomes from Congress, but we can also cause negative outcomes.
▶ 2:36:16Um, Miss Smith, uh, Bazudo operates in many different regions, each with its own zoning codes, fee structures, and approval processes. What specific reforms in permitting, zoning, or federal financing programs would most directly shorten timelines for producing new affordable housing?
▶ 2:36:34Thank you. Um, well, certainly anything you could do to fasttrack the approval process of permitting. Um, you know, actually getting a, you know, project shovel readying in the ground, it can take up to two years to get a a project entitled today. So, that adds a tremendous amount of cost. um you know just between the time you're planning it and the time you're you're building it. So um cutting through some of that red tape would make a big difference.
▶ 2:37:00Um one of the things that we really believe is a great opportunity for building more multif family housing is um modernizing the 221D4 program. That's an act an excellent program. We've used it at Bazudo repeatedly over the years. Um, and uh, the the problem with the program today is um, it just takes too long. It's too administratively burdensome.
▶ 2:37:26thank you for that. I've run out of time. Mr. Chairman, I yield back. Thank
▶ 2:37:30He yields back. Mr. Green, you have a unanimous consent request.
▶ 2:37:33I do, Mr. Chairman. Um, I'd like to ask that I with unanimous consent indicate in the record that I'll be introducing a statement such that I'm supporting HR 4069, the Down Payment Toward Equity Act of 2025, the um, ending homelessness act of 2025. That would be HR4872.
▶ 2:37:57And finally, HR 4223, the Housing Crisis Response Act of 2023, all of which have been introduced by the Honorable Maxine Waters. I yield back. Thank you.
▶ 2:38:09Without objection, that's adopted. Next, we go to the gentleman from Illinois, Mr. Castton. You're recognized for five
▶ 2:38:15Thank you very much. Appreciate everybody being here today. Um, important issue. You know, it's it it strikes me that there's we're having basically two of the three necessary conversations. If we want to lower the cost of housing, we can either increase supply. Um we can reduce the input cost or we can lower demand. Um I don't think any of us are advocating for policies that would lower demand, but at least in theory, that's another way to cause housing costs to go down.
▶ 2:38:42Um, you know, on the supply side, I just make the observation that if your goal was to destroy the labor force of the construction industry, you should adopt Trump's immigration policies. Um, or if your goal was to destroy the labor force for agriculture or hospitality, it's going to take a long time to fix that. Um, but I want to focus for now on the, um, at least initially on the input costs.
▶ 2:39:08Would any of you argue that raising the price of bathroom vanities lowers the cost of a house? Um, obviously, you know, the president imposed tariffs on bathroom vanities and kitchen cabinets because I don't know why. But I guess I'm I'd like to start with you, Miss Smith, because you're the one that's got the most direct construction experience with with Pazuto, if I'm following. I'm wondering if you've been able to look all of these tariffs.
▶ 2:39:36What impact are those tariffs specifically having on on your input costs for for for new construction?
▶ 2:39:43Well, um it's a it's an excellent question um and one we've been trying to answer ourselves. The the subs have up until now been in sort of including their um understanding of what the tariffs are going to be in their pricing. But it's been such a moving target that they're a little uncomfortable with those kinds of commitments. Um there have been very few starts and so we haven't really seen how it's going to be priced in.
▶ 2:40:12Once we see demand really pick up, we expect um to see construction costs go up as a result of the tariffs. But no one really knows how it's going to shake out right now because it's been some moving around
▶ 2:40:25the because the National Association of Homebuilders and this was back in April. So I don't know if this is still current there. They had surveyed their members and I think they said about a $10,000 price per home but that was April like there's been more tariffs since then. um BLS data, which of course since BLS is not releasing data as much as they're supposed to anymore, but in September they said a they were saying a three and a half% increase just because of tariffs. I'm curious if that feels right from your experience as a practitioner.
▶ 2:40:54Um or if you just don't know.
▶ 2:40:57Well, costs are going up about 3% right now, but costs went up sign significantly over the past five years. Just by example, uh we would spend about unit on hard cost for a new apartment five years ago. Today that's $240,000.
▶ 2:41:14And and yes, obviously I I I do think there's a you know, we had global inflation during COVID um that hurt everybody. Tariffs by definition are only affecting domestic
▶ 2:41:29Right. So that's that's a choice to have tariff driven domestic inflation,
▶ 2:41:34but we expect cost to go up.
▶ 2:41:36Um I I do also just I I hope that all of us can and this may sound dumb, but I I hope all my colleagues will go home tonight and reread the three little pigs because some of this conversation is, you know, we can lower costs. If only we didn't have so many building codes. If only we didn't have to build climate resilient homes. if only we didn't, you know, put efficiency codes in so that people could save money on energy. And it's true. You build a house out of straw, it's cheaper than building a house out of brick.
▶ 2:42:04[laughter] But there are big bad wolves out there that we got to protect against. Um, last question is for you, Mr. Peter. Um, as our resident economist here, um, oh, don't shake your head. Come on. The Mr. Bar had, I think, appropriately raised the point that the 30-year mortgage tracks the 10-year Treasury.
▶ 2:42:27Um, I think a number of us on this committee have been concerned about the growing spread between the overnight Fed funds rate and the and the 10-year Treasury. It's one thing that the Tren Treasury is high. It's something else that we have this this increasingly inverting yield curve. Um, yes, we have long-term structural debt problems. Do you know when the yield curve started inverting? You would have to tell me.
▶ 2:42:53Well, it it was essentially the start of the Trump administration. That wasn't the start of structural debt. Um Mike Consul um has famously described this as the risk premium because when you have so many companies who are now being told that contract law doesn't apply in the United States the way it used to, you had a permit, but I'm going to pull it away because I don't know, you had a minority CEO. The that's pulling investment. And so we're seeing this premium that's in there.
▶ 2:43:19And I'm out of time, but I guess I would just ask all of you to continue to fight for the rule of law because the US has an advantage as a country so long as we attract the best and brightest to our shores. And gentlemen's time is know that we're going to follow the law.
▶ 2:43:33Gentleman from Wisconsin, Mr. Style, chairman of the subcommittee on digital assets, financial technology, and AI is now recognized for five minutes.
▶ 2:43:41Thank you, Mr. Chairman. Um, not easy right now. Cost of housing are up. People are struggling. How do you pay for this? where are we at and where do we need to go? If we look back just at the median home, the median homes increased um significantly uh for families and the cost structure for families is a huge challenge.
▶ 2:44:05So we look back a generation ago 1985 the share of household spending more than 30% of their income on housing was 28%. Now it's 37%. and we have an under supply of housing, roughly 6 million homes. Uh Mr. Mr. Sears, if I can start with you, there's a number of kind of bullet shots that we could take at this to chip away at the challenge we face. There's no one silver bull. There's no one thing we're going to do where housing prices are immediately going to become affordable.
▶ 2:44:34But in your testimony, you have uh some great nuggets in there and in particular lot sizes. Could you comment uh what that would do and how local uh leaders could engage to to bring down the cost of
▶ 2:44:48Thank you, Mr. Style. And as Mr. Peter has talked about, lot sizes certainly have an impact and they allow for uh for density. And one of the things is the more dense uh we have for housing construction, the more units that come on the market, that does impact uh pricing and affordability. You also talk about the shot clock where people go in, you want to get approval, you find yourself gummed up in all sorts of red tape. How would that impact housing
▶ 2:45:14Yeah. By streamlining um the the red tape, the permitting process, you know, we're on average we're looking at about $100,000 of cost before a shovel goes in the ground for a a typical single family home. So, if we can uh speed that up, there's a time value to money which would allow for more affordable housing to be produced.
▶ 2:45:32And could you do some some pre-approval? Um uh Miss Bayham and I have looked at pattern books, ways that cities could be proactive to do this even on the front end to further accelerate the timeline.
▶ 2:45:45Uh yeah, anything that could be done in advance would would be beneficial for housing production.
▶ 2:45:49So why wouldn't you do that and why why would municipalities not be doing that in advance today?
▶ 2:45:53Uh nimiism, not my backyard. as as one of your colleagues talked about um bureaucrats getting in the way of projects that they might not particularly agree with even though they're legal to do. Let me let me shift gears. Uh one of the solutions that we've heard talked about uh by some of my colleagues on the left uh is why not just come in and control the costs uh rent controls in particular.
▶ 2:46:20We saw this with mayoral race in New York City um that aha you can just come in set a price the government can dictate the price uh and things will solve themselves. Mr. Sears you've examined and studied this. What happens when municipalities put in rent controls?
▶ 2:46:38Uh in the early 2000 I got my MBA Western New England University and in fact my economics professor was a tenant of mine at the time. He was a visiting professor. He took one session, one class to talk about how uh rent control is flawed economics. I think universally economists agree that rent control is flawed. Uh instead, what it does is it it makes people stay put. Uh housing inventory shrinks.
▶ 2:47:02You have investors that will flee from those uh localities that implement rent control um because
▶ 2:47:09and it dramatically reduces investment in those communities that have rent controls, right?
▶ 2:47:14Yes. Yes. What's the long-term ramifications of that?
▶ 2:47:16Higher prices.
▶ 2:47:17And so by putting in these rent controls, what we really see is higher prices and lower quality housing. Is that right?
▶ 2:47:23Yes, sir.
▶ 2:47:24All right. Let me let me shift in the the the a lot of time that I have left and come to you, Mr. Peter, if I can. Um, can you walk us through the carpenter index? I think this is a really helpful framework to understand uh the lay of the land and the challenges that we face in housing.
▶ 2:47:36Yeah, so we the carpenter index is one of the metrics that we track affordability at the national level. And particularly we do it for the largest 100 metros. And um the carpenter index asked a simple question. The carpenter they build housing but they can they actually afford to live in an entry- level home. And back in 2012 we found that the affordability was there in 74 metros um out of the largest 100 metros. It was it was affordable for average carpenter household. Today um that number has shrunk to about 21 22 metros.
▶ 2:48:06Um so it's been it's been deteriorating massively and um we laid a fault squarely at the at the foot of the Federal Reserve. Um by mid 2020 we were warning them that the housing market was overheating and they ignored our calls. They maintained that um that inflation was transitory. Um and of course they had to slam the brakes in 2022 and at that point it was too late and um we've the home prices were higher now interest rates are higher.
▶ 2:48:32But at the same time, the carbon index also shows that if we can um build smaller allow sizes, houses is going to be affordable for
▶ 2:48:40I'm gonna I'm gonna cut you because we're going to run out of time, but appreciate all of you being here. Your testimony, huge huge challenge. Yield
▶ 2:48:46Gentleman yields back. The gentleoman from Massachusetts, Miss Presley, is recognized for five minutes.
▶ 2:48:52Thank you to our witnesses for joining us today. 2.5 million 2.5 million children. That's how many children are currently being raised in grand families or kinship households in the United States. Uh and in my home state, uh that which I share with Mr. Sears, uh over 100,000 children are raised in grandfamily or kinship households.
▶ 2:49:16Now, these are the children of service members and veterans that are living with a grandparent while their parent is deployed. These are the children uh whose parents uh have been impacted by the opioid epidemic and are struggling with substance use disorder. These are are children um who worried not for their grandparents uh intervention. Perhaps they and their siblings would be separated or living in foster care. These are the children who are living with grandma while their parents are getting back on their feet after losing a job.
▶ 2:49:46Uh that is exactly why Representative Jim McGovern and I have introduced the Grand Family Housing Act to provide resources to those households to help with school work, after school care, and home repairs. Uh this uh affords us a chance to um support those grand families, our elders that are living on fixed incomes uh who are struggling uh to u to take care um of a child after they've already raised their raised their children.
▶ 2:50:14Miss Bailey, some people are uh are unaware of um of this family model which has really quadrupled in the last decade. Um as the co-chair of the task force on aging and families, I'm well aware, but do you mind just uh educating the public on why this is in fact an issue deserving of our attention? And can you discuss the unique types of challenges that elders face when trying to raise young children in senior residences?
▶ 2:50:39Thank you so much for the question. It's very important and thank you for your Grandparents living at home oftent times need home modifications for safety so that they can remain there and maintain their families and help to keep their families whole.
▶ 2:51:00And without your legislation and full enforcement of our fair housing act to make sure we're doing things to ensure that they are not being discriminated against, they're not able to stay in those homes. And then that means that we have family instability, which is not the outcome that we desire. We actually want to make sure we keep families together and that we empower them.
▶ 2:51:24They in many ways support people that might not be biologically family and I think that's something that we really have to talk about. Um they're very generous taken in neighbors so they're helping to hold whole communities together.
▶ 2:51:42Excellent. Uh thank you for that. Um Miss Bailey, across our country more and more elderly people are becoming homeless. So, we're talking about the role that they play in keeping families whole and providing stability um to uh the community and to children. Um but it's also essential to their own stability. And what we're seeing is a growing gray wave uh where um our elderly are representing uh the highest rising rate of homeless.
▶ 2:52:12Um, could you speak to uh these challenges and what are you seeing and getting in terms of keeping elderly folks in housing they can afford to live in?
▶ 2:52:21I think the administration's most recent actions on continuum of care really really should be alarming because as you stated many older Americans are increasingly becoming homeless. many people are being left without any support and what we see is that the recent actions could add to those numbers.
▶ 2:52:43So we already have about 700,000 plus people in homelessness every day and the recent way that they have put out a proposal to redesign the program would only leave funding for about 30%. and the notice of funding opportunity literally cut the program's funding in half.
▶ 2:53:04Thank you.
▶ 2:53:04So, we can actually grow more homelessness by almost an additional 200,000 families just with those changes.
▶ 2:53:14My goodness. Deep deeply consequential and preventable.
▶ 2:53:17Yes, ma'am.
▶ 2:53:17Thank you. Recently, I joined ranking member Waters and urging the Department of Housing and Urban Development to avoid a gap in funding the continuum of care programs in Boston. and granties rely on these funds to provide life-saving housing assistance. I'm calling on the administration to treat housing like the essential priority that it is. It's why I work with my colleagues to introduce bills like the Innovation Fund Act to improve housing supply, the Eviction Helpline Act to create a national support hotline, and the Appraisal Modernization Act, which would allow homeowners to seek a second appraisal when they suspect their home's value is under represented.
▶ 2:53:46These little to no cost bills help people remain housed and allow them to build wealth and maintain their homes, pass their homes down to their children or move into new homes as their families expand. I yield back.
▶ 2:53:58Gentlewoman yields back. The gentleman from Pennsylvania, Mr. Muer, who is the chair of the subcommittee on oversight and investigations, is now recognized for five minutes.
▶ 2:54:07Thank [clears throat] you, Mr. Chairman. Thank you all for being here. So, we're really trying to find solutions, not try to come up with makebelieve. um Uh the fact is that the um housing shortage began back in 2008 um in the so-called great recession. Mr. Sears, you mentioned that 100 there $100,000 cost before the shovel hits the dirt.
▶ 2:54:35Okay, that's not a tariff issue, right? Uh lumber, by the way, uh as you well know, three years ago during a different administration was at $1,500. Uh today it's at $5.45. Last year it was at 550. So that's it's it's come down to an extent. So yes, um most homes are are built with lumber. Uh inflation rose and from 21 to 24 by 20%. cumulatively.
▶ 2:55:04Cumulatively over the last 10 months with President Trump in office, uh, inflation has gone up 2.4%. Okay, so let's just get all all that straight. Interest rates were very, very high, went up quickly. That had a lot to do with people having a shock value of not buying homes. And with the rapid inflation that took place, incomes didn't keep up. So, you know, the idea of buying a home was was very, very difficult.
▶ 2:55:31The fact is that we are short about 4.5 million homes and we're building about 1.4 million a year. So we need answers, not fingerpointing. Um, so Mr. Sears, from your perspective, here's just one thing I want to ask you. Representing re realtors on the ground, uh, when American uh, sells their home, uh, qualifies for capital gains, 500,000 for couples uh, in profit. that is the rest is considered income.
▶ 2:56:01So 30% as opposed to capital gains are 33%. Um should we work on that? Should that be corrected? Would that help?
▶ 2:56:09I would encourage this committee and and all of Congress to support the more homes on the market act. That would take a first stab at the antiquated capital gains exclusion from 1997 and raise it to 500,000 and a million dollars uh for a married couple. Um there is a proposal out there to uh eliminate um taxes on uh e home equity on your primary residence.
▶ 2:56:32So we would support any of that, but if if uh we could get the more homes on the uh market act uh approved, we'd be very happy with that start.
▶ 2:56:41Good. I I I agree and I look forward to supporting that. Um M. Smith, um rent control, I know that's been discussed plenty already, but housing um hurt housing quality. What lessons should we learn from what's occurred in New York, for instance?
▶ 2:56:57Well, you could look right in Montgomery County, Maryland, right here in this area that enacted rent control a year ago. And there's absolutely no investor interest at all in um in that community. And that had been a very robust department, a market with uh you know, with very positive results. But um the investor community is hopped across the bridge over to Virginia.
▶ 2:57:20Okay. Thanks. You know, while we were sitting here, I texted um Secretary Scott Turner and he when he was um in his previous role, uh we worked on opportunity zones together. So, I said, "Hey, why don't we try talking about some housing area arena um opportunity zones, so creating that type of potential private sector incentive." So, uh Mr. Sears, back to you. Um uh it's nearly impossible.
▶ 2:57:47Home builders have told us to deliver a home under Permitting finan financing rules have big impacts here on limiting affordable starter homes. Thoughts on that? Yeah. And anytime there is red tape, um delays in in construction, uh difficult permitting that that cause delays in in this, there's a time value to money.
▶ 2:58:11And and so the builders, they are unfortunately fleeing away from starter homes and the missing middle uh homes, and they're going for the higherend homes where the profit margins are a little larger, but they can absorb uh these additional costs. I mean, listen, here's the thing. Housing represents nearly 20% of GDP. every single uh transaction, residential transaction that occurs generates approximately $90,000 of economic activity um in every community across the country.
▶ 2:58:38So, anything we can do to streamline it to get people into affordable homes will only be good for the economy.
▶ 2:58:44Yeah, I agree. I agree. Great multiplier effect and very very meaningful quality life and and everything else. You know, there's you look online, there's right leaning proposals. Well, we don't have to look online. We're members of Congress. Everybody's got different different ideas and all, but this is important. It's it's something that we're really focusing on and we need to come up with. You got left leaning proposals, you got centrist proposals. Well, I'm I'm out of time.
▶ 2:59:07Just look forward to hearing more of your ideas on what we can do to help um solve this this uh contemporary problem. I yield back, Mr. Chairman.
▶ 2:59:16Gentleman yields back. The gentleoman from Georgia, Miss Williams, is now recognized for five minutes.
▶ 2:59:24Thank you, Mr. Mr. Chairman, and thank you, Ranking Member Waters, for holding this hearing today addressing the housing crisis that is impacting the entire country, y'all. And thank you to all of our witnesses today for coming to testify to pres pro provide your perspective on solutions because that's what the American people want when addressing this housing crisis. And I know that we've had discussions in our housing subcommittee where we've had members mention their perspectives and their solutions to address housing affordability and the housing supply.
▶ 2:59:53And while I'm happy that most of my colleagues have talked about proposals to help build more housing both for urban and rural communities and creating more resources to make home ownership more affordable, I agree as evidenced by legislation that I've introduced in co-ed. I also think a crucial piece of the puzzle is ensuring that constituents have the tools to ensure that they can maintain and hold on to homes that are a part of their family's legacy, which builds generational wealth.
▶ 3:00:22And that's why I've introduced bipartisan legislation, the heirs act, to keep homes and families for generations to come and build that generational wealth. And while I represent the fighting fifth district of Georgia centered in Atlanta, which in it is a very urban area, y'all, I grew up in rural Alabama. And so rural housing is important to me personally. the home that I grew up in in the big city of Smith Station, Alabama, didn't have indoor plumbing or running water.
▶ 3:00:52And so, I'm hopeful that we will continue to have conversations around the whole home repairs act that I'm co-leading with Mr. Downing. I hope that legislation can be discussed and adopted. But I also understand the need to tackle the housing crisis on multiple fronts. Miss Bailey, what have you found are some of the best practices for designing mortgage programs that work for rural communities that also tackle the racial wealth gap and home ownership gaps? Thank you so much.
▶ 3:01:18I think your legislation, the Heirs Act, is really critical for making sure we can preserve home ownership opportunities in rural communities. And I think we need to make sure we are also utilizing special purpose credit programs.
▶ 3:01:31This is something that the Federal Housing Finance Agency removed liquidity for from the GSSE and the CFPB just issued a proposal that would curb the use of special purpose credit programs despite them providing access to nearly 60,000 borrowers with $82 million in savings, particularly for people who live in the South. What people don't realize is that people in the south have lower credit profiles than people across the nation.
▶ 3:01:58And what specialurpose credit programs allow lenders in those regions to do is to remove those unnecessary and arbitrary barriers and make sure they can create and design programs to well serve those creditworthy consumers. So making sure we put forward the properties act that you've led and and and really is critical to helping preserve black wealth but also advancing special purpose credit programs is extremely important. And these programs have been adopted by lenders throughout the nation.
▶ 3:02:28They have made an a an huge impact, trillions of dollars in impact. So, we need to make sure we are providing the oversight over the CFPB and the Federal Housing Finance Agency to make sure these critical programs can continue. Thank you, Miss Bailey. Mortgage lenders serving residents living in rural communities and majority black areas know that some homes are not even eligible for traditional mortgage financing. So, these programs are extremely important.
▶ 3:02:52Many families in the black community also face challenges with estate planning leading to situations where property is inherited informally as heirs property as we've discussed. And so that is why I am still hope for Mr. Chairman that this legislation will be brought before the committee so that we can move it forward because it is truly bipartisan.
▶ 3:03:11Um, I also understand, Miss Bailey, that transformation of heirs property into formal ownership can contribute to long-term wealth accumulation and financial security for marginalized communities. And so, I hope that we can continue to gain support from all of the people here, the experts here, because that is something that um I have found that we all agree on. But, Mr. Sears.
▶ 3:03:35Recently, I introduced the Whole Home Repairs Act with my colleague, Representative Troy Downey, which would establish a pilot program to empower homeowners to make critical repairs, ensuring that homes are safe, efficient, and remain livable.
▶ 3:03:49Can you explain why access to lowerc cost financing for home repairs is essential for not only homeowners safety and stability, but also to preserve affordable housing in our communities and prevent Miss Williams, I'm happy to say that the National Association of Realtors supports your legislation.
▶ 3:04:06Thank you.
▶ 3:04:06Here's the reality. If we do not assist these people um to be able to maintain their home, we could lose another precious housing unit on the market. And so, anything we can do to incentivize them to rehabilitate, to fix up their home, to make it uh stronger and and can handle uh storms and natural disasters, the better off the entire community will be and the homeowner. I agree, Mr. Sears, and my time is up. I have more questions for all of our witnesses that I'll submit for the record. Thank you so
▶ 3:04:37The gentleman yield. Gentleoman yields. The gentleman from Wisconsin, Mr. Fitzgerald, is now recognized for five
▶ 3:04:43Thank you, chairman. Thanks to uh the panel. Thank you for being here today. I know it's a long morning and early afternoon, I guess. So, uh, and I apologize if some of the questions are some redundancy, but one of the biggest barriers to improving affordability is a sheer lack of developmental lots. It's something I see in the district all the time.
▶ 3:05:02I have draft legislation to create a no interest revolving mezzanine loan fund to help responsible developers overcome the upfront capital constraints that keep lot development uh, out of reach, especially for projects with lot costs under 100 grand. Uh, Mr.
▶ 3:05:20Sears, I know we've talked about this in the past, but can you just how would increasing the supply of just buildable um through this type of like targeted and and repayable financing impact the entry level home prices?
▶ 3:05:37Simple economics, supply and demand. The more supply we have, the the more of an impact we'll have on the affordability. And so if we can designate these lots and get them uh designated to be buildable and then get the builders in there, um that will help with um the the missing u homes that we're looking for, whether it's the entry level or the missing middle.
▶ 3:06:00It's it's um it it's very evident that the underground portion of any new uh just adds uh astronomical cost to the overall development. Have you guys seen any strategies on municipalities working with developers or or kind of any new ideas out there when it comes to just developing lots in general?
▶ 3:06:24Well, as I mentioned earlier, the coalition that we had for the housing accelerator playbook where we have over four dozen examples of the way that municipality municipalities have worked with builders um and other governmental agencies in order to streamline the process. Um I I don't know for sure if we have an example about the infrastructure issue in there, but anything that can be done to reduce the cost of infrastructure or to assist in that uh would be greatly appreciated and would help with construction of more
▶ 3:06:54Oh, very good. So, I've been working on legislation to release uh GSSE conservative ships, and the goal of of a bill that I have right now is simply to protect taxpayers, codify the strong reforms that we've already had administratively, but take away the incentives to stray from their charter uh by making Fanny and Freddy utilities and and allow the GSC's to operate under the reforms. So, um your members work directly, I know, with families uh to become homeowners.
▶ 3:07:25This legislation aims to build on the reforms already in place by moving uh Fanny and Freddy into utility style entities. Uh it also is preserving the limited and paid for government back stop through the PSPAs. Um how could this kind of utility model strengthen stability in the secondary mortgage market and ultimately help more families access affordable home ownership?
▶ 3:07:52Yes, I I know that uh them coming out of conservatorship has been something we've talked about uh for a long time, but we would fully support the utility type model. Um with that said, what we'd want to make sure is that the 30-year fixed rate mortgage uh remains a bedrock of uh the financing that's available. Um we'd also want to make sure that there's the government guarantee.
▶ 3:08:12And then and then finally um if there is any uh revenue that is generated from this um we would ask that we make sure that that money is geared towards housing and used for public private partnerships because um from what I understand anytime there's these types of partnerships uh the private sector will put in 10 times the amount of money as the federal government. So we could be talking about trillions of dollars influ of influx into the housing economy.
▶ 3:08:39And just one more uh kind of tail question it would be um from your vantage point, what are the most burdensome regulatory barriers that that are actively preventing builders from actually moving forward? And I know they work with realtors kind of in the marketing of some of these new developments, but what what still is kind of the hardcore thing that that really needs to be repealed for this stuff to move forward?
▶ 3:09:07A universal one across the country that scares uh builders and investors is rent control.
▶ 3:09:13Absolutely. Thank you so much.
▶ 3:09:14Thank you. I yield back.
▶ 3:09:15Gentleman yields back. The gentleoman from Michigan, Miss Talib, is now recognized for 5 minutes.
▶ 3:09:21Thank you so much, Chairman. Um we all been talking about boosting our housing supply. Um but we know it's of little value uh to someone who can't get a mortgage because of their skin color or can't rent an apartment because they have a disability. Uh, and I know people want to pretend it's not happening anymore, but it is. The administration is deliberately undermining the enforcement of our fair housing laws.
▶ 3:09:46You know, this is incredibly important because we know that settlements of against banks have been done and closed doors from folks giving higher interest rates of uh folks coming in if they have an accent. Wasn't that Wells Fargo, Miss Bailey? They got sued for that. Lost. But again, they settled out of court because they didn't want the public to know.
▶ 3:10:05In May, ProPublica reported that administration was halting their fair housing investigations, allowing hotlines to go unmonitored, preventing staff travel to identify witnesses, and ending compliance reviews to ensure housing developers practices and policies are legal. In September, the New York Times reported that employees from the HUD's Office of Fair Housing said, quote, said that Trump political appointees had made it nearly impossible for them to do their jobs.
▶ 3:10:32A week later, the administration fired two HUD whistleblowers who spoke out about the administration's gutting of Fair Housing Enforcement capacity. We can't sit here and act like this isn't happening. Miss Bailey, is the Fair Housing Act being enforced right now?
▶ 3:10:50No, ma'am. And and can I just say it's not being enforced at a time when complaints of housing discrimination that are led by people with disabilities are up. So we are at nearrecord levels of complaints of housing discrimination and complaints based on disability continue to lead. Complaints based on national origin are also on a significant rise.
▶ 3:11:10Yeah, I was going to ask you about trends right now and I heard that was one of them. Now, um, you know, I want to talk about CFPP because I think that's also really important and we we know that the CFPP recent proposed rule on regulation B of the Equal Credit Opportunity Act was important and Miss Bailey, can you talk about some of the proposed changes? And wouldn't the proposed rule basically allow banks to redline again?
▶ 3:11:34Yes, ma'am. And thank you so much for this question because this is one where I think every woman in our country should be alarmed. The Equal Credit Opportunity Act made it possible for women to get access to credit without needing a male co-signer. It is baby in terms of the years of enforcement.
▶ 3:11:53I just want people to know we couldn't get loans without a man signing the loan with us. Just just remember that. I know Miss Smith I cringe too, but go ahead, Miss Bailey. So, so, so for 50 years, we've had this legislation that has made credit more accessible and it has allowed us to use fair lending practices that simply made lending fairer.
▶ 3:12:17It removed obstacles and made lenders helped them to choose the less discriminatory alternative. And what they've since been able to do is design programs that are really profitable.
▶ 3:12:29It's literally my next question.
▶ 3:12:31Mr. Could could I just say for the record that what we are seeing um is that the largest growth sector for buyers here in the United States are single women. In fact, single women are more uh three times more likely to buy a home uh than single men. So we are coming going in the right direction. I would just like to say that.
▶ 3:12:53Well, Miss Bailey, I because you noted the black white home ownership gap and we we I mean Michigan lost more black home ownership than during the last recession than any um any state in our union. Um but it's higher now. The lack of black home ownership is higher now before the passage of the Fair Housing Act. And that just make is so unsettling to hear that. So simply reducing what they call roadblocks and supporting more of what they've been doing won't cut it.
▶ 3:13:20And I'm I wish my colleagues would understand that even though they think everybody's all well and it is actually still happening um through the banks and through these institutions and that's why we had to create laws to push back against it.
▶ 3:13:33And we were making tremendous progress. We increased black home ownership for the first time since the great recession of 2008. It grew from 2019 through 2024. The black home ownership rate grew That was incredible work that a whole group of us came together. This committee's leadership, leadership at the Federal Housing Finance Agency under Director Thompson, leadership at HUD under Secretary Marshia Fudge.
▶ 3:14:00So, we can do things that are going to give people fair opportunity and they may ultimately benefit everyone. What we know for sure is that discrimination distorts. And if we solve for discrimination targeted at black communities alone, our entire economy will grow by$5 trillion over a 5-year
▶ 3:14:17Yeah. And I know for many of our families, it really does create a lot of economic stability to be able to own our own home. Thank you. AU.
▶ 3:14:25Gentlewoman yields back. The gentleman from Michigan, Mr. Heisinga, who is the vice chair of the entire full committee, is now recognized for five minutes.
▶ 3:14:32Thank you, Mr. Chairman. And uh there's there's a lot to unpack. U I actually have some personal uh involvement in the industry uh when I graduated with my oho employable political science degree. Pause for chuckles from other political science majors. Um I I went into real estate full-time. Uh family has been involved in construction for a very long time. I have done a number of h single family housing developments.
▶ 3:14:58Most recently, our family did a uh a duplex, triplex, multif family uh development, 24 units, small. Um, but I've got a lot of personal stories uh surrounding some of those barriers that exist. Uh before I go into that, I do feel like I need to address a couple of the points that were made uh by my colleague from Michigan and Mr. Sears.
▶ 3:15:24you you made one of those and I believe uh Miss Bailey actually buttressed that which is heading in the right direction. You know, I know when I got my realtor's license in the early 90s, uh I was taught something very important. You don't look at color. You don't look at national origin. There is one standard and it's green. Either people can afford it or they can't afford it.
▶ 3:15:52And we've seen government policies both make it harder and frankly way too uh to get loans that people should not have gotten. Not saying that they should not have gotten a loan, but that they got a loan that they could not afford. And that has caused a significant part of that.
▶ 3:16:14When my colleagues talking about the the the dip in home ownership in Michigan, which was across all races, that was part of the reason is we had people that had arms that could not afford them. And we've had to step in to to tighten that up. And that pains me as someone who literally sold houses for a living and uh and still develops uh housing and still is involved in construction uh at at a level.
▶ 3:16:42Um, but uh, Miss Smith, I mean, I'm going to start with you. In your written testimony, you noted regulatory burdens have been a major contributor to the slowdown in new housing production. Um, I had that I' I've had where a township came in and said, "Oh, I'm sorry. We know that this isn't legal, but we're going to double assess your property because it's on a corner."
▶ 3:17:03Oh, and you want to fight us? Do you know how much it's going to cost in court? So, tell you what, why don't you just give us some extra money and we'll go away. You want to know where those additional costs went? Right into the cost of the lots. That's
▶ 3:17:16Not to mention, oh, we think the sight lines aren't aren't good. So, we'd like you to spend uh tens of thousands of dollars to take down a road, a hill, so it's not as steep. So, we've got better sight lines. When I inconveniently pointed out that maybe that was the county road commission, the the uh the answer was, "Yeah, but we think you ought to do it."
▶ 3:17:38All right. Uh not to mention uh when we're talking our values of of insulation and all of the other requirements that that have been put in in in place, uh there is some structural issues that have caused decline in home uh that have to be addressed. Uh the um so there I just wanted to point that out that uh that I appreciated your your your take on this. I only have a minute and 30 left.
▶ 3:18:07I got to go through this very quickly. I want to hit on one thing. Uh when Secretary Fudge testified before our committee uh last Congress, I pressed around a local housing project in Benton Harbor, Michigan called Harbor Towers. And uh although it did get some immediate press and and media attention almost two years later, the start of the multi-million dollar project to rehab it continues to be stalled. And we're working with this administration now to try to make that unstuck.
▶ 3:18:33Um, but I I can tell you firsthand that this housing complex is in dire need of immediate uh renovations. It shouldn't take an act of Congress uh to to have federal or any housing projects moved forward. But what can Congress do to tackle some of these barriers at the federal level?
▶ 3:18:50I think um one of the things it can do is to make sure that there's incentives um at the local level because so many of the regulations that you're talking about are done, you know, in local permitting departments and that sort of thing. And it's um uh um you know it can really vary depending on where you are.
▶ 3:19:08So having like real incentives to be able to fasttrack projects and to be able to get them built quickly without a lot of ownorous um um requirements would make a big difference. We've also found that tax abatements are incredibly impactful particularly when we're looking at like conversions from office buildings to um residential etc. My my time is expiring and Mr. Peter, I'm gonna have to go to you about the increase in in private capital coming into this.
▶ 3:19:38I'll take those as written, but I appreciate what you're doing. This we have to tackle this issue as a as a nation. Thank you. I yield back.
▶ 3:19:44Gentleman yields back. The gentleman from New York, Mr. Torres, is now recognized for five minutes.
▶ 3:19:49Thank you, Mr. Chair. The single greatest challenge confronting our country is the affordability crisis. A crisis so severe that it's become the death sentence for the American dream. If you were born in 1940, you had a 90% chance of out earning your parents. But for Americans born since 1980, that fighting chance at the American dream has collapsed to less than 50%. The American dream is dying of cost disease. And the leading cause of death is the cost of housing.
▶ 3:20:19And for proof, look no further than America's largest city, New York, which has become dangerously unaffordable for working families. From 2005 to 2024, the population of New Yorkers ages five and under fell by 1/3. From 2010 to 2020, 20% of black children and teenagers disappeared from the New York City census count. America's experiencing a reverse migration.
▶ 3:20:45In the early 20th century, African-Americans fled the south of the north in order to escape Jim Crow. Now, in the 21st century, African-Americans are fleeing the north in order to escape the affordability crisis. The scale of the need for affordable housing in America and especially in New York cannot be overstated. When the New York City Housing Authority reopened the Section 8 waiting list in June of 2024, for the first time in 15 years, a staggering 600,000 people rushed to apply.
▶ 3:21:16In the Bronx, the East Clark Place senior residents received a staggering 26,000 applications for just 84 units, a ratio of 300 to1. When 300 families are left desperately chasing after a single unit, that's not a housing market. That's a humanitarian crisis, pure and simple. Mr. Sears, what is the National Association of Realtors latest estimate of the gap between housing supply and housing demand? Mr.
▶ 3:21:46Torres, um the last three years, the National Association of Realtors reports that on average of around four million units have sold. The typical average uh year is 5.3 million. So just in the last three years um there have been almost 5 million uh I'm sorry almost 4 million units um that have not been on the market for consumers to buy.
▶ 3:22:08So over four to five million units in the aggregate. But of course, when we speak about affordable housing, the question that my constituents often ask is affordable for whom? And most of the affordable housing that we create is often unaffordable to the poorest families in America. The National Low-Income Housing Coalition estimates a housing gap of over 7 million units for the lowest income families.
▶ 3:22:33And so even though the United States has a deficit of more than 7 million deeply affordable rental homes, federal spending on expanding the housing supply amounts to a mere fraction of a percent of the federal budget. A mere fraction. Miss Bailey, do you think that housing should only receive a fraction of a percent of the federal budget?
▶ 3:22:56No, not at all. It's only getting less than 2%. And housing is a fundamental right. And as we heard, it is accounting for nearly 20% of our nation's GDP. Instability in the housing market means instability in the economy. And if you would permit me, there was a statement made earlier that people only see green.
▶ 3:23:21Our lending experiences and our housing experiences showed that discrimination complaints are at record highs. People see people for who they are, how they show up, and they choose to treat them differently, oftentimes based on their immutable characteristics, but also to your point, their source of income.
▶ 3:23:40I also think how history flatly contradicts the notion that the free market was sufficient to abolish Jim Crow. But, you know, that's why we needed the Voting Rights Act and the Civil Rights Act.
▶ 3:23:49But given the decal credit opportunity act and the Home Disclosure Mortgage, you know, we could go on.
▶ 3:23:54All of which are under assault. Given the decades of disinvestment for from affordable housing, do you think Congress has been part of the solution or part of the problem?
▶ 3:24:03So, Congress did something brilliant during the CARES Act and the American Rescue Plan. Congress put in an infrastructure. This committee under the leadership of then chairwoman Waters and then when she was ranking member put together an infrastructure that allowed us to maintain people at home during the COVID crisis. that funding was so critical that we maintain renters and it's so important because as we know most renters have little savings.
▶ 3:24:29So if we do things like go in today and take back those CARES Act provisions that limit the ability to evict families, we are putting more people at jeopardy of homelessness. We're ultimately going to pay for that. We did right by veterans and now we need to take those same lessons and apply those to our lowest income renters.
▶ 3:24:48I just want to end quickly. Look, I'm all for regulatory reform, but we need regulatory reform in addition to reinvestment, not in the place of reinvestment. Let let us not create a false choice where one need not exist. Gentlemen, I yield back.
▶ 3:25:01Gentleman yields back. The gentleoman from California, Mrs. Kim, is now recognized for five minutes.
▶ 3:25:06Thank you, chairman and ranking member for hosting this hearing. And I want to thank all of you for joining us. We're almost done. California's housing market is one of the worst in the nation.
▶ 3:25:20And as a member who represents California, it saddened me to say that just last month, California earned F rating for housing You know, since I got here as a member, I have fought relent relentlessly for housing affordability at the federal level. But there is only so much that we can do when Sacramento and Gavin Newsome are driving so many failed policies.
▶ 3:25:48Earlier this year, as you know, um when we were working on one big beautiful bill, I secured four times increase in the salt deduction to $40,000 to make home ownership in California more attainable. Mr. years. As you know, I represent Orange, San Bernardino, and Riverside counties.
▶ 3:26:08And in my area, a family needs to make $367,000 to afford a medium-priced single family home. And I want you to please discuss what the effects of increasing the salt deduction to $40,000 means for housing affordability for constituents like Uh thank you, Miss Kim. Good to see you again. Good to see you.
▶ 3:26:35Yes, the increase in in salt from 10,000 to 40,000 is very important. Uh as well as securing um the mortgage interest deduction uh in the uh bill passed this year. Um these are very real costs and I always find it ironic that um citizens would have to pay taxes on taxes they've already paid and so anything that can be done to increase that.
▶ 3:26:58Um, in 2017 when the tax cut and jobs act was put into place and the $10,000 limit was there, there was no indexing for inflation. Uh, and again, unfortunately, I don't see an indexing for inflation. Now, um, we do know based on historical uh, numbers, the cost of housing and housing ownership is going to go up. I would encourage the Congress to look at any tax measures like this to bring up to date to put into in put indexing in along with the capital gains exclusion that was set in 1997.
▶ 3:27:29Thank you.
▶ 3:27:29Thank you very much. You know, as tax filing uh season begins, I hope that Californians remember to utilize this key deduction to attain their dreams of home ownership and keep more of their hard-earned dollars in their pockets. Um during the recent California fires, there is a short-term rentals. They play critical role in providing emergency housing for displayed residents, fire responders, and uh relief workers.
▶ 3:28:00So question to you, Miss uh Smith. How can Congress better support and scale partnerships between state agencies, local governments, and short-term rental uh platforms to ensure that flexible housing options remain available during natural disasters?
▶ 3:28:18Yes. Um it's a very good question, Representative Kin. We um after the the wildfires, we housed so many people in our Santa Monica communities and um Santa Monica had a 12-month lease requirement.
▶ 3:28:33And so we had to we had to actually work around that and to be able to have people sign leases and letting them know that they could break their lease so that they could have any lease term that they needed um in addition to um lowering any type of deposit or application fees or that sort of thing. And so, um, one thing, um, one thing Congress could do would be to work with local jurisdictions, particularly on their, um, lease length requirements.
▶ 3:29:02So, when there is a natural disaster or something like that, that um, that that would uh, that could be overridden. Um, so you could have shorter lease lengths. um and um working with the short-term providers on streamlining um access to housing so that they could get into housing very very quickly. So I think there are a lot of incentives that would be very very impactful.
▶ 3:29:26You know another incentive that I co with my colleague representative Lawler is the community investment and prosperity act. This bill would increase the public welfare investment cap on banks from 15% to 20% that would enable further investments into the uh LITAC low-inccome tax credit. Um Mrs. Smith again to you. How would the passage of the Community Investment and Prosperity Act help address the shortage of affordable housing units that our country face?
▶ 3:29:57Um I I can't speak directly to the act, but we have um done a fair amount of low-inccome uh uh uh lit work over the years. And one of the things that's very it's a fantastic program. It's probably been one of the most effective programs in producing um affordable housing. But one of the challenges is lining up all of the capital sources because it all has to
▶ 3:30:19The gentleoman's time is expired. The gentleoman's time is expired.
▶ 3:30:22Thank you very much.
▶ 3:30:22So that would be helpful.
▶ 3:30:23Gentleoman yields back. The gentleoman from Texas, Miss Garcia, is now recognized for five minutes.
▶ 3:30:31Uh, thank you, Mr. Chairman, and thank you to all the witnesses today. And I apologize I had to step out for a few minutes. And I hope that that some of the area that I'm going to cover is not going to be redundant, but I know my first words will not be redundant. Mikasa sucasa. a simple phrase that's used in my community to simply be proud of their home and making it a welcoming home.
▶ 3:30:55It simply says, "My house is your house." But in reality, we're currently facing a severe shortage of affordable homes made worse by wages that have not kept up with skyrocketing rents. Mr. Sears, you put it another way. You said, "The American dream is slipping away." Our job, of course, is to make sure that we ensure that dream for everyone. So, I couldn't agree more.
▶ 3:31:19Earlier this year, the housing subcommittee heard directly from the National Association of Homebuilders on the impact that this administration's mass deportations and the very fear of deportations have on housing construction. Mr. Sears, you and I both agree that construction workforce is stretched thin. The construction trades agree, especially when 61% of plasterers and 61% of drywall and ceiling installers in the workforce are immigrants.
▶ 3:31:48A recent survey found that 92% 92% of construction firms can't find enough workers. And as as a district that has the distinction of having the most construction workers in the country, I'm very concerned about this. So, Mr. Mr. Sears, do you think that this fear of is an obstacle and a barrier to the supply chain? And should we not in housing also consider that?
▶ 3:32:16Here's the reality, Mr. Garcia. The average age of a American trades person is they're in their 50s. We have not done a good job of developing um the young people to get into the trade. So, we need to do that. And what the uh what we are all for is making sure that the skilled trades people that we need.
▶ 3:32:35But I didn't ask about the trades. I'm asking you specifically about the fear of deportation work sites that do not have the the the uh the workers there because they're afraid of coming to work. I I I know about work training. I've I've done this work a lot for a long time.
▶ 3:32:52I'm not in a position to speak about deportation. I'm sorry, Miss Garcia. So, you've not read that people are being raided at work sites.
▶ 3:32:59What what I would encourage uh the administration to do is to uh allowed skilled workers to be able to legally work here in the country, whatever that takes. And if the Congress can do something, I would encourage
▶ 3:33:11Well, I'm intrigued because all of y'all have been talking all morning and you all have not faced sub to the the worker shortage. And if 91% of the workers are immigrants, it seems to me that that's an obstacle and and an issue that we also need to address at some level here in this committee. Uh I'm on the subcommittee, as you know, on housing and insurance. Uh and you you know, we really shouldn't dance around it. The reality is you if you don't have the builders, then you're not going to have the homes.
▶ 3:33:42Well, you do agree with that. Well, good. Uh, so in your opinion, do you think that that we should be looking at
▶ 3:33:51In order to keep skilled workers in the in the country, absolutely.
▶ 3:33:55No. In order to make sure that we can build homes,
▶ 3:33:58we need to build more homes. Yes. And how do we do that? We need the workforce. So any workforce that we have or can encourage to be here, we need to do that.
▶ 3:34:05All right. Well, let me move on to another one that that that you all seem to be dancing around is this whole tariff issue because we also had um u we I specifically asked the um the homebuilders this question too.
▶ 3:34:19The text te tax policy center found that terrorists would add roughly 30 billion 30 billion to the cost of investment in residential structures or about8 to $10,000 per home because as we know the white lumber that's used for framing most homes um comes from Canada and Canada I believe had the 10% and then plus another 20 25%. Mr. Sherman went through a lot of this.
▶ 3:34:47Miss Smith, uh, since you represent a multif family housing room, how are tariffs impacting your bottom line?
▶ 3:34:54Well, we are trying to figure that out. I did want to make a comment about the immigration because not only do we need people to build homes, we need people to take care of homes. So, in the multif family environment, we have teams of maintenance workers who are keeping up these communities and making sure that people's homes are well cared for. and um it is very dependent particularly on legal immigrant labor. All right. So I think it's important let's get back to your bottom line that tariffs have impacted the
▶ 3:35:24we believe that they will have a significant impact but like I said the subs are
▶ 3:35:30agree that it's going to be between 8 and 10,000 per home.
▶ 3:35:33We don't know. We don't know. We don't know because they move they're moving around so much. We don't really
▶ 3:35:39Mr. Chairman, I would ask for more detail in that response from the witness. Without
▶ 3:35:46Without objection.
▶ 3:35:47Thank you.
▶ 3:35:48I yield back.
▶ 3:35:49Gentlewoman yields back. I now recognize myself for five minutes. We have heard a lot from our witnesses today about different policy ideas and regulatory barriers that hold back the development of more housing. I think at the core of many of these ideas is one basic fact. We need to build more housing. I mean, it's simple. There are many factors that have led to our current environment where housing supply has failed to keep up with demand.
▶ 3:36:13While some of those factors are beyond the remit of Congress, there is a universal there is a universe of federal barriers to housing supply that we are working on addressing in this committee. I want to spend my time today focusing specifically on one of those federal barriers that I feel is worth some attention. Build America by America or BABA. These requirements were enacted as part of the infrastructure investment and jobs act signed by President Biden in 2021.
▶ 3:36:42The statute states that BABA applies to infrastructure, but a decision by the previous administration has applied by America requirements to federal housing projects in addition to hard infrastructure projects. Sadly, that decision has had disastrous effects. While a hard andf fast baba requirement may make sense when building a bridge made of steel and concrete, it makes less sense when you think about all the different components that go into building a home.
▶ 3:37:11And fundamentally, this policy betrays a basic reality of federal housing programs. If we are aiming to take finite federal resources and use them to build housing, we need to be able to scale those dollars as efficiently as possible to make it work. In other words, in order to build more affordable housing, we must use federal resources to build housing affordably.
▶ 3:37:35I recently asked affordable housing groups to bring my office anidotes demonstrating the effects of BABA on projects, and I'd like to take a moment to share some of the stories. One developer in the southwestern United States had this to say about BABA costs, and I quote, "For a 60-unit affordable housing development, we estimate these soft costs could be in upwards of For example, each project will now need to hire a BABA consultant to manage the waiverss. That's 50 to 100,000 a project.
▶ 3:38:02General contractors will need to increase their administrative time on projects to manage compliance, another 100,000. And architects and designers will have additional administrative time, another 50,000. We heard the following about a project in Massachusetts related to BABA costs. and I quote, "The Baba materials cost increase is estimated to be $193,000, a 17.7% increase or greater than 15 of the home HUD award that triggered the BABA requirement.
▶ 3:38:31We heard this about a project in Wisconsin for a 45 unit project with a construction budget of around 8.5 million. The BABA impact was estimated at over $400,000. The home award that would trigger BABA requirements was around $700,000. So more than half of the federal home partnership program money would be used to pay for BABA compliance. We heard this about a project in California.
▶ 3:38:57Quote, "On one project in central California, 80 units, BABA requirements resulted in an increase of approximately 1.3 million." And we heard this about a project in Montana. quote, "A project to provide homes to families experiencing homelessness lost the opportunity to use of a $1.3 million housing trust fund grant that expired on September 30, 2025.
▶ 3:39:22The contractor was unable to find products made in the US to complete the utility work in time because US products were on back order. I have more of these. I could go on and on and on, but the reality is that however well-intentioned it may be, BABA is driving up the cost of projects, wasting federal dollars that could be going to building more housing, and in some cases, it's even killing projects entirely. With the little time I have, Mr. Sears, Miss Smith, Mr.
▶ 3:39:51Peter, can you briefly please share with us your opinion on the cost associated with the Build America Buy America requirements for affordable housing projects? Mr.
▶ 3:40:01thank you, Mr. flood. And while the Baba rules were well intended and I think meant for larger infrastructure, the reality is is that when builders get stuck uh waiting for waiverss um or searching for substitutes or having to pay higher prices, the impact goes right down to the the end consumer.
▶ 3:40:20Thank you very much, Miss Smith. Um yes, we've um been talking to our subs and we think that the um that the imp the incre the increase per unit would be somewhere around four to 5%.
▶ 3:40:31Thank you, Mr. Peter.
▶ 3:40:33Yeah, I I agree. I mean, all levels of government just need to get out of way and you highlighted a great example
▶ 3:40:38Well, I appreciate everybody being here. I appreciate my colleagues on both sides of the aisle. Uh while we may have disagreements on policy, this committee is functioning the way I had hoped Congress would work uh before I got here. So with that, I yield back. Uh the gentleman from California, Mr. Licardo, is now recognized for five minutes.
▶ 3:40:57Thank you, Mr. Chair. I want to thank the chair uh both the subcommittee chair as well as the full committee chair um for their collaboration. Uh we don't hear that word very often in this congress and I think in this committee there is some collaboration. I really want to thank them for their leadership. So as a ranking member Waters, my ranking member Cleaver um for their very strong leadership uh and in particular that the we are taking this housing crisis uh like it is a crisis.
▶ 3:41:25Perhaps not all the ideas and solutions I would prefer are on the table. I understand that's how it works. Um when you're not in the majority uh but I appreciate the fact that we're actually seeing legislation that will be soon coming to markup. I'm very eager to see that happen and hopefully very soon also to the floor. Uh, and I want to thank in particular Chair Flood for reaching out uh, even to a rookie like me very early on to say we're interested in in all our committee's ideas. And so I appreciate that effort.
▶ 3:41:53Um, obviously I I come from I know we all probably come from a place that's affected by the housing crisis. I'm from Silicon Valley. We consider ourselves sort of the ground zero of it. Uh, and there are many uh, many fingers to be pointed in different directions. And we can all talk about supply and the urgency of more supply and all agree with everything everybody says about more supply. I still of the viewpoint that I haven't seen an economist who thinks that if we do everything right on supply, we're going to see rents fall by more than 10 or 15% over half a decade.
▶ 3:42:22We're still going to have 13 million households uh that are extremely low income that are never going to be able to afford market rate rents. Uh and so we have to do something on things like vouchers which are badly underserving right now uh our country. I think only one out of every four families actually qualifies gets a voucher. Uh yes, we do need some demand side solutions as well unfortunately because the market is just not going to fix it all no matter how well we fix the market or allow the market to operate.
▶ 3:42:51I I do really want to thank um appreciate the fact that uh and thank the leadership for the fact that um uh you know we've got several bills uh that I've been leading or co-leading that are in consideration. There are other additional bills I'm hoping we can discuss in the future uh including the unlock act HR5150 uh that chair flood and I introduced uh to better utilize existing federal resources for housing construction which really resulted from local response to an RFI that uh the
▶ 3:43:21chair and ranking member Clever issued uh and city and my own community city of Mountain View responded identified some challenges they have barriers with CDBG and and we're trying to fix those and I I appreciate the the process they started and I want to make sure we finish it that is responding to the local needs. Uh coming soon there's going to be a bill under draft uh now to incentivize conversions of office and commercial space to housing and I look forward to to working with my committee colleagues to make that happen.
▶ 3:43:50Um, and I really want to appreciate uh first uh Miss Smith, uh your company is my landlord, so I'm hoping that um you will let your colleagues in um accounts receivable know that the checks in the mail. Um uh and I I I want to appreciate uh Mr. years.
▶ 3:44:08Realtors have been very supportive of a couple bills that Chairman Flood and I have worked on, HR 4810 and and 4660, both to streamline uh reviews for uh affordable projects, particularly federally assisted affordable projects. We appreciate that. I want to ask if you could go back to your uh colleagues over at the Realtors to take a uh a look at HR50, I'm sorry, the supply Act.
▶ 3:44:34You might have guessed um I introduced it with Congressman Garbino, another bipartisan bill. Uh and this is to expand FHA mortgage insurance to finance uh second lean loans for accessory dwelling units. It comes from my experience as a former mayor of a large city of San Jose with a million folks and we have a housing crisis and we thought one solution might be to try to make it easier for homeowners to be able to get permits and build ADUs or granny flats as they're often known.
▶ 3:45:01Uh and what we discovered uh when we went to the private sector and lots of pre-fabricated companies came forward with 20 different models and we put those models on our website and we allowed homeowners to be able to get their permits in a day by going online because we streamlined in advance all the permitting and approvals so folks could get them. We saw a huge increase in permits uh that went from 15 a year to about 900 a year.
▶ 3:45:28We thought we're really on to something and we're patting ourselves on the back and then we discovered only about half of them got built because homeowners couldn't get financing especially if they were modest income. They didn't have enough equity. Uh we know that Fanny May and Freddy Mack get in this game. Uh we could see a real opportunity, an explosion that could enable many homeowners to become home providers and I know that's something uh that the realtors might care about and so I very much appreciate the realtor's engagement on this. Yes, sir.
▶ 3:45:58Thank you. [laughter] Gentleman yields back. The gentleman from New York, Mr. Lawler, is now recognized for five
▶ 3:46:05Thank you, Mr. Chairman. Housing affordability is a serious crisis in our nation right now and gets to the heart of the affordability concerns being felt by most Americans. For many, it is the most difficult time to purchase a home in a generation. And at the heart of this crisis is supply. We are probably over 8 million units underbuilt nationwide at the moment.
▶ 3:46:30And this is despite massive federal spending to support housing, over 1.2 trillion spent on programs run by HUD since 2000. It is going to take a serious re-evaluation and reform of our federal involvement in housing to actually focus on the substantive issue, which is supply. This has been a key priority of mine and I'm proud to have several bills that are attached to this hearing.
▶ 3:46:58In focusing on unleashing construction to meet our needs, we need to be ensuring that we're taking a comprehensive review of housing policy and spending, hearing from the secretary and looking not just at the critical programs that support low-income housing, but at middle class housing and workforce housing as well.
▶ 3:47:17Housing for the elderly, housing for the ID community, housing in all communities across our country which have unique needs at this time of years. At this at a time in which we've seen raised rates, sustained affordability concerns, and the ongoing battle to finish bringing down inflation, middle inome buyers face a unique challenge causing them to fall through the cracks. not poor enough for assistance, not wealthy enough to compete.
▶ 3:47:49And I would echo Miss Wagner's sentiment from earlier in the hearing, uh, that we need to pursue reforms that could expand attainable home ownership for middle inome buyers. Mr. Peter, expanding beyond your earlier answer on minimizing lot sizes, how can we ensure we're incentivizing the financing and construction of starter homes?
▶ 3:48:10Yeah, thank you for the question, sir. the short answer is if we have small lots the builders are going to build. That's what we're finding across the country. Um and we don't necessarily need federal programs. Um in California, we just heard about it.
▶ 3:48:27the ADUs came out of nowhere and um the the finance people find the financing the same in Seattle where in back in the 1990s um um zoning law was changed in the private sectors felt the vacuum by providing financing for for the How can federal reporting or data collection help identify where regulatory barriers exist without implying that Washington should dictate how towns and counties plan their neighborhoods?
▶ 3:48:57You know, New York is a home rule state. I support home rule. I support local control of zoning. But how do we take the data and actually utilize it in a constructive way?
▶ 3:49:08Yes. So, from our case studies, we've distilled the lesson what we call the housing abundance success sequence. It's very simple. You need to allow by right zoning. So take the discretion away. The second is you need to allow smaller lot sizes. And the third one is you need to allow faster permitting. Um and keep it short and simple regulations. Once you make it complex and complicated only the people only the builders which large staff can navigate it.
▶ 3:49:34If you keep it short and simple then small builders that may be lawn care professionals today they might see the opportunity to get into the game and build housing. So we don't need we don't need a lot research on this. We already know what
▶ 3:49:50Appreciate that. One other measure uh that has had a disastrous impact in New York for instance uh that disincentivizes investment in housing and contributes to grazer greater housing scarcity is rent control. uh and the concept of freezing the rent uh which uh seemingly is uh all the rage in New York City right now.
▶ 3:50:15Um but we've seen in New York City for instance 50,000 vacant units uh as a result of New York's rent control laws that were passed in 2019. Mr. Sears, as we prepare for the Mandani regime uh to take over New York City, can you speak to the impact rent control policies have on housing supply and affordability?
▶ 3:50:39It has a dramatic impact. Uh rent control units uh less frequently come on the market, which um excludes people from moving into them. Uh it also uh scares away potential investors and builders who would want to build in the community but not knowing if they will be able to get a return on investment. Um they will look elsewhere to build.
▶ 3:51:02Appreciate that. And Mr. Sears, in the 3 seconds I have left, did you appreciate the increase in salt?
▶ 3:51:09Thank you, Mr. Lawler. Thank you. I yield back.
▶ 3:51:13Gentleman yields back. The gentleman from Texas, Mr. Gonzalez is now recognized for 5 minutes.
▶ 3:51:18Thank you. Thank you, uh, Mr. Chairman, and and thank you for the committee, uh, for our witnesses to be here today on such an important topic. Um, I know we're talking about a lot of interesting and important policies that impact the housing shortage in America, but there seems to be an apprehension about talking about a root issue, which is the labor shortage, which is impacting the construction of new housing in this country. And I think we can't fix a problem if we don't admit we have a problem.
▶ 3:51:4730% of construction workers in America are immigrant labor. In Texas, it's 40%. Just recently, I met with homebuilders in my district that showed me videos of job sites that look like ghost towns. And we can't fix this problem if we don't address it. And and I know Mr. Shears, you talked about uh workforce training and certainly that's something that we need to address in this country. And it's a long-term solution, right? It's not something we're going to fix today.
▶ 3:52:15But what are we doing today to talk about the labor shortage? We can't build homes without people, hardworking people, which are immigrants. They're doing they're building America. It's not American labor force born and raised in America that's building this country. It's labor that's coming from other countries that are doing the hardest work in this country and building homes and affordable housing as part of it. Um, Miss Smith, are your members talking to you about this and what are we doing?
▶ 3:52:44Um, yes, they they certainly are and I'm experiencing in my own company because it's not only just um the um immigrant labor that's used to build apartment communities, but again, those that maintain them,
▶ 3:52:57our um our contractors that paint our apartments, that clean our buildings, that sort of thing. And so it really does impact our ability to be able to provide the kind of experience that we want for our community. So it is a it is a very big challenge that we face right
▶ 3:53:12Yeah. And also on affordability, I was told after these ice raids recently in the country that uh the square footage for framing in my district almost doubled because of the labor shortage. So that's putting a real squeeze on housing and and Mr. Sears, we shouldn't be shy about it. We should be honest and and forthcoming and and just tell people we have a labor shortage. And I don't know if they're documented or undocumented, but they're doing the work and they're they're building our country and we have to admit it. We can't be hiding from the issue because we can't resolve it if we do.
▶ 3:53:42Well, it'll also increase cost,
▶ 3:53:44Mr. Won't be as many
▶ 3:53:46and we and it's okay, right?
▶ 3:53:48Thank you. Because we do support immigration reform. We support, you know, having people come in uh to increase our workforce and including uh work visas. I mean, we need this.
▶ 3:53:59We need more work visas. We've been fighting for them for a long time. But but the ice raids that are happening right now are having a direct economic impact on construction in this country and we can't hide from it. We have to admit we have this problem or we can't we can't solve it. Right. Thank you. Um uh Mr. Sears, thank you for joining us today.
▶ 3:54:19By the way, in the real Grandandy Valley, the district that I represent, the average home price is $200,000, which on paper looks far more affordable than many places in the country. But in this part of the district, people's medium income is $55,000. That means most families may never have the savings to buy a home with cash. And because these mortgages tend to be smaller, many lenders won't offer them since they're less profitable under the current market conditions.
▶ 3:54:46So even in areas where housing is relatively affordable, too many working families are effectively iced out of home ownership from every angle. Mr. Shears, what steps can Congress take to help financial institutions incentivize them to offer smaller dollar mortgages in communities like mine and um and to keep them from shutting out of this market.
▶ 3:55:09Uh the affordability crisis is everywhere across the country and in markets that seem might seem more affordable um there is still sticker shock for your constituents for example and so what we could do is open it up for community banks um smaller local banks or regional banks uh and to incentivize them to to make these loans. I I will just say I have not heard a mortgage officer say no they don't want to do a loan because it's too small because the bank will still make money but it's a matter of how do they get access to that credit
▶ 3:55:40very well
▶ 3:55:40if I may sir I need to share that the liquidity programs and the equitable housing finance uh programs of Fanny May and Freddy Mack actually included support for small dollar mortgages but unfortunately the federal housing finance agency director has taken away those uh equitable housing finance goals so this is why oversight is so critical because we actually had a mechanism for doing it.
▶ 3:56:03And then the chairwoman has a bill where she's recommending that HUD actually conducts a study for how we can create more liquidity within the FHA program for small dollar mortgages because there are affordable homes throughout our nation. But to your point, without having access to safe and responsible financing, people are not able to assess it.
▶ 3:56:21Thank you. Thank you. And for the record, I'm sponsoring a bill called the Save the American Workforce Act. I encourage y'all to look at it. It will take it addresses undocumented workers who are here that haven't had any legal trouble. Thank you.
▶ 3:56:36Yields back. The gentleman from Indiana, Mr. Stzman, is now recognized for 5
▶ 3:56:42Thank you, Mr. Chairman, and thank you all for being here. I'm I'm happy to say that Indiana is one of the most affordable states for home ownership in the country, but the dream of owning a home is still far off for a lot of Hoosiers, especially today. Uh because during the Biden administration, the median price of a home in Indiana increased by nearly $100,000. Uh Miss Smith, I'd like to start with you. Uh during the Biden administration, inflation increased the cost of construction materials, labor, and now insurance.
▶ 3:57:10Uh and it's clear that a big reason for our housing problem is a lack of supply. Uh how have increased costs impacted the ability of developers to build new housing? Well, I think we're seeing it in the fact that our starts are down 35%. Um, just to give you some context, you would need about a 6% return on cost to get a project financed today with a say a pension fund um or an insurance company.
▶ 3:57:36And um with the uh the costs where they are and the land and the regulations, the soft costs, we just can't get there. And so it's really just uh it's a return on cost issue today. Yeah, economics is is playing a key role in this. Uh to follow up on Mr. Lawler, uh while we're discussing new development, pointing out that the newly elected mayor of New York City and other far-left mayors in this country have endorsed things like rent control. Mr. Peter, I'd like to ask you, uh do you think rent control or uh rent stabilization policies encourage
▶ 3:58:07Um, no. They discourage development. And there's a pretty robust economic literature and that's one of the reasons where e economists generally don't agree on anything except that on rent control they agree that it's uniformly bad and there have been plenty of examples from uh internationally where rent control was implemented that shows that it had not the desired effects and in fact in Argentina the Wall Street Journal just wrote about this recently once they repealed rent control actually more units came on online because people were sitting on them not renting them because they couldn't make the
▶ 3:58:38costs work and now they um returning them to the market.
▶ 3:58:41Sure. Thank you. In addition to increased costs, it seems that uh government roadblocks are exacerbating this issue. Uh that's why in August I introduced my streamlining rural housing act alongside Senator Moran. And so I'm I'm pleased to have bipartisan uh support along with our conference chair, Miss Mlan, as well as Miss Peterson and Mr. Scott.
▶ 3:59:00My bill would require HUD and USDA to develop a joint environmental review and an inspection process for rural housing projects, cutting red tape and making affordable rural housing easier to build. This is not only necessary uh a necessary solution, but an important step towards making it easier to build new homes. Mr.
▶ 3:59:20Shears, I want to ask and I'm honored to have the realtors supporting this bill and others like this, but can you discuss a little bit how the overlapping rules and regulations across federal agencies make it more difficult to uh construct new
▶ 3:59:36I'm very happy to say we support the bill as well. Uh anytime there are duplicative efforts, it takes longer and it costs more. Streamline it, have one review and that will make things quicker, more affordable. Yeah, I know one thing, you know, just coming from a business background, it's not that I'm would be frustrated with a regulation. It's often the speed of getting to a conclusion and getting that permit so you can move forward.
▶ 3:59:59And I think that's where this is really a key, uh, piece to letting the economy move quicker, still having the same regulatory outcome, uh, but just much quicker. I want to follow up to that. How do we um target reforms like my bill improve the how do they uh these reforms improve the environmental review process while still maintaining the necessary environmental protections?
▶ 4:00:25Yes. I mean, as you said, we need to make sure that the protections stay in place, but having it streamlined one uh inspection process, uh that that is very important and that way we make sure that we have the the safety that is needed for uh the eventual um occupants of the
▶ 4:00:42Yeah. Anybody else want to comment on the idea of streamlining regul uh the
▶ 4:00:50That's fine. I I know that zoning laws are set at the state and local levels and the federal government has no business in micromanaging state and and local officials, but uh I do think it's important to emphasize that housing affordability is not an issue that can be solely fixed at the federal level and that we need buyin and smart policy from our state and local partners to help spur growth. Um Mr. Peter, I'm pleased to to see you mentioned zoning in your testimony today.
▶ 4:01:18What are some places that have u overtly restrictive zoning laws? Can you mention anything quickly?
▶ 4:01:26I mean most of the country.
▶ 4:01:27Most of the country [laughter] got a lot of work.
▶ 4:01:29That's a problem. I I could you know if you ask me the the places that have less restrictive zoning laws. So for example, Houston um has done a great job back in the 1990s and the 2000s. They've rolled back minimum lots lot size requirements and um they had a big increase in home home construction.
▶ 4:01:46Thank you. Gentleman yields back. The gentleman from New York, Mr. Meeks, who is the ranking member of the House Foreign Affairs Committee, is now recognized for five minutes.
▶ 4:01:57Thank you. And I'm thrilled that the chairman has convened this hearing, giving us all an opportunity to discuss the housing affordability and supply issues, as well as our as well as share our proposals to address this crisis. This includes my uh bipartisan bill that I recently reintroduced with Congressman Sessions known as the Mortgage Insurance Freedom Act.
▶ 4:02:20The Mortgage Insurance Freedom Act is a straightforward and common sense fix that will make a real difference for families across the country. It would end the FHA the FHA's lifetime mortgage insurance requirement and return to the system that existed before the financial crisis. Under this bill, FHA loans would operate like those in the conventional market.
▶ 4:02:45Once a borrower has built enough equity, they would no longer be required to pay monthly mortgage insurance installments immediately cutting their monthly So also right now the FHA borrowers who are often firsttime home buyers and young families must continue paying mortgage insurance for the entire life of their loan even after they have gained
▶ 4:03:15substantial equity. This policy has created or was created during the financial crisis when the mutual mortgage insurance fund was under significant strain. That is no longer the case. According to last year's FHA annual report to Congress, the MMI fund is now more than five times above its required capital ratio. Conventional borrowers are not subject to a lifetime insurance requirement.
▶ 4:03:42Once they build sufficient equity, their mortgage insurance ends. My bill ensures that the FHA borrowers receive the same fair and reasonable treatment and are not burdened by unnecessary monthly costs long after they have demonstrated financial strength. In today's economy, that relief matters. Ending lifetime mortgage insurance means more money for groceries, child care, college savings, and everyday expenses.
▶ 4:04:10It helps families build equity faster and strengthens their long-term financial stability. This bill is endorsed by the Mortgage Bankers Association, the National Urban League, and the Broker Action Coalition among others. And these organizations understand the housing market and recognize that this reform will help families keep more of their hard-earned dollars.
▶ 4:04:32The this legislation delivers greater fairness, boost affordability, and accelerates wealth building for American families by allowing mortgage insurance to end once borrowers build equity. We give FHA families the same pathway to financial stability and conventional home owners already enjoy. And so I look forward to talking to you and working with my colleagues to move this bill forward as we go forward. But I want to switch gears.
▶ 4:04:58I'm just looking at my time to another important issue that I'd like to discuss because back in March of this year, FHA director Bill Plute re released a directive eliminating the GSE's participation in specialurpose credit programs. These programs provide the down payment help, closing cost assistance, and other support that many firsttime buyers and families in underserved communities rely on to get their foot in the door of home ownership.
▶ 4:05:28And I immediately led a letter along with my colleagues to the director urging him to reverse that decision. For far too long, structural disparities in our housing and lending markets have kept too many lowincome families like my parents and Rio residents and other historically marginalized communities on the outside looking in. Every single day, it seems to me that the Trump administration finds a way, a new way to make life harder and more affordable for regular and average everyday Americans.
▶ 4:05:57From cutting off these credit programs to pulling back on the CDFI fund to attempting to shut down the CFPB, their actions are making it harder for families to get ahead and pushing people further behind. Miss Bailey, what are you hearing from lenders, housing counselors, and community groups on the matter of losing special purpose credit programs, and how does it impact families to get ahead and have the opportunity to home ownership?
▶ 4:06:24Particularly for people who live in the south where people have historically lower credit profiles than people in the rest of the nation, there's deep concern that there will not be credit liquidity there. The GSC's have not always done a great job of ensuring broad credit liquidity in every community at all times, including in the south. So, special purpose credit programs in that region have really lifted credit opportunities for everyone and for people of color who have a history of underser.
▶ 4:06:52And it's important to note that these are the people that the health of the housing system depends on. So, if they are not able to get access to fairly priced loans, the system will
▶ 4:07:04Thank you. Yield back.
▶ 4:07:05Gentleman yields back. The gentleoman from Texas, Miss Dea Cruz, is now recognized for five minutes.
▶ 4:07:12Thank you, Chairman. I appreciate you and you holding this meeting today. And thank you to all of the witnesses for being here. Where I live, which is in deep South Texas, affordability and specifically housing affordability is at the top of their mind. Especially for the young families and young adults that are getting to that age of beginning their life in a new family.
▶ 4:07:41Um, affordability is something that we must tackle and unfortunately consumers looking to buy or rent are being hurt by all angles and the primary driver to housing costs have been the decades of underdevelopment that has left us short 5 million housing units.
▶ 4:08:05That being said, I'm sure all of our witnesses would agree that the FHA multi-family insurance programs play a critical role in incentivizing housing construction nationwide. I've introduced the HR6132, the Housing Affordability Act, to update FHA's multi-family insurance program for the first time in over 20 years.
▶ 4:08:34That's quite a bit of time. A lot has changed since then. And um this is to ensure that they more accurately capture the true cost of constru of construction. So Mr. Sears and Miss Smith, I am proud to say that the organizations that you represent are supporting this legislation and I'd like um you to explain how changes like these can leverage and incentivize private investment to expand the housing supply. Mr.
▶ 4:09:03Sears, I will start with you first.
▶ 4:09:05Miss de la Cruz, thank you very much. And yes, the National Association of Realtors does support this effort. Um, we see have talked about uh too many uh rules and laws that have gone unchanged. And so 22 years is a long time. Um, but what we see is these outdated limits block uh the potential uh financing for these projects. And when financing is blocked, that's going to uh prohibit um the construction that is so desperately needed.
▶ 4:09:32Uh so updating this, unlocking the private investment uh would be cru would be key to helping to solve the housing crisis.
▶ 4:09:39Thank you so much. And Miss Smith, would you agree with this?
▶ 4:09:42Absolutely. Um like I mentioned earlier, the 221D4 program is is really an excellent one for multifamily. Um because costs have gone up so much over the 20 years as you um represented. Uh we need to extend the loan limits. So today there are so many projects that are just that cost so much more to build than would fit into the program today.
▶ 4:10:04So we think that that in addition to really expediting the process and and really shortening the waiting period will make a big difference in the use of this program but we are very supportive of it.
▶ 4:10:16Thank you. And uh Mr. Peter to change topics. Many people might be surprised to learn that most government housing programs focus primarily on stimulating demand while ignoring the supply constraints that we have. What role can government programs play in better incentivizing supply of new housing construction rather than just focusing on demand?
▶ 4:10:41Yeah. So, government is very good at stimulating demand. It's very poor at bringing forth new supply and demand is relatively easy. All you have to do is lower underwriting standards, add down payment assistance or lower interest rates, for example. But if you do that against the limited supply, economics 101 tells you that you're going to end up driving prices higher, and that's bad for first-time home buyers. On the supply side, there are certain levers that the federal government has.
▶ 4:11:09for example, um you could free up federal land um especially out in the western third that could um over 10 years create 1 million single family starter homes. Um and that's that's certainly a very potent option. Smaller lot sizes we've talked about before. There's a whole slew of things that the federal government can do.
▶ 4:11:27Thank you so much. Um very quickly in my short period of time, Mr. Sears, I'll come back to you. Another important cost driver for both consumers and developers is the ability to access affordable lending. From your perspective, what are the key drivers in today's market that are increasing the consumer's cost to
▶ 4:11:49Right off the top of my head, interest rates, that that is one of the most significant. Um, also, uh, insurance costs, that's part of the the cost to to own and and part of the borrowing costs um have been significant as well. Thank you. And with that, uh, Mr. Chairman, I ask by unanimous consent that this support letter for HR 6132 co-signed by over a dozen housing groups be entered into the record. Thank you.
▶ 4:12:18Without objection.
▶ 4:12:19Thank you. I yield back.
▶ 4:12:20Gentlewoman yields back. The gentleoman from Oregon, Miss Binham, is now recognized for five minutes.
▶ 4:12:29Thank you, Mr. Chair. Um, thank you to all the witnesses for your testimony and thank you to Chairman Hill and Ranking Member Waters for convening this important hearing and to Mr. Flood for presiding. In my home state of Oregon and across the country, we are struggling with a lack of housing supply. It's been mentioned um which of course has created a housing crisis.
▶ 4:12:52In a recent study of housing affordability in home building led by the National Association of Realtors, Oregon earned an F ranking, ranking 45th out of the 50 states. I'm really competitive and I don't like that. It is estimated that Oregon will likely need to build over 140,000 single family homes by 2030 in order to meet demand.
▶ 4:13:18Moreover, delays caused by complex and restrictive permitting processes and other regulatory burdens have resulted in a nationwide housing shortage of nearly 5 million homes. In communities across the country, local governments are investing in a process called pattern zoning, in which architects and local governments develop pattern books full of pre-approved standardized plans and designs.
▶ 4:13:45So recently, I introduced the Accelerating Home Building Act, with my colleague, Congressman Style. HR5907 would establish a grant program within HUD to fund the creation of these pattern books, speeding up the permitting and home building process and lowering the cost for home buyers. It's clear that we need to be using every tool at our disposal to tackle the housing affordability crisis.
▶ 4:14:13And this bill is an example of how the federal government can cut red tape and provide local communities with the resources they need to get more housing built faster. So my question is for Mr. Sears. The housing market is facing historically low inventory, especially for starter homes.
▶ 4:14:32How would a significant increase in the predictable supply of missing middle housing facilitated by HR5907, the Accelerating Home Building Act, impact our market dynamics and create new opportunities for firsttime home
▶ 4:14:48Uh, Miss Bham, thank you. I I could not agree with uh your statement more uh about um what we need to do. And as a practitioner, I've seen how long it takes for housing uh projects to get approved, to get the permits. Um, and we need to uh take advantage of any lever that can be pulled to uh unleash some of the the housing inventory that's needed, especially that missing middle that you talked about.
▶ 4:15:15And we and we do support your bill. Yes.
▶ 4:15:17Okay. [laughter] Well, I I just have to be um honest and humble here for a moment. I have a 24 year old daughter and a 21-year-old son, and I am trying to get them off the payroll. Like, we are we are really working. you know, they're still in school, but when you think about it, what do our 21 and 24 year olds have to look forward to? It used to be what, 38 was the average first-time home buyer age, and maybe it has pushed up to 41ish, something like
▶ 4:15:44Yeah, the the current median age is 40. Um, and we've seen it increase. It had been between 27 and 30 for a very long time. So um we are an entire generation is missing this opportunity to um to work towards intergenerational wealth and home ownership.
▶ 4:16:03So parents and grandparents out there are looking to us to make sure that we can get these kids off payroll and get them launched. Right.
▶ 4:16:11Um I think the other question that I have is, you know, realtors are seeing the direct relationship between housing supply and median prices. How important is the bill's goal of accelerating the time to market for new units? How important is that goal in stabilizing and lowering the houses uh housing costs for Americans?
▶ 4:16:31There's a time value to money. So, the faster that units can get on the market, the less they will cost to build. The less they cost to build, the more affordable they will be. It's hate to say it, but very simple economics.
▶ 4:16:42Actually, thank you. All right. So, thank you to all of the witnesses for your expertise and and time. And I'll leave the the last 40 seconds if you want to share your story about getting them off payroll or or any other interactions that you've had with uh young people or their parents in the Mr. Peter.
▶ 4:17:02Oh, I I'm just the proud parent of a one-year-old. So, [laughter]
▶ 4:17:07well, we better solve this problem now,
▶ 4:17:09I I hope by 20 years we're going to have this problem under control, but it's probably going to take years until we get there.
▶ 4:17:15All right, Miss Bailey. HUD's affirmatively furthering fair housing uh rule could really go a long way in making sure we're doing everything to create inclusionary zoning. So having oversight and community hearings because this jurisdictions are actually seeking the guidance. They want uh to give them the guidance.
▶ 4:17:33Thank you. I yield back.
▶ 4:17:34Gentleoman yields back. The gentleman from Iowa, Mr. Nun, is now recognized for five minutes. I want to begin by thanking both the panel and the chairman for holding what I think is a very important hearing on housing. It's one of the most vibrant things that we talk about in a rural community like Iowa and it's something that impacts this entire nation coast to coast.
▶ 4:17:55The challenge here is that everyone who has been doing this right, saving up, trying to buy that first home or maybe transition from their last home to their final home is having a harder and harder time doing this with interest rates up, with housing stock down. And currently in the state of Iowa, nearly 40% of our renters are spending a third or more of their take-home salary just to be able to afford the rent while still trying to save on the side. Look, folks in Iowa, across the Midwest, they're not asking for a handout.
▶ 4:18:22They're asking for a fair opportunity to become home buyers and buy into the American dream. Today, I want to discuss five proposals that we've come up with to help particularly in rural communities like Iowa. One, expanding access to inventory through accessory dwellings. This is the so-called mother-in-law suite, but giving people the opportunity to be able to save on their own property and build a facility. Two, increasing loan amounts for critical home repair programs that keep inventory vibrant.
▶ 4:18:53Three, updating USDA's outdated technology process, which today still requires a mountain of paperwork just to be able to get into that first home. Four, auditing the rural housing program. And five, ensuring better reporting. I think in tandem, we're able to bring these together in a really meaningful way because we have to face the reality that candly there's just not enough homes on the market right now for a first-time home buyer to be able to get into it.
▶ 4:19:15I fully support the efforts to increase the housing supply, but we must also effectively ensure that US Department of Agricultures rural housing tools are modern and effective. In Iowa, these common sense reforms can help, and I think it becomes a model for the entire nation. Now, Miss uh I want to begin by saying we have several multi-generation farm families that need flexible housing options. One of the things we've highlighted here is what's called the ADU or a mother-in-law suite. And you can see it can be something that's an external building.
▶ 4:19:44Uh or it can be for, as was noted earlier, a kid who just wants to live over the garage with a little bit of modification. We're providing another housing unit in an area that's already been planted for it. ADUs are cheaper, they're quicker to build, and there are solutions that can pro immediately provide a solution for our housing stock necessity. My legislation clarifies the accessory dwelling units qualify for USDA loan guarantees. I'd like to ask, do you think this would help address Iowa's housing shortage and increase the over housing supply?
▶ 4:20:13Uh, yes, Mr. Nun, very good seeing you again, but I I need to let you know it would increase the supply across the country, not just Iowa. Uh, my home state of Massachusetts last year passed the Affordable Cares Act, which made ADUs by right, so people could put that in. But the financing is is an issue as some of your colleagues have have talked about. And so we strongly support your legislation to expand the opportunity for your constituents, but also everyone across America to take advantage of these loan products when it comes to
▶ 4:20:43Thank you, Mr. Sears, and thanks for what you're doing on this. Um, I'd like to just ask the panel by a show of hands, has anyone worked with rural housing before or had the opportunity? I wouldn't discredit you for this because the challenge is we don't talk about it enough. I think we talk about the great things that HUD does, but I'd also like to talk about the important role that USDA plays in this. Rural housing really hasn't been discussed. And whether you're living in Ringold County, Adams County, in Iowa, or across America, there's every community that has an opportunity to succeed here.
▶ 4:21:12The current system can broken and needs a fix. Um, Miss Smith, one of the things I'd like to say, thank you very much for our effort on our rural housing bill, the support that you've given to this, and the bipartisan effort that we've worked with Mr. Clever on. This is uh not only endorsed by the Iowa Habitat for Humanity, it also is something that a lot of Ians can take advantage of and Americans. Critical repairs would be increased by 100%.
▶ 4:21:37This means that repairs that would go to a septic system, a roof, electrical, all in order to improve the housing stock means that we get to identify a home that might be on the brink of dilapitation now is on the market for development. And we're not destroying rural America by asking a new builder to come in. We can keep what's already there. To put all of this in perspective, fixing a septic tank today in Iowa costs about $20,000 on a home that's worth $149,000.
▶ 4:22:05By being able to increase something we haven't seen happen for over 20 years, can start with this legislation. Do you think that, you know, these type of critical repairs are something that are in need of update and would it improve the housing stock for America across the board? Miss Smith,
▶ 4:22:23I would certainly I would certainly hope so. Would Yes.
▶ 4:22:28Here's what I want to do going forward. Right now, I also want to address the issue of bureaucracy. Right now in Iowa, it takes about 12 months to get through the USDA process. We can update the system to make it digital, cleaner, more efficient, and get families into homes faster. Together, Mr. Chair, this is important legislation that America needs. I look forward to working with this committee in a bipartisan way to make it happen. Thank you. I yield my Gentleman yields back. At this time, I move for unanimous consent to enter the following statements into the record. A statement from the International Code Council dated December 2nd, 2025.
▶ 4:22:59A statement from the American Property Casualty Insurance Association dated December 3, 2025. And a coalition statement from the National Taxpayers Union and other conservative or conservative advocacy organizations dated December 2, 2025. With that, the committee will stand at recess for 5 minutes and will reconvene at 2:14 p.m.
▶ 4:27:59The gentleman from Montana, Mr. Downey, is now recognized for five minutes.
▶ 4:28:04Well, thank you, Mr. Chair, and thank you to the witnesses. Uh Montana has certainly not been immune from skyrocketing housing costs that are really pricing out more and more of my constituents. And in fact, Montana since 2018 has seen a 90% increase the median home value, which is, you know, congratulations. Here's your new property tax bill. Um it's uh it's been a struggle.
▶ 4:28:28And one of the things that I've heard from constituents of mine that are developing affordable housing uh is that a huge driver of costs is HUD's application of the Build America Buy by American or or BABA act on federally backed housing projects from the 2021 infrastructure investment and jobs act. And I appreciate the comments that Chairman Flood made on this issue, but uh I'm going to go a little deeper here. I'm going to start with Mr. Smith.
▶ 4:28:55Can you please elaborate uh how Baba while well-intentioned makes housing less affordable?
▶ 4:29:02Um I mentioned earlier that we have haven't actually had to build a project using Baba but we've been talking to a lot of a lot of our contractors about um what they anticipate the additional cost will be and they're so they're saying anything from like four to 6%. So that's just going to add more cost to building affordable housing, which is already very expensive.
▶ 4:29:26I think it's important to note that it is more expensive to build an affordable housing unit today than it is to build a luxury market rate unit today.
▶ 4:29:37Appreciate that. Do you believe that uh the Baba provision was intended to apply to housing projects or only to hard
▶ 4:29:43Uh I'm sorry, but I really can't.
▶ 4:29:45Okay. Appreciate that. Should Congress resend this provision for federally backed housing projects?
▶ 4:29:50I think that Congress should uh resend anything that's adding cost to building more affordable housing.
▶ 4:29:55Thank you.
▶ 4:29:56Unnecessary cost.
▶ 4:29:57Thank you, Mr. Sears. Um, part of solving the housing affordability crisis is ensuring that homeowners are able to stay in their current homes rather than move and compete with first-time home buyers. According to the Montana Department of Commerce, over 230,000 homes were built before 1980 and only 40% of existing homes are in good or better condition in Montana. Can you please discuss how repairing and renovating the existing stock of homes is also an important part of the
▶ 4:30:29Thank you very much. It is very essential for us to maintain our existing uh housing stock. The last thing that we'd like to see happen, as I said to Miss Williams when she brought this uh legislation up, was that we need to uh keep people in their homes. And so if there are any uh grants, low interest loans that can be given so that necessary repairs are made, strengthen the property against natural disaster, um we are in full support of that.
▶ 4:30:55Do you see any disparities between urban, suburban, and rural areas in terms of aging housing or homes in no sir. Um, it's it's equal opportunity when it comes to older homes. Uh, and especially as the population ages, they might not um be in a position to be able to make the necessary repairs.
▶ 4:31:16What can Congress do to help with this
▶ 4:31:21Well, uh, this uh, this legislation, the whole whole home repair act is certainly a step in the right direction. Uh I know in the in the past uh there have been uh block grants that have been made for local municipalities to be able to uh assist lower income folks with maintaining their properties. So uh any of those types of uh grants or access to low interest loans would be uh great.
▶ 4:31:42Well, thank you. Thank you for your comments. Um I want to end my remarks by talking about communities that are often left out of these discussions uh namely tribes. You know, Montana is home to seven federally recognized Indian reservations, and Indian country faces many unique challenges that make housing affordability some of the worst in the nation. In fact, Native Americans in Montana experience 12% lower home ownership compared to the rest of the of the state.
▶ 4:32:10The primary law governing federal support for Indian housing is the Native American Housing Assistance and Self-Deterine Determination Act of 1996. And this authorizes the Indian housing block grant among other critical programs. You know, authorization for these programs expired over a decade ago and the law has not been updated since 2008. This is simply unacceptable. I look forward to working with my colleagues to finally get these programs reauthorized and modernized.
▶ 4:32:39And um I just uh want to thank you all for being here today and participating in this. This is an incredibly important topic uh not just to us in this committee but to our our constituents to this country. So I appreciate you being here. And on that, Mr. Chair, I yield back.
▶ 4:32:52Gentleman yields back. The gentleman from North Carolina, Mr. Moore, is now when he walks in the door. Mr. Moore is the former longtime speaker of the North Carolina House of Representatives. He joins us today as a member of the House Financial Services Committee. Mr. more.
▶ 4:33:12are recognized.
▶ 4:33:22Turn your microphone on, Mr. Moore.
▶ 4:33:24We'll do. Uh, thank you, Mr. Chairman. And, uh, I just want to first uh, first of all, thank our witnesses who are being here. And I represent the 14th district of North Carolina. And our state is actually one of the fastest growing states in the country. in the region that I represent is one of the fastest growing regions in the state. Uh families are moving in, business are expanding really because at the state level, we've we've lowered taxes, we've cut red tape.
▶ 4:33:49Uh but what we've also seen is a lot of the the pain with with growth and prosperity are the are the limits in terms of housing. I mean, a lot of the problems have been talked about today and the housing supply simply has not kept up and as a result how you know housing costs have just climbed far beyond anything that a lot of working families can reasonably afford and it's it's not regional.
▶ 4:34:12You all have testified already how this is a national problem probably caused I mean the last four years try not to be too political here but the last four years were probably just out of control in terms of what happened with inflation but you know the problems that we have are longer and systemic and and so forth. So I think my understanding is right now nationwide there's a shortage of as many as what five and a half you know million homes. Um I'll start with Mr. Peter. uh you've written extensively about the constraints created by zoning restrictions and land use policies.
▶ 4:34:42Um in a nutshell, what tools do you think could encourage localities to modernize the outdated zoning frameworks?
▶ 4:34:51Yeah, that's an excellent question. So, at the at the local level, it boils down to just getting out of the way. and um there are certain jurisdictions that are always going to be against um building more housing. Um but in that in that in in those instances the state preeemption um can um can play a role in in overcoming some of these concerns and we're seeing lots of movement from Washington, Oregon, California, Montana, Texas that have all moved in the
▶ 4:35:21I I'll tell you in my before I came here I was a state legislator for 22 years. I was also an attorney and handled a lot of land use and a lot of real estate work for folks. And I at one time used to have either commercial, residential, R4, R5, you have breakdowns. Now it seems like I've noticed more and more folks want to do all these UDOs's, unified development ordinance, want to do um a kind of special variance for this development or that development. And I can't help but imagine that that is passing along significant costs that end up being borne on the taxpayer.
▶ 4:35:51Anybody want to or excuse me on the home buyer? Anybody want to comment on that? I mean I can I can make another point about um about this and I mean from a city perspective if you allow a little bit greater density we call it light touch density you're going to be able to broaden your tax base and um in the jurisdictions that we've studied in some of them um they were able because they have a broader tax base they have more taxable value they were able to lower the tax rate for the citizens so um that has that has resulted in positive
▶ 4:36:22in addition to zoning I think my understanding is a lot of like permitting delays, zoning issues, uh environmental reviews, and outdated federal requirements add cost and also years to projects. And of course, adding time adds cost. So, Miss Smith, I'll ask you this question. Multif family developers face multiple layers of environmental review at environmental review at the federal, at the state, and at the local levels. How do these overlapping requirements impact the timing and the financial feasibility of large multif family projects?
▶ 4:36:53They obviously add tremendous costs. We talked about that 40.6% of the cost of a multif family dwelling unit is is tied up in soft cost of regulations. Um it also moves it it sort of moves development around too. I was going to mention that your state of North Carolina is getting a lot of attention from developers from this region because um it's easier, it's faster, um it's a just a it's a better development process.
▶ 4:37:20And as a result, North Carolina is getting a lot more housing, rental, high quality rental housing.
▶ 4:37:26Um, Mr. Sears, question for you. I I hear realtors often say that it's nearly impossible today to deliver a home for under $250,000, which blows my mind. Uh, what are the most common regulatory or permitting obstacles that prevent builders from meeting that price point? regulatory. It's uh you know the patchwork of zoning uh across municipalities and localities not knowing that they're going to have uh a streamlined process.
▶ 4:37:57Uh sometimes inspectors get in the way. Um there's a myriad of of reasons why it's can be more difficult to build and there's the time value to money. So anything that can be cut off of the the length of time before the shovel gets in the ground and then the final occupant moves in. um will make things more affordable.
▶ 4:38:17Thank you. I had other questions. My time is nearly over, but I do think it's important. I appreciate these witnesses here today and and my colleagues, frankly, on both sides of the aisle who acknowledge that affordability is a huge issue and that we need to find more ways to make home ownership uh the reality uh for more and more Americans. And I appreciate the work. And Mr. Chairman, I appreciate your work because I know this is something you and your subcommittee are working on very hard. So, thank you on that. Count me as an ally in this whole process. With that, I yield back.
▶ 4:38:47Gentleman yields back. The gentleman from New York, Mr. Garbarino, who is also the chairman of the Full House Homeland Security Committee, is now recognized for five minutes.
▶ 4:38:58Thank you, [clears throat] uh, Mr. Chairman, and, uh, thank you to all the witnesses for being here today. Um, access to housing is an increasing issue across the United States, especially in areas like where I'm from on Long Island. I was excited to see the supply act, the bill I co-lead with my colleague replico attached to this hearing. This bill expands federal housing administration mortgage insurance to finance certain second lean loans for accessory dwelling units, also known as backyard cottages, granny flats, or in-law suites.
▶ 4:39:28This will provide governmentbacked flexible financing options to help owner homeowners of modest means overcome what is often the last hurdle to breaking ground on an ADU. Mr. Peter, how would ensuring second leans for ADU construction help homeowners who want to add housing units but face financing I mean I mean for some for some homeowners financing is certainly a hurdle but um in other examples um in California
▶ 4:39:58which has passed ADU's law ad ADU ADU laws um they were able to overcome um they were able to find financing without federal without federal guarantees or federal lending programs. So, um, my concern, um, with ADU financing, um, through the federal pro through a federal program is that it may encourage lower income homeowners to take on more than they can to bite off more than they can chew.
▶ 4:40:23And, um, it is one thing to be a homeowner, but to be a homeowner and a landlord can be can be somewhat um can be somewhat dangerous um to make the payments. And um, your land your your your um your rental your renter may not pay um, but you're stuck with the cost. So there there's there's there's certain um cost concerns to be considered.
▶ 4:40:42Absolutely. I I mean I actually have a accessory dwelling unit, accessory apartment at my house and there was initial um costs uh you know you have to separate you have to there's there are there permit fees there's construction fees you know to get that done to actually get the house available. But I will tell you um having that extra uh having that tenant there as someone who's never home uh is is is a nice helps have me have a peace of mind.
▶ 4:41:09U also has income uh when they pay they and he always does pay. Um but again it is something that definitely helps especially with taxes keep going up. So I I do understand there is concerns about initial cost but I think the financing definitely here and government back financing uh will help them with that initial cost and if yes there's always bad actors tenants always sometimes don't pay but I think most of the case to address someone who can't afford a full mortgage um having this access
▶ 4:41:40um for a home for someone who needs to live in an apartment or uh is great for them but also for someone who's struggling to pay they mortgage having accessory apartment uh that extra income could also be helpful. Um so I think that will address uh that could address this housing shortage uh in a in a way that doesn't require a lot a lot of investment. Um but from your perspective, does this legislation complement existing HUD and FHA Um yes, M.
▶ 4:42:10I mean uh yeah, I mean there's another there's another option that HUD and FHA in particular could do um that we haven't talked about. So, um, the mortgage insurance premium is another way where HUD could crowd in more starter homes. And by rejiggering the mortgage insurance premium towards, um, homes that are under, let's say, 1,800 square feet, um, and, um, lowering the premiums on these on these new constructions. Um, HUD and FJ could play a role in um, getting more starter homes built. [clears throat] Thank you.
▶ 4:42:40Um, I was I was also excited to see my bill, the NFIP Extension Act, included in this hearing. Flooding has long been the most significant cause of property damage from natural disasters in the United States. And homeowners rely on National Flood Insurance Program to protect their homes. In districts like mine, many homeowners are required to purchase flood insurance to obtain a mortgage. However, since 2017, Congress has only extended the NFIP on a short-term basis, leading to lapses in the program, including a recent 43-day lapse during the uh the government shutdown this year. Mr.
▶ 4:43:09Sears, what did the lapse mean for people trying to purchase a home during that time?
▶ 4:43:14Uh, thank you, Mr. Gabino. Uh the lapse uh created uncertainty in the market uh especially uh when the banks requiring uh the the mortgage hold the mortgage e to obtain flood insurance and some of them were slow to realize that that that uh restriction had been lifted temporarily. But even if the consumer closed that would expose them to the potential liability uh without insurance coverage.
▶ 4:43:38And so we support your effort to extend the NFIP until September 30th because since 2017, as you said, there's been 34 short-term extensions u and that just causes too much uncertainty,
▶ 4:43:50uncertainty and also extra cost the homeowner if there is a lapse uh with delay of closing and and and other things like that uh which a lot of these homeowners that extra cost they just can't afford. But I thank you for your answer. I thank you again all for being here and I I yield back.
▶ 4:44:04Gentleman yields back. I'd like to thank all of our witnesses for their testimony today. Without objection, all members will have five legislative days to submit additional written questions for the witnesses to the chair. The questions will then be forwarded to the witnesses for your response. Witnesses, please respond no later than January 8th, 2026. This hearing is adjourned.