[Joint House and Senate Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 118-222
REBUILDING THE AMERICAN DREAM: POLICY AP-
ROACHES TO INCREASING THE SUPPLY OF
AFFORDABLE HOUSING
=======================================================================
HEARING
BEFORE THE
JOINT ECONOMIC COMMITTEE
OF THE
CONGRESS OF THE UNITED STATES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 17, 2024
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Martin Heinrich, New Mexico, David Schweikert, Arizona, Vice
Chairman Chairman
Amy Klobuchar, Minnesota Jodey C. Arrington, Texas
Margaret Wood Hassan, New Hampshire Ron Estes, Kansas
Mark Kelly, Arizona A. Drew Ferguson IV, Georgia
Peter Welch, Vermont Lloyd K. Smucker, Pennsylvania
John Fetterman, Pennsylvania Nicole Malliotakis, New York
Mike Lee, Utah Donald S. Beyer Jr., Virginia
Tom Cotton, Arkansas David Trone, Maryland
Eric Schmitt, Missouri Gwen Moore, Wisconsin
J.D. Vance, Ohio Katie Porter, California
Jessica Martinez, Executive Director
Ron Donado, Republican Staff Director
C O N T E N T S
----------
Opening Statement of Member
Page
Hon. Martin Heinrich, Chairman, a Senator from the State of New
Mexico......................................................... 1
Vice Chairman, David Schweikert, a Representative from the State
of Arizona..................................................... 3
Witnesses
Ms. Jenn Lopez, Affordable Housing Consultant, Founder and
President of Project Moxie, Durango, CO........................ 4
Dr. Jenny Schuetz, Senior Fellow, Brookings Metro, Washington, DC 6
Mr. Tobias Peter, Codirector of the Housing Center, American
Enterprise Institute, Washington, DC........................... 8
Dr. Salim Furth, Senior Research Fellow and Director, Urbanity
Project, Mercatus Center, Arlington, VA........................ 9
Submissions for the Record
Prepared statement of Hon. Martin Heinrich, a U.S. Senator from
New Mexico..................................................... 34
Prepared statement of Ms. Jenn Lopez, Affordable Housing
Consultant, Founder and President of Project Moxie............. 37
Prepared statement of Dr. Jenny Schuetz, Senior Fellow, Brookings
Metro.......................................................... 40
Prepared statement of Mr. Tobias Peter, Codirector of the Housing
Center, American Enterprise Institute.......................... 47
Prepared statement of Dr. Salim Furth, Senior Research Fellow and
Director, Urbanity Project, Mercatus Center.................... 105
Articles submitted for the record by Vice Chairman David
Schweikert:
https://www.governing.com/housing/socal-counties-trying-to-
house-home
less-face-nimby-pushback................................. 110
https://slate.com/business/2023/05/housing-market-
affordable-real-estate
-single-family.html...................................... 110
https://wamu.org/story/19/11/25/is-montgomery-countys-top-
official-pract
icing-nimbyism-in-disguise/.............................. 110
https://www.theatlantic.com/ideas/archive/2022/02/uc-
berkeley-universit
y-enrollment-nimby/622927/............................... 110
REBUILDING THE AMERICAN DREAM: POLICY APPROACHES TO INCREASING THE
SUPPLY OF AFFORDABLE HOUSING
----------
WEDNESDAY, JANUARY 17, 2024
United States Congress,
Joint Economic Committee,
Washington, DC.
The hearing was convened, pursuant to notice, at 2:29 p.m.,
in 216 Hart Senate Office Building, before the Joint Economic
Committee, the Honorable Martin Heinrich, Chairman, presiding.
Members Present:
Senators: Heinrich, Klobuchar, Hassan, Welch, Fetterman,
and Schmitt.
Representatives: Schweikert, Arrington, Ferguson, Beyer,
Trone, and Porter.
Staff: Kobe Barthelemy, Matthew Cernicky, Sebi Devlin-
Foltz, Ron Donado, Colleen Healy, Jeremy Johnson, Jessica
Martinez, Michael Pearson, Alexander Schunk, Douglas Simons,
and Garrett Wilbanks.
Chairman Heinrich. This hearing will come to order, and I
would like to welcome everyone to today's Joint Economic
Committee hearing, titled ``Rebuilding the American Dream:
Policy Approaches to Increasing the Supply of Affordable
Housing.''
Today's hearing will begin with five minute opening
statements from myself, from Vice Chairman Schweikert and each
of our four witnesses. We will then proceed to questions
alternating between parties in the order of Member arrival.
Members are reminded to please keep their questions to no more
than five minutes, and now for opening statements.
OPENING STATEMENT OF HON. MARTIN HEINRICH, A U.S. SENATOR FROM
NEW MEXICO, CHAIRMAN, JOINT ECONOMIC COMMITTEE
Chairman Heinrich. There is a serious housing crisis, in
New Mexico and really all across this country, impacting people
at all income levels in nearly every community. Whether they
rent or own and whether they live in rural, suburban or urban
areas, too many Americans cannot securely afford the place they
call home.
Broad access to affordable, stable and safe housing helps
ensure Americans economic well-being and social mobility. But
the current housing shortage means the American dream of home
ownership is out of reach for far too many. After the housing
market collapsed in 2008, new housing supply never recovered to
keep up with demand, and the pandemic only compounded this
crisis.
Exclusionary zoning adds to this problem, placing
restrictions on where people can live and the types of housing
they can live in, often enmeshed with discriminatory practices
that have left a legacy of unequal opportunity.
At the same time, rents have been climbing over the past
decade, and many lower income families are being priced out of
their current neighborhoods. These same families are blocked
from renting in higher income neighborhoods due to the absence
of smaller, more affordable housing options. The Biden
administration has taken historic steps to keep people in their
homes, and to increase housing production.
They helped reduce the burden of housing costs during the
pandemic, increased the supply of quality housing to their
housing supply action plan, and took important steps to protect
renters. The American Rescue Plan's State and Local Fiscal
Recovery Funds also helped stimulate affordable housing
construction and supports housing stability.
But more federal investment is needed to address the
growing housing crisis and ensure fair and competitive markets
for renters and homeowners. We need to increase the supply of
safe, accessible and affordable homes. We need to lower rental
costs and expand affordable home ownership so that families can
build wealth and live safely in their communities.
The low income housing tax credit is one way that federal
and state governments can help finance new building projects
with affordable rental units. But that program is over-
subscribed and in need of reform to make sure it reaches those
most in need. The Bipartisan Affordable Housing Credit
Improvement Act would increase the number of available credits
to better meet demand, while changing program rules to make
sure that more units are built to serve tribal communities,
rural areas and other under-served groups.
I am a co-sponsor and strong supporter of this legislation,
and in June I introduced the Delivering Essential Protection,
Opportunity and Security for Tenants Act, also known as the
DEPOSIT Act. This legislation would help low income renters
overcome the barrier of security deposit payments when moving
into new housing.
This legislation has also been introduced in the House, and
we can also take note of state and local programs that have
produced successful results. In my home state of New Mexico,
local governments are leading efforts to finance additional
affordable housing stock.
This past November, voters in Santa Fe approved a tax on
home purchases that are over one million dollars, to increase
revenue for the city's Affordable Housing Trust Fund. In Las
Cruces, voters approved the issuance of a $6 million general
obligation bond to fund its Affordable Housing Trust Fund.
The initial investment could help leverage more than $36
million in funding from state, federal and private sources, to
create additional affordable housing units. These are important
steps, but we need to do more at every level of government to
meet the scale of this crisis. I'm looking forward to hearing
from our witnesses today on how we can replicate policies that
work, and help create new approaches that will increase the
quantity and available and affordable housing, and promote fair
and competitive markets for both renters and homeowners.
Now I will turn it over to the Vice Chairman.
[The opening statement of Chairman Heinrich appears in the
Submissions for the Record on page 34.]
OPENING STATEMENT OF HON. DAVID SCHWEIKERT, A U.S.
REPRESENTATIVE FROM ARIZONA, VICE CHAIRMAN, JOINT ECONOMIC
COMMITTEE
Vice Chairman Schweikert. Thank you Chairman Heinrich, and
thank you for choosing this one. It's something that I think
all of us are interested in.
One of the great discussions we're going to have, and I'm
going to expect this from our witnesses, is this a financing
issue or is it actually in many ways a supply of buildable
opportunities? Whether it be taking down a former Motel 6 in
parts of California where the neighbors shut it down, or things
that have happened, you know, the famous story of in Berkeley,
you know, one of the most progressive communities in America,
not allowing affordable housing as neighbors, to even right
here down the street here in Virginia, where the neighborhood,
a very progressive voting one, had basically opposed.
For those of us in the west, we actually have lots of
federal land but also state trust land. How much of that should
be made available for future housing stock? And then there's
the derivative of this, is what can we design in rules and
regulations, particularly in a modernization of housing codes,
construction codes, even into housing design, that we could
update in a way to make more affordable but also improve the
time-line.
In many of our communities, particularly for myself in
Maricopa County, one of the biggest counties in America, when
you want to build housing even if you have the land, it can
take a couple of years just to get your entitlements. That is
not something we're going to manage from the federal
government.
But maybe there's some ways we can incentivize a much more
one-stop process. The cities of Scottsdale and others have
tried to build a model where come in it's one desk, one
counter, one filing and you do it on one form to cut down,
because of the cost of holding that money. Being someone who is
in this business, sometimes we would acquire a piece of land
and if you held it for three years before you got your
entitlement, what did you have to make the pricing of the
housing, just because of your legal, engineering and financing
costs? So--Mr. Chairman, thank you for the hearing. But I look
forward to an honest assessment, other than just subsidies
coming from the federal government.
What do we do to help our brothers and sisters in the next
generation of home ownership to develop the American Dream? And
with that, I yield back.
Chairman Heinrich. Thank you Vice Chairman. Now I'd like to
introduce our four distinguished witnesses. Ms. Jenn Lopez is
an affordable housing consultant and the founder and president
of Project Moxie, an organization committed to the development
of western regions in the U.S. She currently serves as board
president for the Community Economic Defense Project, and was
previously a board member at the Colorado Housing Finance
Authority.
Prior to founding Project Moxie, Ms. Lopez led regional
housing efforts in Southwest Colorado, and served as the
state's first cabinet level Director of Homeless Initiatives
for then Governor John Hickenlooper.
Dr. Jenny Schuetz is a senior fellow at Brookings Metro, a
non-resident senior fellow at George Washington University's
Center for Washington Area Studies, and an adjunct lecturer in
Georgetown's Urban Planning Program. Dr. Schuetz previously
served as a principal economist at the Board of Governors of
the Federal Reserve System, an assistant professor at the
University of Southern California, and a postdoctoral fellow at
NYU Furman.
Mr. Tobias Peter is a senior fellow and co-director of the
American Enterprise Institute's Housing Center. Prior to this
role, Mr. Peter served as a regional--as a director of Research
and Research Analysis for the Institute.
Dr. Salim Furth is a senior fellow, research fellow and
director of the Urbanity Project at the Mercatus Center at
George Mason University. Dr. Furth also worked at the Heritage
Foundation as an assistant visiting professor at Amherst
College, and as a contractor for the U.S. Department of Housing
and Urban Development.
Ms. Lopez, we'll start with your testimony, and then we'll
go down in the order of introductions. Welcome.
STATEMENT OF MS. JENN LOPEZ, AFFORDABLE HOUSING CONSULTANT,
FOUNDER AND PRESIDENT OF PROJECT MOXIE, DURANGO, COLORADO
Ms. Lopez. Thank you Chair Heinrich and Members of the
Committee. Thank you for the opportunity to testify today. My
name is Jenn Lopez, and I'm president of Project Moxie, a
consulting firm that helps non-profits, governments and private
sector partners acquire, preserve and build affordable housing.
I will be focusing on my work in the Southwest, and will
conclude with policy considerations.
My experience in New Mexico began in 1997 as a graduate
student at UNM, followed by my first job as a housing planner
in Santa Fe. Over the past two decades, housing development in
the Southwest has fallen behind the growing needs of families.
Building activity slowed significantly after the Great
Recession to ten percent over the last decade, a notable
decline from the 30 percent average since the 1970's.
Factors contributing to the slowdown include builder and
lender reluctance due to market conditions, a chronic labor
shortage in the construction industry and a shift in the
housing industry towards catering to higher income households.
This imbalance is reflected in a 70 percent increase in rent in
New Mexico since 2017, while wages have only gone up by 15
percent.
As market rate development has slowed, our industry's
efforts to address supply at the local level have met with
various obstacles. Throughout the Southwest, local land use
policies pose significant obstacles to increasing our housing
supply. For example in Santa Fe, the Anchorum Health Foundation
spearheaded the redevelopment of a motel in late spring of
2021. We are still awaiting final approvals from the local land
use department.
This situation is not unique. In fact, Albuquerque, New
Mexico recently initiated Housing Forward Albuquerque, aiming
to allocate resources for the redevelopment of commercial
properties, while also eliminating land use barriers for
affordable housing development.
The competition within the private market for scarce
resources and a shift towards higher end real estate products
limits our ability to compete in the market to generate or
maintain a supply of affordable housing. These challenges are
particularly pronounced in Northern New Mexico, where private
developers are acquiring real estate and reducing sites for
affordable projects.
Moreover, preserving existing housing become impossible
when competing against private investors, when our communities
lack sufficient funding. In the past year, collaborative
effort, including representatives from the New Mexico
delegation, worked diligently to safeguard a USDA-funded rental
community named La Vista Del Rio. This is in Espanola. Due to
the structure of the USDA program, the property owner was
permitted to sell this community to private investors without
incurring penalties.
This marked the second instance of a USDA property being
sold to investors, displacing over 100 households and a
permanent loss of 145 affordable units. Access to tax credits
and federal funding would have facilitated preservation and
redevelopment of these properties.
The challenge lies in the insufficient availability of
federal funds, posing a significant obstacle to scaling
affordable supply to meet the needs of tens of thousands of
cost-burdened New Mexicans. The stark reality is that if the
market cannot provide affordable housing in New Mexico,
renowned for its lower building costs, then accomplishing this
feat anywhere is unlikely.
In 2023, the New Mexico Mortgage Finance Authority, as the
state allocating agencies, financed 1,415 new affordable rental
units. At this current rate, we are meeting less than one
percent of the need. Since 2018, Maryann Chavez-Lopez, the
local housing authority director in Socorro, has tirelessly
lobbied for resources for a 30 unit project, and submitted
multiple applications for tax credits.
Further delays ensued when gap funding was inadequately.
Finally the project closed in financing last month, and it set
to open in 2025, but it's taken eight years to get to that
point. Our industry knows how to increase housing supply, but
we cannot be successful without increasing federal resources
and land use reform at the local level.
I'd like to pivot to some promising policy work in
Colorado. In 2021, Colorado passed HB21-1271, providing grants
to local governments willing to remove land use barriers to
affordable housing. Another example is Colorado's Proposition
123, a voter referendum that established a $300 million housing
trust fund that provides flexible funds complementing existing
federal dollars.
For a local community to access funds, they must commit to
increasing their housing stock by nine percent, and implement
fast track approvals. This incentive-based approach has changed
land use reform conversations throughout Colorado.
In summary, our industry can swiftly scale our efforts.
However, we need the federal government to significantly
increase federal resources, and consider ways to support local
land use reform. I urge you to consider pairing these two
practices to bolster the economy. When we provide affordable
housing, we house our local workforce, create jobs and
stabilize our communities. On behalf of our New Mexico and
Colorado communities, we appreciate your consideration of these
solutions.
[The statement of Ms. Lopez appears in the Submissions for
the Record on page 37.]
Chairman Heinrich. Dr. Schuetz.
STATEMENT OF DR. JENNY SCHUETZ, SENIOR FELLOW, BROOKINGS METRO,
WASHINGTON, D.C.
Dr. Schuetz. Chair Heinrich, Vice Chair Schweikert and
Members of the Committee, thank you for the opportunity to be
here today. My name is Jenny Schuetz. I'm a senior fellow at
Brookings Metro.
U.S. housing markets currently face four major challenges.
First, the U.S. is experiencing a persistent and widespread
housing shortage. Over the past several decades, housing supply
has become less responsive to changes in demand.
Population and job growth have not led to proportional
growth in the number of homes, while prices and rents have
increased faster than household incomes. Researchers estimate a
shortage of nearly four million homes nationwide.
Second, the stock of existing homes is aging and needs
substantial renovation to remain safe and habitable. As the
number of older adults increases, there is a growing need to
retrofit existing homes with accessibility features. Many older
homes were not built to withstand current and future climate
stresses.
Third, low income households cannot afford market rate
housing without financial support. The poorest 20 percent of
households spent more than half their income on housing,
leaving too little cash to pay for food and other necessities.
In 2023, more than 650,000 people were experiencing
homelessness.
Finally, the combination of high housing prices and high
mortgage rates are making it difficult for renter households to
purchase their first home. The situation is particularly acute
for younger adults, because they earn lower wages and have had
less time to accumulate savings.
Tight housing supply and rising costs are not just a
problem for impacted families. Building too few homes makes it
harder for employers to attract and retain workers. Poor
quality or unstable housing harms families' physical and mental
health, especially for children.
Relaxing overly-strict regulations could increase housing
supply and improve affordability. America's housing shortage is
not simply the result of market forces. Local governments
across the U.S. have adopted policies that make it difficult to
build more homes where people want to live.
These laws have become more complex and restrictive over
time, especially in high opportunity communities. Single family
exclusive zoning is one of the most common practices. More than
three-quarters of lands in U.S. cities and suburbs is reserved
exclusively for single family detached homes, meaning that
rowhouses, duplexes and apartment buildings of all sizes are
simply illegal to build.
This rule creates challenges both for affordability and for
expanding housing supply. Single family homes with yards
require more land per home than other structures, and therefore
are more expensive to rent or buy. Additionally, many low
density communities that were developed in previous decades are
now built out under their current zoning. They have no
remaining undeveloped land.
Rules such as large minimum lot sizes are especially
problematic for the construction of small starter homes, that
accommodated first-time homebuyers in previous generations.
Limitations on manufactured and modular housing are
particularly relevant in rural areas, where these homes have
traditionally been an important source of moderately-priced
housing.
The past several years have been an unprecedented amount of
housing policy experimentation, often with bipartisan support.
Cities including Albuquerque, Minneapolis and Raleigh have
passed reforms aimed at legalizing missing middle housing
types. State legislators from Massachusetts to Montana to Utah
have passed statewide laws aimed at increasing the diversity of
housing options.
The federal government could support healthier housing
markets through four channels. First, HUD should coordinate and
disseminate research on effective policy solutions, such as
evaluating the outcomes of recent state and local zoning
efforts. Second, HUD should leverage relationships with other
federal agencies and the real estate industry to monitor real
time data on the health of U.S. housing markets.
Third, HUD can encourage regional collaboration among
housing authorities to preserve and expand affordable housing
where it is most needed. Fourth, HUD should build up its triage
and rapid response capacity to be better prepared for the next
housing crisis.
Housing affordability has become increasingly urgent for
many Americans over the past decade. Cities and states across
the U.S. are experimenting with policy reforms, to increase
housing supply and create more diverse options. The federal
government can better support the work of state and local
partners, as well as the real estate industry through
strategically targeted efforts.
Thank you again for the opportunity to testify and I look
forward to your questions.
[The statement of Dr. Schuetz appears in the Submissions
for the Record on page 40.]
Chairman Heinrich. Mr. Peter.
STATEMENT OF MR. TOBIAS PETER, CO-DIRECTOR OF THE HOUSING
CENTER, AMERICAN ENTERPRISE INSTITUTE, WASHINGTON, D.C.
Mr. Peter. Chair Heinrich and Vice Chair Schweikert, and
distinguished Members of the Committee, thank you for the
opportunity to testify today. Housing affordability issues are
real for many Americans. In this election year, Congress is
feeling the urge to increase the supply of affordable housing.
Before taking any action though, it should first consider a
couple of misconceptions.
Misconception No. 1. The housing supply shortage is a
market failure. Not true. It is rather a government, regulatory
failure. Actions of all levels of government, from the
implementation of restrictive zoning laws to introduction of
discretionary reviews in planning and rise of environmental
laws and other regulations have made land scarce and
homebuilding expensive.
This has restricted private developers from building enough
housing to keep up with demand. As a result, today's housing
shortage is estimated to be in the millions.
Misconception No. 2. The federal government can fix, or at
least ameliorate, the shortage. Again, not true. The federal
government has a poor track record in housing supply
interventions. For example, the low income housing tax credit
(LIHTC) established in 1986 to combat lack of affordable
housing has done next to nothing to increase the supply of
housing. According to one study, almost all LIHTC development
would have been built by private developers without any
subsidies.
If that's not enough, LIHTC also limits social mobility and
the program is corruption-prone and complex, thus crowding out
many smaller builders.
Misconception No. 3. The only way to add affordable housing
is through subsidies and government programs. Not true. The
root cause is government regulatory failure, and no amount of
money can fix that. The literature is clear that the most
effective way to add affordable housing is to build a lot of
market rate housing, which helps tamp down home price and rent
depreciation.
As new market rate housing is built, high income households
will move into these new units, freeing up their now vacant
lower-priced unit. This process known as filtering repeats
itself further down the price ladder, as commonly seen in the
new and used car market.
The true policy solution lies in zoning and land use reform
at the state and local level. Such reforms would unleash the
market forces to provide hundreds of thousands of new units
without subsidies each year.
Misconception No. 4. Institutional investors, junk fees,
rent pricing algorithms, air bnb, foreign buyers of vacant
homes are responsible for widespread housing unaffordability.
Not true. While these entities make easy scapegoats, they are
at best symptoms of the supply-demand imbalance, not the root
cause.
Misconception No. 5. Government can make housing affordable
through various demand subsidies, such as looser lending
policies, low mortgage premium or down payment assistance.
Again, not true. Such practices increase demand against
severely limited supply. This benefits those that own homes or
the select few that receive the subsidy, but it raises housing
costs for all.
Having dispelled these misconceptions, the solution to
today's housing shortage becomes clear. First, the federal
government needs to stay out. Congress is considering expanding
the LIHTC program and creating the middle income housing tax
credit, which would expand LIHTC to middle income households.
Such a massive expansion of the state would ultimately
waste taxpayer money, crowd out more private builders and worst
of all, it would do precious little to address the nation's
housing supply shortage. It would also be bad policy for
Congress or the administration to expand lending subsidies that
would raise the cost of housing for all.
Second, zoning and land use policies are state and local
issues and need to be tackled at these levels of government.
Numerous case studies from around the country have shown that
the formula for successful housing reforms is simple. Roll back
government regulatory failures by allowing greater density in
lots of areas, and make the rules simple and the process by
right.
These actions will unleash the ingenuity of the American
people by allowing builders of all sizes to build abundant,
market rate housing over time. Fortunately, this is already
happening, entirely without federal involvement. In 2023,
Washington, Montana, Vermont followed Oregon and California in
passing statewide reforms that allow moderate high density in
the form of cost-effective ADUs, duplexes, triplexes and
townhouses.
The federal government can amplify this trend by auctioning
off under-utilized federal land without any strings attached
for private market rate developers. As Senator Lee has pointed
out, there are plenty of opportunities, particularly out west.
More land means more building, which will translate into more
filtering and greater housing affordability.
On the other hand, federal involvement to influence or even
speed up state and local reform movements will result in
complex, one-size-fits-all solutions that would therefore
perpetuate the housing supply problem. To be clear, housing
unaffordability is a self-inflicted wound stemming from a
government regulatory failure. Supply reform requires no
taxpayer subsidies, and if properly implemented, they have
shown to work.
If more states and cities sign on, such reforms could
provide hundreds of thousands of new homes each year, which
would allow more Americans, even those of lesser means, to
access their own American Dream. Thank you.
[The statement of Mr. Peter appears in the Submissions for
the Record on page 47.]
Chairman Heinrich. Dr. Furth.
STATEMENT OF DR. SALIM FURTH, SENIOR FELLOW AND DIRECTOR,
URBANITY PROJECT, MERCATUS CENTER, ARLINGTON, VIRGINIA
Dr. Furth. Good afternoon Chairman Heinrich, Vice Chairman
Schweikert and Committee Members. Thank you for the opportunity
to address you today. My name is Salim Furth, and I'm a senior
research fellow at the Mercatus Center at George Mason
University, where I am co-director of the Urbanity Project.
Today, I offer a snapshot of housing affordability trends,
and then detail how state legislatures are aggressively
tackling the long-term causes of high prices. But much work
remains to be done. It's a difficult era for renters. From 2000
to 2011, the share of income spent on rent rose from 25 to 31
percent, and it has remained high since.
Homebuyers are in better shape. As of 2022, the average
brand new homeowner household spent less than 22 percent of its
income on housing costs. Of course, the national trends conceal
large, growing differences across regions. Home prices in the
most expensive states are about 3.8 times higher than in the
least expensive.
A pandemic-era preferences and policies contributed to a
sharp increase in home prices and rents. The most important is
that we spent more time at home. During COVID, roommates split
up, families carved out home offices and parents opted to home
school. The increase in demand for residential space appears to
be permanent, so people will spend more on housing going
forward.
The second recent shock was the sequence of interest rate
movements. Mortgage rates tanked in 2020, and then spiked in
2022. Low rates allowed sellers to raise prices and homeowners
like me refinanced. But when interest rates spiked, it did not
have an equal and opposite effect on prices.
The low rates become golden handcuffs. The resulting lack
of inventory for sale has kept prices high. Finally, housing
was not exempt from economy-wide inflation, which has amounted
to about 16 percent since January 2020.
As valuable as it is to understand recent fluctuations,
long-term trends are even more important. To understand why,
let's compare the Los Angeles and Oklahoma City Metro areas.
Home prices in both cities are about 40 percent higher today
than in January 2020.
That increase, however, was added to a base price of
683,000 in LA, but just 162,000 in OKC. As a result, the four-
year increase alone amounts to three median household incomes
in LA, but just one in OKC. So what explains the fourfold
difference in baseline prices? Economists believe that the
biggest factor is that OKC has allowed enough housing to be
built to meet demand, while LA has not.
As a result, material living standards are higher in OKC
even though nominal income is lower. The scarcity of housing in
restrictive, high wage cities has deepened every decade.
Through most of American history, large numbers of people have
migrated from low to high wage places. No more. Now, Americans
move to cities with attainable, modern housing.
Now the good news. State legislatures have taken seriously
the role of local regulation and begun the long road to reform.
California's efforts have received the most press, but some
other states have gone further. In both Vermont and Montana,
the governor and key legislators made zoning reform a top
priority.
Local newspapers and organizations led a public
conversation about the reach of zoning. The legislative leaders
convened stakeholders, formally in Montana, informally in
Vermont, and hashed out consensus reforms to make it
significantly easier to build housing.
For example, both states now allow duplexes everywhere in
most towns, and both created new exemptions from state
environmental review. In both states, these ambitious,
extensive limitations of local regulatory authority received
super-majority support from legislators in both parties.
And in both states, lawmakers are not done. They have
promised to continue reforms in their upcoming session.
Important strides have been made in many other states,
including Oregon, Rhode Island, Utah, Washington and Wisconsin.
In several other states, including Arizona and Colorado, reform
efforts fell just short in 2023 because legislators in both
parties were hesitant to limit city power.
Unlike many issues, this one cuts across lines. Legislators
from both sides recognize the need for more housing, and
legislators from both sides would prefer not to preempt local
governments. For 50 years, the pendulum has swung too far to a
local authority to restrict housing construction.
State legislators are now moving back toward balance,
restoring the individual freedom to build and, we hope, durably
increasing the supply of housing. Thank you.
[The statement of Dr. Furth appears in the Submissions for
the Record on page 105.]
Chairman Heinrich. Thank you all. You know, I am a little
bit struck by the fact that there is more--there are a number
of disagreements here on how to move forward. But I think I
heard all of you say that reforming exclusionary zoning is
going to be key to solving this crisis. Do any of you disagree
with that?
We'll just go down the line here. We'll start with Dr.
Furth and go across to Ms. Lopez. Tell me what you think is
most effective to incentivize that, and you're talking to
someone who used to be the Land Use chair of the City Council.
So I know how contentious zoning changes can be. Liquor
licenses, zoning changes. It gets, it gets very sporty in those
council meetings. So how can we incentivize this, given the
fact that all of you seem to agree that this reform is a key
driver of how we address this crisis? Dr. Furth.
Dr. Furth. Thank you. I think that's best done at the state
level, and that's going to be a mix of preemption, where you
simply say there are things that should be allowed everywhere.
For instance, there's no reason any city should be spending its
time calculating parking spaces for developers. They can figure
that out on their own. Let's just get the cities out of that
business.
Then there's other things where you say hey, every city
should have at least some zoning for multi-family housing.
Maybe it doesn't need to be everywhere in the jurisdiction.
Maybe we want to keep commercial and multi-family separate.
But at a minimum, there should be a place and Vermont
actually has passed this into law. There's got to be a place in
your town that allows for multi-family housing. Then there's--
and so then there's a mix of state incentives there. I don't
think the federal government has great tools for this.
Chairman Heinrich. Mr. Peter.
Mr. Peter. Yeah, I agree with Salim. I mean this is best
done at the state and local level, probably at the state level
is best. What we found in our research is that framing really
matters at the local level. And of course, the NIMBYs are a
group that need to be overcome. But if you frame the issue
properly, we have found that this removing exclusionary zoning
has been successful in California. They've passed reform in
Washington, Oregon, Vermont, Montana and the list goes on and
on.
But if you frame it around where are your kids and
grandkids going to live, that seems to have an impact because
older Americans are now realizing their kids, if they move
across country, where they can afford a home, but if they're
only going to see them once or twice per year, that's a real
down side.
So that, the framing is very important. At the same time
what we found is that the incentives are really aligned here.
You can pull in a lot of groups that would benefit from it.
Just to name a few, builders, realtors, bankers. More homes to
build, mortgages to originate, loans to sell.
It's good for the environment because you are replacing----
Chairman Heinrich. I'm going to run out of time, so I'm
going to keep going down the dais here. Dr. Schuetz.
Dr. Schuetz. I think it's helpful to think about localities
in kind of two different buckets. There's a bucket of
localities that don't want to change their zoning, they like it
the way it is. The voters are not going to get on board, and so
those are going to be the really hard places to change.
But there are actually a substantial number of local
governments that know housing supply is a problem. They know
that affordability is an issue voters care about. They want to
do better, but they don't know exactly what to do. If you look
at the list of zoning rules, figuring out which ones do you
need to change to make it more effective to build, what are the
kinds of structures that developers want to build in your
community but can't, and how you get them there.
That's not always an obvious question. So I think one of
the things actually the federal government is best suited to do
is start doing some evaluation of the reforms that we're
seeing, understand what kinds of policy changes are helpful in
particular kinds of markets, and then provide that information
that local governments that want to do better and just need the
information. The other thing that local governments are
struggling with is how to do community engagement in a way that
doesn't privilege the voices of a few NIMBYs over often a very
broad swath of people, including business interests, who would
really like to have more housing.
And that's again something localities are starting to
experiment with surveys and polls that tap into a much wider
range of voters, figuring out how to do that and again, helping
local governments do that better is something we could
definitely do.
Chairman Heinrich. Great. Ms. Lopez.
Ms. Lopez. We've been talking about this since the 90's or
even earlier, and at UNM we had a lot of conversations about
this. But I finally have hope. The reason I have hope is that
we're seeing some action in Colorado and I think New Mexico is
interested in following suit, and what's getting people excited
about actually changing things is incentives.
So the state is going to fund housing. It does it, it
always has. So adding the incentives of if you do these things,
you get access to infrastructure money. Infrastructure is huge
right now, right? We have old and aging infrastructure and then
we have areas that are growing that just can't afford to do it.
So we're tying it to infrastructure. In Prop 123 we're
tying it to just new pots of money, very exciting pots of
money. Workforce, housing, homeless money, and we're saying
look, we're not going to prescribe how you do this. We're going
to tell you what the goal is. It's outcome-driven.
We want you to increase your base number of units and then
I think what's really important is local communities need
technical assistance. They're already overburdened, so if we
can create best practices. I love collecting them and then help
them implement. I think you get a long way there. So we're very
excited about what's happening.
Chairman Heinrich. Great. Thank you all. Vice Chairman.
Vice Chairman Schweikert. Thank you, Mr. Chairman. I was
just sort of looking up how many--being from Maricopa County, I
accept it's a very large county, but you know, we get 100,000
new residents a year, you know, 300 plus a day. And first up,
there's the demographic migration issue.
You know, what happens when you drive through parts of
rural Kansas and it's been depopulated, and come to the
Phoenix-Scottsdale area and, you know, you have bidding wars on
homes as people are moving from California and those things.
So I want to make sure we're all being intellectually
honest here. It's a housing stock issue but it's also a housing
stock issue in regards to where there's jobs and people are
choosing to live. And that's not going to be taken care of
through a financing mechanism. It's going to become actually
those are desirable areas as long as they have housing stock
that's affordable.
I do have a couple of unusual questions, just because it's
in front of mind. Do any of you have a specialty in sort of
taxation and housing, because we've had a running debate, and
I'll just jump on this because we've been talking about it.
Before getting elected, I actually ran some partnerships
that bought lots of houses, and we've had a running discussion
with some of our tax people being on Ways and Means. Here's the
tax benefits you get as a homeowner. You get to deduct your
interest, you get the once in a lifetime, you know, per person
those things.
But if I'm a corporate entity, LLC, partnership, I get to
component depreciate. I get to have a 1031 exchange and those
things. Has anyone--have any of you ever seen a study where
there's been actually a parity discussion on tax benefits
compared to being the individual compared to being a corporate
entity?
That's a little ethereal, and if not, I'm going to turn to
my Chairman here and say why don't we try something bipartisan
with our brilliant staff. Maybe we'd get the Democrat and
Republican staff to assign someone and say take a run at this.
It's an interesting question, and I've never actually seen it
other than the numbers we've been trying to do.
Questions, and this is--let's do the same thing. Let's go
from Ms. Lopez down the line. Give me something that's been
successful at a community level, preferably in my case, unlike
someone who has more rural America, you know, rural-suburban--
myself, I'm all urban--that's been successful incentivizing a
community to update its zoning practices? What's worked? What
have you seen work? Ms. Lopez.
Ms. Lopez. So I just spoke about the state one. So local,
I'm going to give an example from Santa Fe that goes back to
the 90's, and I wish I could replicate it all the places I
work. It was sort of an incentive and more of an action. They
were very proactive.
So back in the 90's, the City Council bought their own--a
failed subdivision, and what they did is they took care of the
cost of land, zoning and infrastructure in one fell swoop. It's
called tier contenta. It's a best practice and they also
leverage private builders.
They said look government, let's do what we're good at.
Let's lay the foundation to make it more market friendly
solution to housing, and then get out of the way. What happened
was they built hundreds, probably 1,500 homes over the last 16-
17 years, mixed income. Now they're best practice. We love to
see folks of all incomes living in the neighborhood.
So that's a package, but I think it's a really powerful
one, and it illustrates how local government can be an engine
and create opportunity.
Vice Chairman Schweikert. Doctor.
Dr. Schuetz. One example at the state level that I'm
watching, along with my colleague Dr. Furth, is the new program
in Massachusetts that requires all localities that have a
commuter rail station or a T station to allow some multi-
family.
And that was, you know, prompted both by the need for
housing but also things like declining ridership on transits.
You can kill two birds with one stone. We're still waiting to
see how that's going to work out, and I will say that the best
incentive to get local governments to update their zoning is
when their voters show up and say housing is too expensive and
we'd like you to do this.
But places that have done this have really had pressure
from the voters, pressure from constituencies, and they really
said this is something that actually can get them reelected the
next time.
Vice Chairman Schweikert. Thank you.
Mr. Peter. So Seattle is one example. So Seattle in the
1990's, they convened a study and they were realizing home
prices are getting out of sight, and we need to do something.
So as a compromise, they set aside certain parts of the city,
what they called urban villages, where they allowed townhouses
to be built instead of just single family detached housing.
And over the last 20 years, they've actually built 18,000
new townhouses, two-thirds of those are owner-occupied. They
are catered towards people earning about 80 to 100 percent, 120
percent of area median income. They are being purchased by
younger and more diverse group of people, and it's been a great
success.
It's been a great success, until in 2019 they became
greedy, and they thought well, let's create an inclusionary
zoning mandate, where we provide a little bit more density in
exchange for you to set aside a larger number for lower income
people.
On the rental side, it did make a difference. But for these
townhouses where they're selling them for homeowners, the
permits fell off a total cliff, and then this speaks to the
best practices that the federal government. The federal
government had actually came out and said this policy has been
a great success.
But in reality, they built hundreds of units, but it costs
them thousands of units. So this is a danger of getting the
federal government involved.
Vice Chairman Schweikert. Doctor, we're way over time, but
can you give me something quick, of what in general should I
look to?
Dr. Furth. Auburn, Maine is my favorite example. I got to
work with the mayor there on a huge community-wide upzoning
that absolutely involved elections. Going out there, pitching
it to the voters and saying I have a vision of growing our
community, and Maine's an aging state.
He said, you know, when was our town great? And they all
said the 60's, the 70's. He said you know what we were doing
then? We were growing. We were building housing units, we were
adding jobs and they're trying to get back to that. Thank you.
Vice Chairman Schweikert. Okay, and Mr. Chairman, thank
you, very patient. Another future question will be also
starting to talk about national demographics and where this
fits in. Thank you.
Chairman Heinrich. Representative Beyer.
Representative Beyer. Mr. Chairman, thank you very much,
and thank you very much for doing this. Dr. Schuetz, I live
right across the river, inside the Beltway. So the number one
political issue in Alexandria and Arlington, Virginia last year
was the missing middle. It tore the community apart. People
that had worked together politically for years hated each
other.
They ended up electing two members of the City Council, one
that was for the missing middle, the other was against. Now in
Alexandria this year, they just started last year in December I
think, they eliminated single family home zoning. No more from
now on. Once again, it's likely to be the centerpiece of this
coming elections this year.
How do we avoid the backlash? How does this not happen in
community after community all across the country, where the
people that are already there and love their single family
neighborhoods and their big lawns resist, and they're often, by
the way, the ones that have the most political power?
Dr. Schuetz. Some of this is about how the issue gets
framed, and if I had a magic wand I would actually wave it and
say nobody can say eliminate single family zoning or end single
family zoning, because for a lot of people that winds up being
very confusing, and they think it means make it illegal to
build single family homes, which is not what any of these
policy changes do. Often the advocates want to present this as
a big, radical change, when really what it means is we're going
to legalize building ADUs and townhomes. Arlington and
Alexandria have lots of beautiful townhome neighborhoods that
people love. So a lot of this is reminding people that it's in
fact re-legalizing things that are already in their community,
and often some of the neighborhoods that people want to live in
the most, and find very architecturally beautiful and very
human scale. Good elected leaders will figure out the
constituencies who are behind this, and also manage the
engagement process.
Once the NIMBYs get a big microphone and start sharing
their information, they can poison in the debate and make it
hard to put out facts. There's often a lot of disinformation
that gets shared around this. But this, you know, this takes
strategy at the local level.
The constituencies look a little bit different in smaller
communities that are worried about population loss, versus
places that are worried about having too many people moving in.
Representative Beyer. Thank you very much. Ms. Lopez, Mr.
Peter did a good job sort of blowing up a bunch of the myths.
One of the myths was that he tried to explode was that LIHTC
doesn't work. We now have a deal pending before the House and
the Senate that would expand that child tax credit, R&D tax
credit.
But they added an expansion of the LIHTC, which by the way
typically has hundreds of Democrats and Republicans for it. Can
you answer his concern that it's done nothing to improve
housing over the years?
Ms. Lopez. Representative Beyer, I'd love to. So again,
I've been working in this field for 24 years, and in my
experience as a development consultant-developer, being on a
housing finance authority, advocate, in Colorado alone the tax
credit program's created 80,000 units of affordable housing.
That sounds very successful to me. I don't have the New
Mexico numbers, but I would suspect 20 to 30 thousand, and we
do it very efficiently. Most state agencies are allocating
around, and they're giving us points to make sure that we're
building the most efficient green product we possibly can.
But that product is going to be affordable for 30 years.
They're managing to how much developer fee can be taken from
the deal. They're managing--they're making sure that we're
taking some debt. So this not all--we're leveraging private
funding, both in equity and borrowing.
And so it really is a public-private partnership to get
those deals done. I mean it's the most successful affordable
housing development tool in the country that Reagan created. I
mean he created it and it's how we get units on the ground. So
thank you.
Representative Beyer. That Reagan heritage may be how we
get Republican co-sponsors too.
Ms. Lopez. I think so.
Representative Beyer. Dr. Furth, George Mason University,
I'm very proud of that. You--I'm impressed with the factoid
that more Americans live alone than at any time in the
country's history, and a greater percentage live alone than any
time in our history.
During the pandemic, we saw lots of multi-generational
households maybe went back. How can we use this notion of these
one-person households to move housing in the correct direction?
Dr. Furth. Thank you Representative, and thanks for
representing my workplace. It's a great question. This is where
I think accessory dwelling units and other kinds of flexible
housing can be really valuable, right? A lot of times a single
person household is a stage of life, right? It's either early
adulthood or maybe after retirement.
You might go through a period where you're, you know,
retired and healthy, and then you might have a period where
you're retired and would really like to live next to somebody
who can help you out with moving heavy boxes or checking in on
you daily.
A large home is not the best thing for that. In a lot of
places, single family zoning functionally means you can't add a
kitchen. That's really what it boils down to, is if you build
another kitchen, you've broken the law. You can add a bathroom,
you could add anything else, but you can't build another
kitchen. Simply saying it's not local government's job to
police stoves, it really is the stove.
That's where like if you put in the larger electrical
outlet, that's when you--the moment you've broken the law. And
simply getting government out of that business and saying you
know, if somebody wants to break up their house and live on the
first floor and let their nephew live on the top floor or rent
it out, that's perfectly fine, and I think that would help a
lot of people.
Chairman Heinrich. Representative Ferguson.
Representative Ferguson. Thank you Mr. Chairman, and thank
you all for being here. I'm going to speak to you today and ask
questions from the point of view of being a former mayor of a
small town, and also as part of my past life, I was a very
small homebuilder during that as well.
When we talk about housing affordability, I want to come
back to the things that we've been discussing here. But I think
we should address the elephant in the room, which is the cost
of housing and the rapid rise in the increase in housing that's
occurred over the last couple of years.
We've got to do things to drive down the cost of housing.
That includes driving interest rates lower. Those interest
rates are being driven right now by inflation, and the Fed's
response to inflation. So how do we get that under control?
We have got to cut back on the federal spending and the
borrowing, but we've also got to increase productivity. We need
to be putting in pro-growth policies that drive the supply side
of our equation. I also worry deeply about the Fed's new
requirements in the Basel 3 section that I think is going to
further restrict capital.
And quite candidly, we've got to do more to drive energy
costs lower, so that we can get back to being energy
independent. Owning a house costs energy. It's part of--it is
part of the monthly equation and it's something that we've got
to address.
Another issue that is driving up cost is the available
workforce in the housing, in the construction industry. While
we are facing a crisis in higher education on all fronts, we
should be doing more to encourage people to utilize technical
schools and technical education and apprenticeships, and to
making all types of apprenticeships available, so that we can
get more folks interested in the trades that we need so
desperately.
I think that's really important. I also think we've got to
be thinking about how to be innovative in the use of
construction materials. Specifically one that I think makes a
lot of sense is using mass timber or cross-laminated timber. I
think that is something that we can build here in America, and
I think making some of the green energy tax credits available
for mass timber makes a lot of sense.
In order to do that, we've also got to increase education
awareness at our architectural institutes. But we also have got
to make sure that local communities, that zoning and planning
allows for this, and also we've got to make sure that the
inspectors and the permitting process allows for this as well.
And again, these are state and local issues, but we need to
be thinking about how we can encourage that to take place. Once
again, I want to go back to the energy piece of it. The higher
our energy costs, the less affordable the home becomes across
the board.
And again, I think driving down inflation, driving down
interest rates, increasing workforce and increasing the supply
side will make a huge difference in the overall cost of
construction. It does not matter how this, you know, how this
body looks at the best way to fund it, whether it's through
government subsidies or strictly on the private sector.
They earn enough money at the current costs. So we've got
to drive those costs down. I think, I think that's really
important. I want to push back on one thing, Mr. Peter, that
you said about LIHTC housing. As a former mayor, it does work.
But it is not the solution. It has to be part of an overall
development plan, and we should guard strongly against moving
this into the middle class.
Housing affordability in the middle class is a function of
construction costs, interest rates and really good-paying jobs.
I find it really interesting that most of the examples that
you've given are all around metropolitan areas.
You've talked about Oklahoma City, you've talked about Los
Angeles. You've talked about, you know, Denver, Colorado, to
other areas like that. So many of our fellow Americans live in
rural areas, and I think that what we've got to do is we've got
to rebalance the equation, both in terms of job production and
in terms of incentives for--to make, to close the economic
viability gap in rural America, because this place has done an
amazing job of turning rural America into an inner city.
I do applaud the efforts for--that you talk about with
zoning and planning. It is a tough, it is a tough row to hoe,
no doubt. But if you get the community on board, Dr. Furth like
you talked about, you can build something. You can change the
ideology of a community, and you can begin to put things in
place that make sense, that attract younger people to
communities.
I go back to what worked through many towns throughout the
south up until NAFTA, and that was these were mill villages
that were built around the textile industry, where you had many
small houses put together in a relatively dense area, and many
families lived not just for a period of time but for
generations, in these houses because these communities worked.
And finally, I'd like to touch on the fact that I think we
ought to really make it a priority to protect agricultural
land. Mr. Chairman, I think that that is something if through
the local zoning and planning and through the state, I think we
can protect that in economically, environmentally sensitive
areas.
Things like conservation easements are a really good tool.
They need some reforms. But they do help protect
environmentally sensitive areas. So I know I've spent a lot of
time talking. I love this topic.
Bottom line, so much of this has got to be done at the
local level, but our job here in Congress is to make housing
more affordable by ending the crushing inflation that is just
crippling American families up and down the economic spectrum
right now. With that, I yield back.
Chairman Heinrich. Representative Trone.
Representative Trone. Thank you Chairman, the staff for
getting us here today to talk about a plan to preserve and
expand affordable housing. Housing is a human right. Everyone
deserves a roof over their head. Yet in America, so many
families struggle to afford a home and 10 million renters, and
I find it unbelievable, 25 percent of those renters spend over
50 percent of their income.
I mean that's impossible to save money to buy a home. It's
impossible to save money for retirement, unexpected
emergencies. It puts them in an unattainable, difficult
position. So Dr. Deutsch (phonetic) and Ms. Lopez, you both
highlighted the importance of federal action.
We just got some good news. The Ways and Means Committee
said they hopefully have struck a bipartisan deal on child tax
credits and the low housing income tax credit. What impact will
expanding that housing tax credit have on the housing market,
especially for these low income and middle income families?
Lopez first.
Ms. Lopez. Thank you, Representative. What a wonderful
question. I mean this legislation that is coming about right
now immediately, it's going to create 200,000 rental homes for
low income households across the nation. This is one of the
biggest investment we've seen in 35 years. It cannot be
understated how important these units are to preventing
homelessness.
We've seen an incredible increase nationally to
homelessness. The majority of that is a simple equation. I
cannot afford my home. I'm going to be displaced. And so again,
this is, this is going to be a game-changer for local
communities, providing stability, creating housing for a local
workforce and just helping people be active citizens
participating in their local communities so they can change
land use. So it's very important.
Representative Trone. Doctor.
Dr. Schuetz. I'd actually love to pick up one of the other
pieces that's in the new bill, which is the expanded child tax
credit. We know from some early evidence on the child tax
credit from the previous year that many families with kids use
that extra money to pay for their rent, to pay for their
utility bills, to pay for necessities for their kids.
So one of the really great things is that providing cash to
people allows them to balance changes in their expenditures
across time. Housing vouchers are very effective at covering
the rental part, but providing people with cash through the
child tax credit or the earned income tax credit allows them to
balance when their expenses change from month to month. So
that's fantastic.
Representative Trone. Strongly agree. In my district,
Hagerstown, Maryland, we're increasing the development of
manufactured homes, to boost affordable housing options. I'm
proud of the work being done there. It could be a model perhaps
for other communities. Dr. Deutsche, could you talk about
removing zoning restrictions on manufactured homes or mobile
homes, how they can benefit rural communities?
Dr. Schuetz. Manufactured and mobile homes are a really
important part of the affordable housing stock in rural areas,
and even in some urban areas that have relatively inexpensive
land, places like Pittsburgh. Sometimes it's written into the
zoning; sometimes it's actually a part of the building code;
and sometimes there are issues with the financing, because
mobile homes tend to be financed differently than stick-built
homes.
But those are hugely important things to focus on in a lot
of smaller communities, and it's great when communities start
to tackle those barriers.
Representative Trone. Ms. Lopez, take a second and talk
about the importance of financial incentives. You've hit it a
couple of different times, and sometimes we don't have the full
agreement on that. But how do we incentivize these developers
to build these low income housing, affordable housing versus
mid to upper income housing, when I think they're going to make
more money? How important are these incentives?
Ms. Lopez. Thank you, Representative Trone. It's incentives
and it's just the only way it's financially feasible. So I kind
of want to separate those two things. When we talk about
incentives, it's really local governments getting
infrastructure and developers, they have to have profit. That's
how it works, and we support that. But they cannot both deliver
products if the costs are too high, interest rates are too
high, when we're trying to create rental housing serving that
costs 400 to 1,200 to 1,300 a month.
The economics don't work. There's a gap that has to be
filled. So you know, we fill it with tax credits. We also fill
it with an incredible, robust system of CDFIs across this
country. We fill gap all the time with lower interest rates. We
have a lot of great tools at the federal government level.
So I love the tax credit program and the CDFI program. But
I need them all because my development partners say to me hey
Jenn, this isn't financially feasible. I'm going to go next
door and do something else.
Representative Trone. Just quickly, we're going to have a
huge glut of empty office buildings throughout so many major
cities. How do we pare that empty office building glut with--I
was in a homeless shelter just two days ago, and you know,
we've got so many hundreds of thousands of homeless.
I heard the statistic a minute ago, it's mind-boggling. You
know, how do we pare that against low income housing,
homelessness and try and figure how to connect those two dots
together? You want to take a stab at that?
Ms. Lopez. I would, Representative Trone. Thank you so
much. This is maybe the best topic of the day. I totally agree.
Something that we learned during the pandemic is when
commercial spaces lost value when we went back home to work,
when motels were down. We were able to quickly pivot those
properties and repurpose them.
We saved lives. We created bridge programming. We are able
to convert those into tax credit apartments. We had some zoning
challenges, but I think one of the greatest incentives we had
was the ARPA funds.
If we hadn't had the creativity and the resources of the
ARPA funding, there's no way that the state could help its
local government partners go out, acquire the property and take
a little bit of risk to repurpose these. They were very
successful. So that, that's another tool that I think is
helpful.
Representative Trone. Thank you.
Ms. Lopez. Thank you.
Chairman Heinrich. Senator Hassan.
Senator Hassan. Thank you Mr. Chair and Vice Chair. I
really appreciate the topic of today's hearing, and I want to
start with a question to you, Dr. Schuetz. According to recent
estimates by the New Hampshire Housing Finance Authority, my
state needs more than 23,000 housing units right now. This is
in a state of 1.4 million people, to address our housing
shortage, and we need even more in coming decades.
So I'm focused along with a bunch of other people on
bipartisan solutions to increase our country's supply of
affordable housing. Doctor, can you expand on the options
available to Congress to support the construction of new
housing?
Dr. Schuetz. So Congress has somewhat limited options on
the zoning reforms that we've been talking about. But it can
play a really important role in helping communities learn what
kinds of policy changes work and adopt those. Ms. Lopez brought
up the issue of technical assistance. That's incredibly
important, particularly in a lot of places like New England,
where you have very small cities and towns.
They have one planner and asking that one planner to figure
out what they're supposed to do and implement new, innovative
programs is just very difficult. Technical assistance and
making guidelines accessible is one of the most useful things
the federal government could do.
Senator Hassan. Well that's excellent. I would also add
that some of our local processes. It isn't necessarily just the
laws or the rules. It's the processes themselves that are
rooted in the 18th and 19th century, maybe could use some
updating while still maintaining transparency and local control
and oversight, which is also so important. So I appreciate that
very much.
Ms. Lopez, I want to talk to you a little bit more about
the low income housing tax credit. From my perspective, this is
a key bipartisan tool for increasing the supply of housing in
New Hampshire. Again, we've been talking about this in the
latest bipartisan tax agreement that we have just announced the
framework of.
But to follow up on the answers you've already given, can
you elaborate on how LIHTC helps state housing authorities
finance more affordable housing units, because I think that's a
critical piece?
Ms. Lopez. So thank you, Senator Hassan. I'd be happy to.
So again, the tax credits flow to the state agencies. The state
agencies create priorities for how to award those credits, and
this new credit legislation is powerful in that it not only
gives us a bump, that 12 percent bump we need, 12-\1/2\ percent
bump we need to get back to where we were in 2021; it also
allows us--it decreases the amount of private activity bond we
need to utilize, fully utilize the four percent tax credit.
That's a lot of jargon to say we have a lot more rocket
juice to build housing and build it quickly and build it now.
So that's power of the tax credit program and the reforms that
are in place. One other comment I want to make, Section 8 is a
huge, powerful tool as well. We don't have units to put our
Section 8 vouchers in. So we will better deploy the existing
federal resources we have. That's really powerful. So thank
you.
Senator Hassan. Well thank you for that, and one last
question to Dr. Schuetz again. I want to turn to the issue of
rental housing that some of my colleagues have raised, because
a recent academic study found that eviction threats are
associated with worse health outcomes for renters. Safe, stable
and affordable housing is really essential for health and well-
being.
We know that a significant number of evictions occur when a
tenant owes only a couple of hundred dollars or less, really
small differences in a lot of our rental units.
To keep Granite Staters safely and stably housed, I've
previously introduced the Prevent Evictions Act, to provide
grants for landlord-tenant mediation programs which would
reduce the number of small dollar evictions, which also just
create a lot of turmoil and turnover not only for tenants but
for landlords too. So can you discuss how insuring stable
housing can complement public health efforts?
Dr. Schuetz. Absolutely. Going through being evicted and
the instability that that provides in a family is really
devastating, especially for families with kids who are a
disproportionate share of people who wind up being evicted.
Things like eviction prevention programs, providing mediation,
access to short-term emergency funds. Again, the emergency
rental assistance during the pandemic showed us that relatively
small amounts of money can help some tenants.
That's not a solution for people who are perpetually behind
on their rent. So having vouchers or some sort of long-term
income support matters as well. But we can save some people
from being evicted for relatively little money, and prevent
landlords also from having to go through that.
Senator Hassan. Well I really appreciate that, and I also
appreciate the comments about the expansion of the child tax
credit, because again giving people that--we know that people
spend that on essentials like rent, like food.
They also--sometimes it means they have a little bit of
money left over to help their kids, for instance, participate
in school programs, such an important thing. So thank you all
very much for your work.
Chairman Heinrich. Representative Arrington.
Representative Arrington. Thank you, Mr. Chairman. Can you
hear me? Yes, we are live. I think we've done a number on this
economy if you look at the people who build the homes, or those
who buy or rent those units of housing. We've had the worse
combination on the supply and demand side to throw this system
into a bit of chaos, especially for the consumer.
We've constrained supply with higher taxes and regulations.
By ``we'' I say my Democrat friends and this administration, by
paying people more than they would have made in their previous
job while on unemployment insurance. Now I don't think that
exists today in fairness. Repealing work requirements which--
both of which created a labor shortage and I think once you
take this employee retention credit away, you'll see that play
out in a much bigger way on this economy.
And then of course energy costs have skyrocketed on account
of the energy policies of this administration. Now I'm not mad
necessarily. I'm just stating what I believe are the facts, and
on the other side of the supply/demand you've got what was $11
trillion in spending over the last few years, six trillion of
which went to the national debt. That's another concern and
another topic for another day.
But so you just--you have a real mess, and what is our
first instinct? Let's subsidize it. Let's intervene with some,
you know, blanket Washington policy, and look. I get it. There
are instances probably where the Tax Code provides an incentive
for a behavior that we either want but don't get because maybe
there's a market failure, or we need to accelerate behavior
because we think it's in the best interest of the public. There
are times when that is appropriate.
I'm worried that the tax credit for low income housing is
really treating the root causes of the high cost of low income
housing, and it's just addressing the symptom, and we're
actually enabling some of the supply side problems at the state
and local level with zoning, environmental and other legal
policy and otherwise regulatory barriers and costs and
constraints.
Which is why I think, and I don't mean to pick on
California, but I think that's why people are leaving
California. They cannot afford to live in California, and I
think a lot of that is self-inflicted. Now there are policy
choices, and Californians have the sovereign freedom and right
to choose their path, but they have to live with the
consequences.
And half of the people leaving California end up in Texas,
where the average price of homes, by the way, is about $280,000
less, $280,000 less. So policies have consequences. I mean at
least they do at the state and local level.
And that's the interesting thing, Mr. Chairman. They have
consequences at the state and local level because they have to
pay for it. They have to balance their budget. What we'll do,
whether this is good or bad or somewhere in between in terms of
low income housing or whatever the federal fix, we'll have our
children pay for it.
They'll be stuck with the bill. You saw where CBO
miscalculated. They thought that the deficit last year would be
1.6 trillion. It was 2.6. They were a trillion dollars off. So
I like the economic rational trade-off and dynamic that exists
at the state and local level, because it's real. It's not real
up here.
So they can decide, Texas and California and others, how
best to solve this problem. I guess here's my bottom line, Mr.
Chairman, on the LIHTC for example. It may be better than other
federal interventionist strategy, but I don't know that that
credit is actually passed to the consumer with lower prices.
I think lawyers are getting it, landowners are getting it,
and I bet you there are studies, and I know I've gone way over
my--well, I'm six-seven seconds, eight seconds over my time.
But I bet that there's studies, Dr. Furth and Mr. Peter, if the
Chairman will indulge me, that suggest that that money that we
want, all of us want to go to the renter to have more
affordable housing, which we all want, bet it doesn't really do
that.
Chairman Heinrich. Is there a question mark in there?
Representative Arrington. That's the--yeah, I kind of--I
say that with an inflection of a question mark at the end.
Chairman Heinrich. Mr. Peter, do you want to address that
really quickly and then I'll----
Representative Arrington. Mr. Chairman, I hate when
people----
(Simultaneous speaking.)
Chairman Heinrich. I'll ask Ms. Lopez to also address this.
Representative Arrington. Thank you, Chairman. I
appreciate.
Mr. Peter. I'll do it real, real quick. So we have a huge
housing supply shortage and, you know, four million all the way
up to 20 million, whatever study you believe. Any time you
increase demand against a limited supply, you're going to end
up driving up prices or rents, and that's exactly the wrong
approach that we need to do.
We need to do more. We need to loosen supply restrictions
so we can get our supply and demand more in balance. And in
order to do this, we need state and local reform.
Chairman Heinrich. Ms. Lopez, do you want to address that
same issue?
Ms. Lopez. Sure. Thank you, Chair Heinrich. Sir, I agree
with a lot of what you're saying, but I want to clarify about
the tax credit program, because I can. So in the many years
that I've done the program, how it works, right, once the
credits are sold, we build the building. It's a regulated
program. There's lots of involved partners or parties, making
sure that we are serving the people we intend to serve.
And how we do that is there are income certifications every
single year. Every year we look at that building, you know, who
is being served and are they the right income. The only way we
can serve that income is if the rent is low. So it's a very
established program, heavily regulated, very low defaults.
And so I am very confident in saying that when we invest in
a tax credit housing project, it's serving the people we want
it to serve. So thank you.
Chairman Heinrich. Representative Porter.
Representative Porter. Thank you very much. America doesn't
have enough affordable housing. I think that's something
actually that the witnesses generally agree on, even if we
disagree on the solutions. So let me start by just making sure
we all understand the scale and the magnitude of the problem.
So Dr. Schuetz, about how many homes do we need to solve
the affordable housing shortage?
Dr. Schuetz. So the best estimates that we have at the
moment suggest we need about four million total homes across
the country. That's not specific to an individual income level.
Those are a little bit harder to come up with.
Representative Porter. Okay. So four million's kind of the
minimum? Some people have gone as high as six and seven million
in their estimates. This is a four million family problem. This
isn't one where we're going to just be able to tinker a little
around the edges, which is one of Washington's favorite things
to do.
One of my questions is we've heard about this new tax
package, which I should say I have no idea if this is actually
going to pass into law. We don't yet have the support of all
the leaders we need, and Republican or Democratic side on it.
But what we're told is that this would be, and I think this
is correct, the biggest investment in housing in 35 years. Is
that correct, Ms. Lopez?
Ms. Lopez. That is correct. Thank you, Representative.
Representative Porter. Okay, and how this biggest
investment. Remember, here's the problem. Four to seven million
families that can't afford or don't have housing. That's the
size of the problem. This biggest investment in 35 years. I'm
so excited. How many affordable homes would it build?
Ms. Lopez. 200,000.
Representative Porter. Wait, say it again?
Ms. Lopez. 200,000.
Representative Porter. 200,000. So herein lies the problem.
While I am grateful that my colleagues on both sides of the
aisle are willing to do something, the biggest problem we have
had in housing for 50 or 60 years is that folks in Washington
don't do much of anything.
You don't have a four to seven million shortage in a year
or two. You have it because we have an entire generation or two
of career politicians who have failed to invest in housing. And
what is happening today in this hearing is part of what always
happens, which is the federal government blames the states, the
states blame the counties, the counties blame the localities
and then back up the chain we go.
How many times have you seen this movie? Raise your hand if
you've seen this movie on housing. This isn't the answer.
Housing, nothing is more determinative of a family's well-being
financially in terms of their health, in terms of their
physical safety, in terms of their kids' educational
opportunity, in terms of their retirement, than housing.
And what we want to do today is try to figure out who to
blame. What it means to me to be a leader is to step up and own
the very biggest problem that American families are facing, and
today, across the country not just in California although
certainly there too, it's housing.
So tell me, Ms. Lopez, what could we do if we actually
passed the Affordable Housing Credit Improvement Act, rather
than doing a little? What would that full bill do if we passed
that?
Ms. Lopez. Thank you Representative Porter, great queue up.
We could build 200,000 dollars, 200,000, 200,000 homes in
partnership with local and state government. Local and state
governments are working every day to find resources.
Representative Porter. So Ms. Lopez, just to clarify.
Ms. Lopez. Oh yes.
Representative Porter. The full Affordable Housing
Improvement Act. We're only doing a part of it in this tax
package, right?
Ms. Lopez. You might have to give me that answer. I
actually don't have that off the top of my head.
Representative Porter. So these credits, the bump, the 12-
\1/2\ percent, are these permanent? No, they're temporary.
Ms. Lopez. No. Thank you.
Representative Porter. They're temporary, right? So we're
doing the right thing, but only for a little bit of time.
That's why we're only going to get 200,000 houses out of this.
Ms. Lopez. Thank you, yes.
Representative Porter. You see the desperation that your
clients face battling each other over who's going to get these
homes. It took us two generations of failure of investment to
get this situation? We're not going to get out of it with
200,000 homes. And by the way, we're not going to get out of it
with only federal government action. It is going to take
states. It is going to take counties. But they need to be all
in and engaging here, not tinkering at the margins.
So look, for people at home, I think it is so often the
case in Washington that we can say well, this is Republicans'
fault. My Democratic colleagues do this. Democrats blame
Republicans. The Affordable Housing Credit Improvement Act, the
full bill, do you know how many Democrats and Republicans
sponsored that in the House by chance?
Ms. Lopez. I don't, but I know it's the most popular bill,
and that's enough for me.
Representative Porter. Over--I have the exact numbers for
you.
Ms. Lopez. Thank you.
Representative Porter. 104 Democratic co-sponsors. Do you
think we have like a Republican who will sign on? No, no. We've
got 103 Republican co-sponsors. So when a body where I am hard-
pressed sometimes to find a single member who will agree, we've
got 104 Democrats and a 103 Republicans. But this bill hasn't
been on the floor. We haven't voted on it. In my five years in
Congress, we have taken 2,686 votes, not one of them to pass
the most effective federal policy we have on housing. I yield
back.
Chairman Heinrich. Senator Klobuchar.
Senator Klobuchar. Thank you. Ms. Lopez, I was just out in
rural Minnesota last Friday, a bunch of towns. Housing one of
the number one things. Could you talk about the workforce
shortage? It's part of why I have worked so much on
apprenticeships and also on immigration reform, with the
potential for visas, work permits, whatever we can do to get
there, as well as pathesis and CHIP. That would be helpful.
Ms. Lopez. Thank you so much. Yes, and I'm a huge fan of
your work in Minnesota. We get calls weekly, monthly from
developers saying okay, I'm coming to this part of the state.
Tell me who the workforce--how do I find my contractors? Can
you give me some leads? It's a constant issue.
So we absolutely have to pair all of this work with
building the workforce on the ground. There's best practices
all over the country. It's usually our community colleges
that's our trades skills. So I think we can all agree that
there's a win-win there.
Modulars is a good solution. You still need people to lay
the groundwork and build those modular components in a factory,
you know. So that is never going to be the solution. So
workforce, we need it, and it's really difficult in rural
areas. Some of our developers literally travel with their
construction teams in order to take on jobs. So it's a big
challenge.
Senator Klobuchar. It's very hard. No great nation has
expanded with a shrinking workforce. We can try to be the first
experiment, but I don't think we should. Mr. Peter, you were a
foreign exchange student to one of my favorite mayors; is that
correct?
Mr. Peter. Yes.
Senator Klobuchar. Excellent, and you've kept up contact
with him, which I now know by text. Could you talk about--
you've talked about in the past increasing density, the value
of doing it along transit corridors? We are trying to do a lot
in Minneapolis on this front. You have to get zoning changes,
this is local, things like that. Could you talk about the value
of that?
Mr. Peter. Sure. I mean yes. So Minneapolis already passed
some reforms a couple of years ago, and to great fanfare.
Unfortunately, I don't think Minneapolis did it right, and St.
Paul now has followed suit, and I don't think they did it right
either.
Senator Klobuchar. So how do you think we should do it
right?
Mr. Peter. So they've--they basically in their zoning code,
they removed the word ``single family'' and replaced it with
``duplex'' and ``triplex.'' But they did not change the floor
area ratio that goes along with it.
Senator Klobuchar. I see.
Mr. Peter. So if you have a lot of 6,000 square feet and
the floor area ratio the maximum is 50 percent, you can build a
structure of 3,000 square feet. But you know, with 3,000 square
feet it's hard to build a triplex, for example, which each unit
will only be 1,000 square feet.
So in conjunction--it's not just enough to get rid of
single family detached zoning. You also need to put in place
other reforms like parking reforms, like higher floor area
ratio requirements.
Senator Klobuchar. Right.
Mr. Peter. So it should be looked at holistically, and at
the same time, I don't think you necessarily look at transit
corridors is the right solution either. I think if you make it
more broad-based, you can get multiple benefits. If you only do
it transit, you're going to get very expensive housing and
you're going to get mostly rental housing.
If you do it more broad-based, where you allow townhouses,
for example, these townhouses overwhelmingly tend to be owner
occupied. So you can increase home ownership and you can open
up opportunities for people to build wealth, because when
they're home owners, they're going to pay down their mortgage.
And also these townhouses are larger, so they're more
family friendly versus in the transit corridors, you only get
on average about a bedroom. Versus over here, with what we call
light touch density, you get two-three bedrooms, which is more
beneficial to families.
Senator Klobuchar. Thank you. Dr. Schuetz, if we could talk
about algorithm, always fun, and what is going on right now
with pricing tools that collect highly sensitive data from
landlords. Senator Lee and I had a major hearing on this. We've
done a lot on tech, and so could you talk about pricing tools
and what could occur with price increases?
We're very concerned, a number of us, Democrats,
Republicans, of just beyond housing, just what's going on with
potential price fixing through people using other outside
companies, that then get hooked into algorithms that actually
result in price fixing. Go ahead.
Dr. Schuetz. Sure, thank you. We've seen in the last couple
of years increasing use of these outside platforms, who manage
the rent rolls for a large number of properties across
different landlords, and they are collecting data because they
collect data on the vacancy rates and on the rents and what the
rents look like at turnover, and are sharing that potentially
across multiple companies.
I will say this is an area that's still quite new and the
data's mostly proprietary, so it's very hard to know what's
going on. So this is an area where I feel like there's a lot to
be learned still, and having more transparency in the data, in
what they're collecting and how it's being used.
Some of this is really beneficial. So for instance, they're
providing data that supplements the CPI rent index that
provides more frequent updates. But this is just an area where
I think knowing more about what's going on inside the black box
would be very beneficial.
Senator Klobuchar. Uh-huh, very good. Thank you.
Chairman Heinrich. Senator Fetterman.
Senator Fetterman. Thank you Mr. Chairman, and what a
jackpot. My colleague from Minnesota and Representative Porter,
and I was even hoping that there would be a white board here to
take it on. And the nicest student in D.C. right there, my
colleague from Vermont. So I'm grateful for the opportunity.
And now homelessness is, it's really an issue. I think we
can all agree on that. It's been me talking about that, and
it's a crisis. And so Dr. Schuetz, you've all outlined that the
decay of existing homes contributes to the housing shortage,
right? You know, and we can't--we can't increase the supply if
we are losing existing homes. Do we agree with that? And
certainly it's the fastest we can build it.
And now I know that you're very familiar with the Whole
Homes Repair Program, right? Now I want to net check. Senator
Nikil Saville, Saval in Pennsylvania, and he was my former
colleague in Pennsylvania, and he is a senator. Now he, that's
the brain of his, and he came up with this.
And Senator Saval is very, very left, you know,
politically. And the Republican senators in our Senate are
very, very right, but somehow they put this remarkable thing
together and it's an amazing thing. You know, can you talk
about that program, and do you think that that could be even a
national model?
Dr. Schuetz. Yeah. We haven't talked much today about the
quality and age of the existing stock, but that's a very close
corollary with the lack of available homes. A lot of our homes
are aging. They are not in great quality, and historically we
haven't really provided programs and incentives or subsidies
for people to maintain the quality of homes.
So every year some of the lowest-cost homes fall out of
useability because they are so old and they become unsafe, or
they become ripe for being bought and gut-rehabbed and become
expensive. So maintaining the quality and habitability of
existing older homes is really important. We have limited
programs. The Department of Energy's Weatherization Assistance
Program is the main one, and that only serves very targeted
kinds of needs. So my understanding is that the Whole Home
Repairs Program would provide more holistic funding, not just
for things like weatherization and energy efficiency, but also
for major repairs and for climate resilience.
So that would enable both homeowners and landlords of
properties that serve low income tenants to maintain the house
in better condition, and that's a really important part,
because once those units are lost, we never get them back.
Senator Fetterman. Yeah, and I would just like to remind
that a very term, very, very left state senator created this
working with very, very conservative Republican members of the
Senate. Both sides were excited about this. I mean that's a
unicorn as far as I know. I've been around long enough to know
that, and I really would love to see that expand on a national
level, because it addresses a very significant issue,
especially in states like mine in Pennsylvania.
Now pivoting over to this idea that, do you agree with the
statement that there's just way too much red tape and zoning,
and it really seems--it seems much too expensive that it, you
know, to build these kind of homes. Can we make this more cost
effective? And I'm not suggesting that we not use union kinds
of work. But you know, it just seems like it's got to be able
to make that work to the problem. Or anyone, I'm sorry.
Dr. Schuetz. Yes, and I think it's a good reminder that we
want to look across the range of regulations. We've been
talking a lot today about zoning, but we also want to look at
things like building codes, at some of the environmental
reviews which unfortunately in states like California often
gets weaponized to block programs.
So just making sure that the regulations that are in place
are about health and safety, and not just about creating
process and making it longer and more difficult to build.
Senator Fetterman. Yeah. I think to your average person, it
would be like why does it take so expensive when we have such a
real problem of homelessness here? You know, I think we should
just arrive where we can address it and not make it any less
safe, and just make it more efficient and make it more cost
effective. I just have to believe there has to be an answer.
And lastly, you know, what kind of policies should we be
tying to land use reform for these communities, the ones that
are left behind?
Dr. Schuetz. So the----
Senator Fetterman. I'm not picking, but you know, whatever.
Dr. Schuetz. Sure. The affordability problem is hardest,
and in places that have often very well-paid jobs. But it's
also we're thinking about places where housing is affordable,
but don't necessarily have economic opportunity.
One of the hopes of sort of broad-based zoning reform, as
Tobias was saying, is that opening up the ability to build more
homes in communities that have good jobs and have access to
transit and good public schools, enables more economic mobility
and more opportunity.
Senator Fetterman. Thank you. Thank you, Mr. Chairman.
Chairman Heinrich. Senator Welch.
Senator Welch. Thank you very much, Dr. Furth. Any time you
want to come here and brag about Vermont, I hope you'll be
invited. You're certainly welcome. I appreciate that.
Just a couple of things. One, there seems to be real
consensus that the zoning, the local steps that can be taken
only locally on zoning and regulatory review, there's a lot of
action around the country on that, and Vermont certainly is
doing it.
But there's a couple of things we haven't talked about that
have become factors, and I'd like to get your opinion on it. In
Vermont after COVID, a couple of things happened. Number one,
an enormous number of people from out of Vermont came and
bought a second home, and those are effectively beyond reach
now for local folks.
Number two, a number of investors came to Vermont, bought
up homes and turned them into air bnbs, and those are now off
the books. And as much as we're aggressively doing all we can
to build new affordable housing and dealing with local
regulations, it takes a longer time in order to do that, and
we've got a real crisis.
If you've got workers in ski areas, they live an hour and a
half away. There's no chance that they can get a good place to
live where, when I first went to Vermont, that was not a
problem. But the third problem that is enormous is workforce.
We just don't have the folks that are the electricians and the
plumbers and the roofers and the drywall folks.
That is a huge problem, and then really finally on the
market, if you're a contractor, you make a lot more money
building a pretty luxury second home as opposed to affordable
housing. And we haven't really talked about those factors that
are a real dynamic that I suspect affects not just Vermont, but
I'll bet a lot of other places as well.
I'll start with you, Ms. Lopez. What about those factors
and what do we do?
Ms. Lopez. Just one comment on that, thank you. Thinking
about the second home, it's all over the territories and states
I work. And so the ways that we're kind of tackling this is
we're thinking about taxing those second homes so we can create
funds to offset the impacts, the real impacts.
The other things we're doing is where we can get accessory
dwelling units for the workforce, not only is it a change in
zoning, it requires financing so that you can help that
homebuyer provide that ADU, and then you want to have local
residency requirements. So that's that piece. Ask your question
again?
Senator Welch. That's how it's happening by the way, like
with hospitals when they want to get workforce. You know,
employers can't hire somebody because they--for someone a
really good job, they really want to come to Vermont, and one
of the partners comes and is unable to find a place to live.
Ms. Lopez. So we're seeing a lot of interest in employers,
stepping in to help solve these issues. But I'm going to hand
the workforce off to others, because that's not my expertise.
Thank you.
Senator Welch. Yeah.
Dr. Schuetz. Yeah, it's come up a couple of times today
that we don't have enough construction workers, and that's a
real problem. Some of that goes back to the Great Recession.
People who would have gone into construction trades as
apprentices didn't because there weren't construction jobs.
We also had a slowdown on immigration, and that's one of
the main sources of the construction workforce. The
construction industry knows this, the homebuilders know this.
But a push to get more kids in high school and people who are
out of school and may be a little bit older to retrain.
Construction jobs are really well paid and if you're an
electrician or a plumber, you're never going to not have a job.
And so getting more people into these fields, getting them
trained would help us provide good jobs for people, and would
also help us build more homes.
Senator Welch. Mr. Peter wants to say something. By the
way, this is an area where, you know, I know you put a lot of
faith in the market, but this is where in terms of the market
meeting the needs of every day people, I do believe it's a
total market failure for a lot of reasons. But the market won't
solve it, as I see it. But go ahead.
Mr. Peter. Yeah. Let me, let me give you an example from
Montana, because we just--I just heard the governor of Montana
speak on this workforce issue and they have massive problems
out in Montana. But he--what he suggests, what they're doing is
educational reimbursement credits for these trade jobs. The
second thing that he mentioned is they looked at the amount of
trained, the amount of tradesmen, the ratio of tradesmen to
apprentices.
And in the old day, the old days was that you had two
tradesmen for one apprentice. So now they flipped the ratio
from now it only takes one tradesman for two apprentices. So
over time, they're going to get a lot more tradesman through
these small regulatory changes.
And then third thing that they've done out in Montana is
they've attracted a modular homebuilder, and they have people
that can pour the concrete, even in more rural areas, but they
didn't have the people to build the homes. So hence, the
modular housing coming in and they can assemble it on site, put
a little bit of the plumbing, the electricity and they can
cross-train people, you know. But that seems to be working in
Montana.
Senator Welch. Okay, thank you. My time is up, so I'm not
going to be able to hear from you. I yield back, Mr. Chairman.
Chairman Heinrich. Vice Chairman, do you want to leave us
with your closing thoughts?
Vice Chairman Schweikert. A couple of things, Mr. Chairman.
I'd like to actually throw a couple of articles into the
record, just for reference.
Chairman Heinrich. Without objection.
[The articles of Vice Chairman Schweikert appear in the
Submissions for the Record on page 110.]
Vice Chairman Schweikert. Mr. Chairman, thank you for doing
this. The reality we could all be--well, a couple of you
already have done through your Ph.D. theses on this, on just
portions of this. We have to deal with the reality of the
demographic changes, migration, and we also--something we've
been trying to have a conversation with the Joint Economic
Republican economist is are we making policy that's prepared
for the technology disruptions that are coming.
What will jobs look like in a few years, you know? And I
hate to use the pop culture words, but whether it be AI,
whether it be other types of technology, whether it be just the
fact of the aging of America. We've had, seen some things in
Arizona where a lot of our tradesmen retired, you know, and the
next generation, you know, there wasn't that pipeline and yet
you'd look at the demographics.
So thank you for doing this hearing. There's a lot for us
to understand, and then there's one last request I have. I
would--because it came up two times in opening statements. What
federal land, if there's ever research or a map, if any of you
know it, that would be available, particularly around urban or
smaller communities, that would make a rational way to trade
into development or actually have the federal government sell?
Because for many of us in the west, we have sort of
leapfrogging type development, and then often that
leapfrogging, the infrastructure cost is one of the drivers of
why that underlying real estate is so expensive. And just from
basic urban planning, it's an irrational way to do it.
And so I'm trying to think of the things we can do policy-
wise as members of the federal side, that don't necessarily
rely on additional subsidies, but actually would rely on better
policy. With that, I yield back.
Chairman Heinrich. Well, I want to thank everyone who
participated today, certainly my colleagues, our incredible
witnesses. You know, one of the things that is always
interesting out of these hearings is that you really do get
some ideas for where there is some common ground.
There are always things that we disagree on, but I have to
say I was really surprised that all four of our witnesses today
agreed. Having some scars myself from my days as Land Use chair
in the Albuquerque City Council, that reforming exclusionary
zoning is a key part of this and works.
I think that's, that's a great lesson. The emphasis across
the board on the dais here, on apprenticeships, also really
interesting. We clearly need to make that workforce match up to
the demands that we have today. And then this idea of tax
treatment between investors versus actual homeowners is
something, a question worth diving into.
So I want to thank everyone. Any additional questions for
the record may be submitted after the hearing, and the record
will remain open for three business days. The hearing is now
adjourned.
(Whereupon, at 4:05 p.m., the Committee adjourned.)
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