[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

                               __________

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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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