[Senate Hearing 118-185]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 118-185


                       THE STATE OF HOUSING 2023

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                                   ON

          EXAMINING THE CURRENT STATE OF HOUSING IN OUR NATION
                               __________

                            FEBRUARY 9, 2023
                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


                Available at: https: //www.govinfo.gov /
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
54-466 PDF                WASHINGTON : 2024   

            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                       SHERROD BROWN, Ohio, Chair

JACK REED, Rhode Island              TIM SCOTT, South Carolina
ROBERT MENENDEZ, New Jersey          MIKE CRAPO, Idaho
JON TESTER, Montana                  MIKE ROUNDS, South Dakota
MARK R. WARNER, Virginia             THOM TILLIS, North Carolina
ELIZABETH WARREN, Massachusetts      JOHN KENNEDY, Louisiana
CHRIS VAN HOLLEN, Maryland           BILL HAGERTY, Tennessee
CATHERINE CORTEZ MASTO, Nevada       CYNTHIA LUMMIS, Wyoming
TINA SMITH, Minnesota                J.D. VANCE, Ohio
KYRSTEN SINEMA, Arizona              KATIE BOYD BRITT, Alabama
RAPHAEL G. WARNOCK, Georgia          KEVIN CRAMER, North Dakota
JOHN FETTERMAN, Pennsylvania         STEVE DAINES, Montana

                     Laura Swanson, Staff Director

               Lila Nieves-Lee, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                  Amber Beck, Republican Chief Counsel

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                       Pat Lally, Assistant Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                       THURSDAY, FEBRUARY 9, 2023

                                                                   Page

Opening statement of Chair Brown.................................     1
        Prepared statement.......................................    28

Opening statements, comments, or prepared statements of:
    Senator Scott................................................     3
        Prepared statement.......................................    29

                               WITNESSES

Christopher Herbert, Managing Director, Harvard Joint Center for 
  Housing Studies................................................     5
    Prepared statement...........................................    31
    Responses to written questions of:
        Chair Brown..............................................   104
        Senator Warnock..........................................   106
        Senator Fetterman........................................   108
Robert Dietz, Chief Economist and Senior Vice President for 
  Economics and Housing Policy, National Association of Home 
  Builders.......................................................     6
    Prepared statement...........................................    60
    Responses to written questions of:
        Senator Sinema...........................................   112
Lance George, Director of Research and Information, Housing 
  Assistance Council.............................................     8
    Prepared statement...........................................    75
    Responses to written questions of:
        Chair Brown..............................................   114
        Senator Fetterman........................................   115

              Additional Material Supplied for the Record

Statement submitted by Senator Cynthia Lummis of Wyoming.........   117
Letter submitted by Jeffrey Bode, President and CEO, Click n' 
  Close, Inc.....................................................   118
Joint letter submitted by Cedar Band of Paiutes Indians, Lower 
  Brule Sioux Tribe, and Rosebud Sioux Tribe.....................   124
Letter submitted by NAA and NMHC.................................   133
Statement submitted by Zillow....................................   141

                                 (iii)

 
                       THE STATE OF HOUSING 2023

                              ----------                              


                       THURSDAY, FEBRUARY 9, 2023

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:09 a.m., via Webex and in room 538, 
Dirksen Senate Office Building, Hon. Sherrod Brown, Chair of 
the Committee, presiding.

            OPENING STATEMENT OF CHAIR SHERROD BROWN

    Chair Brown. Welcome back to many of you, fewer of you, but 
thank you for sticking around, Jack and Mike; I appreciate 
that.
    I want to welcome Senator Scott as the new Ranking Member 
of this Committee. He has played an important role on this 
Committee for nearly a decade. I also want to thank him for his 
words about Senator Fetterman. We hope he recovers quickly. He 
is a good man, and he was put on this Committee just a couple 
of weeks ago, also, Senator Britt and my colleague from Ohio, 
Senator Vance.
    Ranking Member Scott and I have worked closely together to 
advocate for our Committee's budget. We have agreed to 
clarifying updates. I appreciate the work that he has done.
    I am pleased especially to have worked with Senator Scott 
on issues that matter to families across this country, from 
making sure expecting moms have health care to supporting 
investment in home revitalization so we can increase home 
ownership opportunities for all Americans. I look forward to 
the work we will do together over the next 2 years.
    Last Congress, this Committee talked more about housing 
than we had for a long time. Around town, this Committee for 
years had been referred to simply as the Senate Banking 
Committee, far too much about Wall Street, not nearly enough 
about the issues that matter to people's lives--housing, 
transit, community development, and frankly, small and regional 
banks and credit unions.
    We are starting this Congress with a hearing on housing 
because it is one of the most important issues facing families, 
from Aiken, South Carolina, to Zanesville, Ohio. Housing 
determines so much about your life--how long it takes to get to 
work, whether you have easy access to a bank or fresh food, 
whether you worry about your kids getting sick from lead paint 
or mold. It determines your access and your kids' access to 
opportunity, and for far too many people, safe, affordable 
housing, it is just too hard to find.
    There is not a day that goes by that I do not hear about 
the challenges that Ohioans are facing in the housing market. 
In just the last few weeks, I have heard from Ohio seniors who 
have lived in the same manufactured housing community for 
years, sometimes decades, but they are now worried they will 
lose their homes after an out-of-State investor bought, 
literally, their neighborhood and raised their rents. I have 
heard from renters in rural Ohio, whose rent went up almost 90 
percent in a single year, the same kind of problems that the 
Ranking Member has to endure in rural areas in his State.
    I have heard from city council members and mayors who are 
excited to have new jobs bringing economic opportunities for 
their region, but now they are worried there simply is not 
enough housing for new workers or that existing workers will be 
priced out as we have seen happen to teachers and police 
officers and firefighters.
    The story is the same nationally. There just is not enough 
quality housing at prices people can afford. It is not 
happening just in Ohio. Nationwide, we are short an estimated 
3.8 million homes, and the gap grows. In Ohio, we are short 
50,000 homes. In Senator Scott's home State, it is 12,000. In 
Senator Sinema's home State, the estimate is 123,000 homes.
    Because there are not enough homes, renters and home buyers 
are stuck paying more every month or living with peeling lead 
paint or leaks, if they can find a home at all. In 2021, a 
record number of renters, 21 million households, paid more than 
30 percent of their income for housing. More than 30 percent, 
that is about half the Nation's renters.
    Many of these renters work fulltime jobs or more than one 
job, but it just is not enough. Eleven of the 25 most common 
occupations in the U.S. workers depend on--home health aides, 
office support staff--nearly half of the most common 
occupations do not pay enough to afford a one-bedroom apartment 
anywhere in the country.
    More renters are struggling in part because rents have 
skyrocketed over the past 3 years. Nationwide, rents are 25 
percent--25 percent--higher than they were in 2019. Some 
places, rent has gone up even more than that.
    And while rent growth is finally starting to slow in some 
places, millions of families are still paying more each month 
than they would have a year or two ago. That means less money 
for food. It means less money for childcare. It means less 
money for prescription drugs. Saving for a downpayment is, for 
far too many families, just simply an impossibility. Combine 
sky-high rents with higher home prices, with rising interest 
rates, with too few homes in the market, home ownership looks 
further and further out of reach for millions of families.
    And the families who have already become homeowners are 
feeling the squeeze, too. One in five homeowners pays more than 
they can afford. That includes families who have to make tough 
choices--choices about paying their water bills or their heat 
or their mortgage--and seniors who have to put off critical 
repairs to keep up with payments on a fixed income.
    It is not just a problem in big cities or the Pacific Coast 
and Atlantic Coast. It is not just a Republican problem or a 
Democratic problem. It is every community's--rural, suburban, 
urban, Tribal communities, every State in the country. As we 
heard last Congress, communities from Bozeman, Montana, to 
Tempe, Arizona, to Akron, Ohio, struggle with the lack of 
affordable housing. A national problem will take all of us, 
Senator Scott and I and many others, to work to solve it.
    Today's witnesses are experts chosen together. Senator 
Scott's staff and mine worked together. The Majority and 
Minority chose these witnesses together. This bipartisan group 
will help us understand the housing conditions facing renters 
and homeowners across the country and what we can expect in the 
months and years ahead. Their insights on the availability and 
affordability of housing, the barriers to new development of 
more affordable housing, the unique challenges in rural and 
Tribal communities, that Senator Rounds knows so very well and 
has worked with Senator Smith bipartisanly on a number of 
solutions, will inform this Committee's work to make housing 
opportunities available to families in all 50 States.
    I look forward to hearing from witnesses today, to working 
with all of my colleagues, including our three new Members, to 
find common ground on addressing these challenges.
    Senator Scott.

             OPENING STATEMENT OF SENATOR TIM SCOTT

    Senator Scott. Thank you, Chairman Brown. It certainly has 
been a privilege to work with you, and we find common ground. 
Sometimes common ground typically leads to common sense, and we 
have found some common ground between the two of us.
    We also very often, I believe, see the same problem. We see 
different paths to get to the solution. Today is a day where we 
celebrate bipartisanship. It may not be every day, but it is at 
least today. And thank you for working together on consensus 
witnesses to really understand and appreciate the plight of so 
many Americans who are suffering through the challenges of home 
ownership or renting.
    As I said in my earlier comments, I grew up with a mom who 
worked really hard, 16 hours a day. We rented through high 
school. We lived with my grandparents when we were younger, 
with my brother and my mother and I sharing a bed and a bedroom 
in a rented house.
    And so the problems that we see are not recent problems. 
They span back through history. You think about where we find 
ourselves. So today, we have an opportunity to really try to 
understand why housing in this country has become so expensive 
and out of reach to so many families.
    Federal housing policies have long been disconnected from 
the economic realities that we face. Recent spending bills have 
contributed to what I call housing inflation, and I worry that 
continuing to promote irresponsible Federal spending does not 
address affordability challenges. In fact, in many ways, it may 
be the root, too much money flooding into our market leading to 
incredible inflation, and then the Fed tries to figure out how 
to tamp down inflation by slowing the economy.
    This Administration likes to talk about the need for more 
affordable housing, but as we all know, talk is cheap and leads 
to empty promises. For instance, when President Biden ends 
Federal apprenticeship programs that produce high-paying jobs 
in the skilled trades, he should not get to bemoan the lack of 
construction workers, or when he fails to address domestic 
supply chain bottlenecks, he should not feign surprise when 
construction materials take months to arrive at job sites.
    Threatening builders and housing providers with the 
possibility of rent control will only further increase the gap 
in housing supply. For decades, Washington's response to 
housing challenges has simply been more spending. We need to 
end this cycle and stop spinning our wheels.
    While the trillions spent on numerous Federal housing 
programs were well intended--I do not doubt that--the net 
result, however, has made no meaningful and lasting impact on 
home ownership rates, especially as we see burdensome 
regulations push closing costs higher and higher, making the 
path to home ownership even more difficult. For African 
American families in particular, the home ownership rate 
remains unchanged since 1968, unchanged, the year the Fair 
Housing Act was signed into law.
    For too long, assistance programs have served as 
subsistence programs for the most vulnerable Americans. It is 
past time to rethink the tax-and-spend strategies that keep 
families trapped in generational cycles of poverty and find 
real solutions to meaningfully impact households, breaking that 
cycle of poverty.
    Government must begin responsibly helping families rather 
than doubling down on programs that fail to generate modest 
results. We need to leverage the successes of American 
capitalism by encouraging private investment in the housing 
sector and eliminating needless barriers that artificially 
restrict supply. And, most importantly, we should remember that 
effective housing policy is driven by communities. It is 
critically important the Federal Government encourages local 
solutions to uniquely local problems.
    These ideas are common sense and should not be 
controversial. I sincerely believe Republicans and Democrats 
should be able to find common ground on many of these important 
matters that impact the American people.
    I thank Chairman Brown for working together on building 
this consensus panel, as you said earlier. With that, I would 
like to welcome the witnesses, and I look forward to your 
testimony.
    Chair Brown. Thank you, Senator Scott, and thank you for 
your comments about common ground as we are beginning to find. 
So, thank you for that.
    I will introduce the three witnesses. Dr. Christopher 
Herbert, from left to right, is the Managing Director of the 
Harvard Joint Center for Housing Studies. He is a lecturer at 
the Harvard Graduate School of Design in the Department of 
Urban Planning and Design. Welcome.
    Dr. Robert Dietz is Chief Economist and Senior Vice 
President for Economics and Housing Policy at one of the most 
important housing organizations in the country, the National 
Association of Home Builders. Prior to joining them, he worked 
as an economist for the Congressional Joint Committee on 
Taxation. He is a native of Beavercreek, Ohio, I believe, a 
town in southwest Ohio, not far from Dayton and Springfield.
    Mr. Lance George is the Director of Research and 
Information at the Housing Assistance Council. Mr. George leads 
the organization's research, data, and information efforts. So, 
welcome, Mr. George.
    Mr. Herbert, if you would begin your testimony.

 STATEMENT OF CHRISTOPHER HERBERT, MANAGING DIRECTOR, HARVARD 
                JOINT CENTER FOR HOUSING STUDIES

    Mr. Herbert. Thank you, Chairman Brown, Ranking Member 
Scott, and Members of the Committee. Thank you for inviting me 
to testify at this hearing.
    I am Managing Director of the Joint Center for Housing 
Studies of Harvard University, a lecturer in the Department of 
Urban Planning and Design at the Graduate School of Design. I 
am also a member of the board of directors of Freddie Mac.
    Through its research, education, and public outreach 
programs, the Joint Center for Housing Studies' mission is to 
advance understanding of housing issues and to help leaders in 
Government, business, and the civic sectors make decisions that 
effectively address the needs of cities and communities. For 
more than three decades, we have published our annual The State 
of the Nation's Housing report, and I am pleased to have the 
opportunity to share our work with the Committee today.
    Perhaps the most apt description of the housing market 
trends over the last year is that of a rollercoaster ride, 
first marked by home prices and rents increasing at a dizzying 
pace in response to pandemic-enhanced demand and against a 
backdrop of restricted supply, and now in the midst of a 
dramatic slide in response to the Federal Reserve's efforts to 
bring inflation under control. While the forces behind these 
trends are certainly out of the ordinary, they have illuminated 
and exacerbated housing challenges that are not new, but rather 
long, in the making.
    Arguably the Nation's principal housing challenge is that 
of affordability. The share of renters facing housing cost 
burdens rose from the 2000s through the middle of the last 
decade. While the last few years before the pandemic saw a 
modest recovery, the cost-burdened share of renters has now 
worsened substantially in the face of rising rents. While young 
adults and people of color were able to make up some lost 
ground in homeowning following the Great Recession, the 
combination of very high home prices and now much higher 
interest rates has priced most would-be owners out of the 
market. Today's worsening affordability is particularly 
concerning given the stubbornly high disparities in home 
ownership rates for Black and Hispanic households.
    One notable feature of the trends in housing affordability 
over the last decades has been the spread of these problems to 
those higher up the income ladder. The recent jump in renter 
cost burdens has in fact been most pronounced among middle-
income renters. A key driver of this trend has been a 
constrained supply of new homes, and particularly modest-priced 
homes and apartments, which has put upward pressure on both 
rents and home prices.
    Climbing interest rates further limited the supply of new 
single-family homes over the last decade, but over the last 
decade multiple factors have been behind this lack of supply, 
including regulatory barriers to new development, rising cost 
of materials, and the lack of labor. Efforts to address these 
barriers to expand the supply of homes are needed to improve 
affordability.
    But the most severe affordability challenge has continued 
to be concentrated among the Nation's lowest-income households 
who are outside the reach of the private market even under the 
best of circumstances and so in need of greater public 
subsidies to close the gap between what they can afford and the 
cost of decent housing.
    But housing affordability is not the only challenge we face 
as a country. Housing policy has an important role to play in 
responding to the economic trajectories of neighborhoods, 
including where residents are at risk of displacement and in 
communities that are suffering from disinvestment, where 
housing investments can be an important part of a 
revitalization strategy.
    Housing policies and supports are also needed to be attuned 
to our rapidly aging population, which presents a unique set of 
housing concerns.
    Finally, to maintain the quality of older, modest homes, to 
reduce energy consumption to meet our goals for carbon 
reduction, and to address the growing impact of severe weather 
events on homes, our Nation's aging housing stock itself needs 
investment.
    I realize that I have outlined a broad set of challenges 
that are perhaps daunting, but having a good quality, 
affordable, and secure home in a thriving community is 
foundational for a healthy and productive life for every person 
in America. Addressing our housing challenges will take a 
substantial commitment from the public, private, and nonprofit 
sectors, but doing so would pay dividends for us all.
    Thank you for turning your attention to these critical 
issues and for your invitation to share this information today. 
I look forward to addressing any questions you may have.
    Chair Brown. Thank you, Dr. Herbert.
    Dr. Dietz, welcome.

  STATEMENT OF ROBERT DIETZ, CHIEF ECONOMIST AND SENIOR VICE 
     PRESIDENT FOR ECONOMICS AND HOUSING POLICY, NATIONAL 
                  ASSOCIATION OF HOME BUILDERS

    Mr. Dietz. Chairman Brown, Ranking Member Scott, and 
Members of the Committee, thank you for the opportunity to 
testify today. My name is Robert Dietz. I am the Chief 
Economist of the National Association of Home Builders.
    NAHB is proud to have the opportunity to testify before you 
today, and we applaud the Committee for making housing the 
focus of its first hearing of the 118th Congress. I look 
forward to sharing our views on the state of housing and the 
barriers our industry faces to increasing the production of 
both for-sale and for-rent residences.
    The primary and persistent challenge of the residential 
market in 2023 is a lack of attainable, affordable housing in 
both the single-family and multifamily markets, and the 
fundamental cause of this challenge is a lack of construction 
over the prior decade that has resulted in a structural deficit 
of at least 1.5 million homes.
    The causes of this underbuilding are complex, but we 
commonly cite them as the ``5 Ls.'' It is a lack of labor, a 
lack of lots, lumber and building materials, lending for 
development and construction purposes, and of course, legal and 
regulatory burdens. Solving just one of these challenges is not 
enough. They must all be tackled.
    For example, the construction industry faces a persistent 
skilled labor shortage with currently more than 400,000 open 
construction sector jobs needing to be filled. This will 
require the industry to recruit, train, and retain workers in 
the trades.
    The regulatory cost burden is large and distorts the 
market. NAHB estimates that about a quarter of a typically, 
newly built, single-family home's purchase price is due to 
various kinds of regulatory cost. This burden can be even 
larger for apartment buildings due to delay costs and zoning 
issues. These growing regulatory burdens, such as exclusionary 
zoning practices, have made it very difficult to build entry-
level housing for first-time home buyers.
    And, of course, everyone is aware of recent supply chain 
issues, when lumber costs climbed and product and building 
material delays were common. Construction material costs have 
increased 36 percent since the start of 2020, ultimately 
resulting in higher rents and higher home prices. This is 
particularly true given the growing importance of new 
construction as a source of supply during a period when 
inventory of existing for-sale housing is low. NAR data, for 
example, shows that resale inventory stands at just a 2.9 
months' supply when 5 to 6 months would be balanced. These 
supply chain issues continue. In NAHB surveys, about half of 
single-family and multifamily builders cite ongoing delays with 
electrical transformers as an example.
    To solve these fundamental challenges of the homebuilding 
sector will be a significant undertaking, requiring policy 
action at all levels of Government to address the limiting 
factors on the often neglected supply side of the housing 
sector.
    Safe, decent, and affordable housing provides fundamental 
benefits that are essential to the well-being of families, 
communities, and the Nation. Having access to affordable rental 
housing is critical for younger households and working-class 
families, and home ownership is a primary source of household 
wealth for a typical family in the Nation.
    For these reasons, NAHB is calling on Congress and the 
Administration to make housing affordability a top national 
policy priority, and the need is real. Nearly a third of 
renters were cost-burdened in 2020, and reducing these burdens 
is going to require additional construction. Unfortunately, 
construction of new affordable rental housing is often 
impossible without some type of public support such as the 
successful Low-Income Housing Tax Credit or tax-exempt bond 
programs.
    And with home buyers experiencing a doubling of the 30-year 
fixed rate mortgage over the past year as the Federal Reserve 
fights inflation, single-family, for-sale affordability has 
plummeted. According to the NAHB/Wells Fargo Housing 
Opportunity Index, just 38 percent of new and existing single-
family homes are affordable to a typical family with median 
income of $90,000. This is the lowest affordability measure in 
the post-Great Recession period. Improving housing 
affordability for renters and home buyers will also help fight 
inflation.
    With these goals in mind, Congress should pass legislation 
that will help the homebuilding industry increase much-needed 
housing supply, and helpful policy will focus on the supply 
side challenges I have identified today. Addressing these 
supply side bottlenecks would increase home construction, 
expand housing inventory, and lower inflation. If action on 
these issues is delayed, however, housing costs, which make up 
about 40 percent of the Consumer Price Index, will continue to 
be persistent drivers of inflation as well as remain a burden 
on typical American families.
    Thank you again for the opportunity to testify today, and I 
look forward to answering your questions.
    Chair Brown. Thank you, Dr. Dietz.
    Mr. George, welcome to the Committee.

      STATEMENT OF LANCE GEORGE, DIRECTOR OF RESEARCH AND 
            INFORMATION, HOUSING ASSISTANCE COUNCIL

    Mr. George. Chairman Brown, Ranking Member Scott, Members 
of the Committee, greetings and thank you for this opportunity 
to testify on the state of housing in rural America. My name is 
Lance George, and I am the Director of Research and Information 
at the Housing Assistance Council.
    The Housing Assistance Council, often referred to by the 
acronym HAC, is a national nonprofit corporation that supports 
affordable housing efforts in rural areas in the United States. 
HAC helps build homes in communities across rural America. We 
work with local community-based entities. These groups know 
what is best for their communities. We just help enable them to 
improve their housing conditions through an array of resources, 
including research, data, information to help them form 
strategies and solutions.
    In many respects, the housing issues, characteristics, and 
trends in rural America are no different than what Dr. Herbert 
or Dr. Dietz presented on national housing trends, but there 
are some unique differences in rural housing provisions and 
markets as well.
    Geography is important to this discussion. The people of 
rural America reside in approximately one-quarter of the United 
States homes, but these homes are located across 97 percent of 
our Nation's land mass. There is immense diversity across rural 
areas and small towns; yet, there is also a set of community 
and market conditions that tie this landscape together.
    With this preface, we wish to quickly mention five trends 
in rural housing that we believe are of importance and interest 
to this Committee.
    First, the pandemic left its mark on rural America, and 
housing markets remain uncertain. Housing instability is 
particularly concerning for rural renters. Throughout the 
pandemic, the Census Bureau's Pulse Survey consistently 
revealed that renters nationally have been more likely to be 
behind on their house payments and have less confidence in 
their ability to make next month's rent than homeowners.
    Second, rural mortgage markets are being impacted by high 
interest rates and prices, too. Data from the Department of 
Agriculture on its Guaranteed Home Loan product signals that 
rural home buyers hit the brakes as well. As a proxy for rural 
mortgage activity, USDA's loan guarantees plummeted by more 
than 40 percent from their 2021 levels.
    Number three, affordability is the greatest housing 
challenge in rural America by far. Sometimes there is a 
misperception that housing affordability and costs are not as 
problematic in rural communities, but in reality over 5.6 
million or one-quarter of rural households are considered 
housing cost-burdened, and the incidence of cost burden has 
increased markedly for rural households over the past few 
decades.
    Number four, manufactured housing is an often overlooked 
but important source of housing in rural America, especially in 
rural America. More than half of all manufactured homes are 
located in rural areas, and manufactured homes make up 13 
percent of all houses in rural and small-town communities, 
twice the national rate.
    Living in manufactured homes is often characterized by 
unique financing and land tenure dynamics. The majority of 
manufactured homes are financed with personal property or what 
is referred to as chattel loans. Approximately 66 percent of 
manufactured home loans are classified as high-cost, meaning 
they have substantially high interest rates, which is more than 
5 times the level of high-cost lending for all homes 
nationally. And for manufactured homes secured by the home 
only, that is, without land, that figure jumps to a staggering 
90 percent high-cost loan rate.
    Number five, race matters across the rural spectrum, 
especially in housing. Race and ethnicity are central but often 
complex components of our national history and struggles. One 
highly visible impact of race in rural America are areas of 
persistent poverty with substantial rates of non-White 
populations, including the Lower Mississippi Delta and the 
rural Southeast, the border colonias along the U.S.-Mexico 
border, Native American lands, and among migrant and seasonal 
farm workers. In these largely rural communities and 
populations, the incidence of substandard and inadequate homes 
is twice the national rate.
    Finally, I would only like to add that we simply do not 
know as much about rural housing conditions as we should. In 
the research realm, we often use the term ``bias.'' Well, as a 
rural researcher, I will present my own personal bias. The 
level and quality of data for rural communities is just not 
comparable to that of urban and suburban areas. The reasons are 
varied, and the examples are many, but we would encourage the 
Committee to promote greater rural data availability in 
resources like the Census, the American Community Survey, and 
the Home Mortgage Disclosure Act among others. We need quality 
and accessible data to help inform strategies and solutions 
that improve housing for all communities--urban, suburban, and 
rural.
    HAC appreciates the Committee's attention to housing issues 
in rural communities. Thank you again for this opportunity to 
testify today.
    Chair Brown. Thank you, Mr. George.
    The Ranking Member has a unanimous consent request, 
briefly.
    Senator Scott. Thank you, Mr. Chairman. I would move that 
Senator Lummis' statement be included in the record.
    Chair Brown. Without objection, so ordered. Thank you.
    Start with Dr. Dietz and Dr. Herbert. We heard from the two 
of you, and also from Mr. George, that we need more housing 
supply across the board.
    Dr. Dietz, what are the types of housing where we see the 
greatest shortfall? You mentioned in your statement it is 
almost impossible to build affordable rental housing without a 
subsidy. What people are most likely to be priced out? And, 
speak about that for a moment if you would.
    Mr. Dietz. Yeah. When you talk to builders across the 
country and prospective home buyers, the tightest part of the 
housing market right now remains that small lot, entry-level 
construction that is appropriate for a first-time or a first-
generation home buyer. So when you look at the data, more than 
10 years ago, back in 2010, about 32 percent of new homes being 
built were under 2,400 square feet. That 32 percent share has 
now shrunk to about 24 percent, so we have seen a marked 
decline in that entry-level construction.
    And then the impact? It is harder for those younger 
households to attain home ownership. So the result of that, of 
course, then is people renting longer, which is one of the 
reasons rents are higher, and then we have had a near doubling 
of young adults who live with their parents over the last 20 
years.
    Chair Brown. A doubling.
    Mr. Dietz. A doubling. It has gone from one in ten 25- to 
34-year-olds to one in five.
    Chair Brown. And that is over a 20-year period.
    Mr. Dietz. That is over a 20-year period. So these are 
longstanding issues.
    Chair Brown. Dr. Herbert, comment, if you would, on my 
question. Your thoughts on it?
    Mr. Herbert. Yeah, I would agree with what Dr. Dietz said. 
I think the shortage of single-family, particularly starter, 
homes is really important. He used the metric of 1,800 square 
feet. If we go down to 1,400 square feet, that was a very 
common home in the early 80s, and now it is low single digits.
    I was talking with a home builder, a national home builder, 
the other day, who specializes in this segment of the market, 
and they were saying there are communities that will mandate 
that the smallest house you can build is 1,600 square feet, so 
they cannot even build their entry-level house in that market. 
So that restriction on building those starter homes is key.
    Dr. Dietz has also talked about the need for more townhomes 
and condos. That is a segment of the market that has really 
been missing, too, as an affordable entry point.
    And I would just also highlight the need for more modest 
cost rental housing. What we have been building mostly over the 
last decade has been very large, prime-location, multifamily 
housing downtown, which has been needed, but it is very hard to 
build at an affordable price point there.
    So it is really we need to have lower density housing in 
the suburbs but still making use of land that provides the kind 
of garden apartment-style housing we used to build, more modest 
rental housing as well.
    Chair Brown. That comment you made about 1,600 and 1,400, I 
would--not in this hearing now, but I would like to explore 
that more with you, that it could answer some of these 
problems, I think. So, pretty interesting comments.
    Dr. Herbert and Mr. George, you both talked about home 
repairs as a tool to help lower-income homeowners and seniors. 
Talk about the benefits of home repairs, most importantly, what 
resources can make those repairs affordable for families with 
limited incomes. Start with you, Mr. George, then you, Dr. 
Dietz.
    Mr. George. Thank you, Senator. I think home repairs are 
important, particularly to the older population in the United 
States, and as you know, the population in rural America is 
just older than the Nation as a whole and is maybe a harbinger 
for things to come nationally. But oftentimes, older Americans 
need resources and the ability to repair their homes, and I 
think there are several resources that come to mind.
    One, notably, I would like to reinforce from the work that 
the Housing Assistance Council does is that capacity among 
local housing providers is extremely important. So they are--
oftentimes, the local housing nonprofits are the connective 
tissue or the catalysts that help turn these resources into 
affordable homes and supply those vital home repairs. So I 
think capacity at a local level is important.
    Also, I would just quickly mention USDA Section 504 Home 
Loan and Rehab Repair Program, which has assisted hundreds of 
thousands of rural homeowners across the United States and is 
particularly important to older homeowners.
    So those are a couple of quick resources. Thank you.
    Chair Brown. Thank you.
    Dr. Dietz, your comments.
    Mr. Dietz. Yeah, the remodeling sector is absolutely 
critical as part of the reinvestment strategy. As Dr. Herbert 
mentioned, we have got an aging housing stock. The typical home 
in the United States right now is about 39 years old. About 15 
years ago, it was kind of in the low 30s. That is a pretty 
dramatic increase in that period of time.
    So if we are looking to improve the housing stock, improve 
energy efficiency, improve resiliency, making sure that 
remodelers have access to skilled labor is going to be key. 
Remodelers like to say, not only do I have to find skilled 
workers, but they have to work in someone's home. So finding 
those additional workers is important.
    And I think policy tools can play a role. The Section 25(c) 
and 25(d) Energy Efficiency Tax Credits are good tools, but 
making sure that people can access cash-out refi mortgages to 
get capital and reinvest in those homes, that is really where 
the low-hanging fruit is when it comes to improving our housing 
stock.
    Chair Brown. And, Dr. Herbert, would you answer that 
question, too?
    But I want to--just because time is limited, if you would 
work in an answer to this question also. I have cosponsored the 
bipartisan Eviction Crisis Act with Senator Portman, my 
colleague who just retired, from Ohio, Senator Young and 
Senator Bennet, offering ways to reduce the number and impact 
of evictions on the lives of families across the country. Matt 
Desmond has written about it. And so, if you would also answer: 
What lessons can we learn from the Emergency Rental Assistance 
Program as we continue to work to reduce evictions?
    Mr. Herbert. Thank you, Senator. Briefly, on the remodeling 
question, I would echo what my colleagues have said and 
highlight the fact that we have an older housing stock. We also 
have housing that is in need of energy retrofits, and as you 
mentioned in your question, an aging population that needs 
housing that is adapted to meet their needs with mobility and 
other ways to keep them safe.
    In terms of how, I would highlight the importance of 
grants, particularly for very low-income households who may 
not--particularly elderly households who may not have the 
ability to take on loans, and I would also highlight the need 
for technical assistance for people to be able to assess the 
need and help find a contractor and make sure the work is done 
well.
    In terms of the Emergency Rental Assistance program, I 
think it is really--the evidence is quite clear that the 
program was enormously helpful in keeping people, keeping 
renters, in their homes and, at the same time, also enormously 
helpful for landlords who were suffering from lost rental 
payments. More than 3 million renters have received assistance 
from that program. It has been remarkably well targeted. Some 
two-thirds of those assisted have been--earned less than 30 
percent of area median income; another 20 percent earned 
between 30 and 50 percent.
    And we saw during the pandemic enormous concern that we 
were going to see evictions go through the roof, and what we 
found from the data from the Eviction Lab in Princeton is that 
in fact evictions stayed very low, in part because we had a 
moratorium, but that emergency rental assistance was really 
critical in making sure that people could stay stably housed.
    Chair Brown. Thank you. Those comments are really 
important.
    Senator Scott.
    Senator Scott. Thank you, Mr. Chairman.
    Mr. George, your comments about the harbinger of things to 
come as it relates to the aging population, aging housing 
stock, and the need going forward, I think we could have an 
entire hearing on the importance of aging in America. I think 
it is by the year 2040 or so one out of five Americans will be 
over the age of 65. We have got real challenges coming in what 
we need. Would you agree with that?
    Mr. George. I agree, Senator. Thank you.
    Senator Scott. And we have a lot of work to do on that 
topic.
    I would also--I want to reflect a little bit the importance 
of good Government policy versus bad Government policy. And Dr. 
Thomas Sowell said it really well when he said that the goals 
of rent control and its actual consequences are opposite 
policies. I think that is well said, and I oftentimes wonder if 
all of the great minds can use common sense when it comes to 
delivering reality. Does reality actually marry the comments?
    And Dr. Thomas Sowell's comments, I think, are best 
reflected in the Twin Cities, in St. Paul and Minneapolis. In 
St. Paul, Minnesota, we saw rent control go in, and when that 
happened the census data showed that there was nearly an 80 
percent drop in construction. Next door, Minneapolis did not 
follow in that suit, and we saw construction permits increase 
by nearly 70 percent. A stark example reinforcing the words of 
one of the greatest economists, in my mind, of all time.
    Despite the overwhelming evidence and wide consensus that 
rent control or rent stabilization depresses supply, 
exacerbates discrimination, reduces both quality and safety, 
and makes housing less affordable, amazingly, this 
Administration has chosen to evaluate the feasibility of 
adopting such policies.
    Dr. Dietz, how are renters impacted by policies that forbid 
landlords, including mom-and-pop landlords, from setting rents 
at market rates?
    Mr. Dietz. Yeah, I think most economists would agree that 
rent-control-type policies basically act as a tax on supply in 
the long run. So they are counterproductive in the sense that 
the ultimate solution to all the challenges that we are talking 
about today is adding additional supply. So whether it is rent 
control or other harmful regulatory policies that show up at 
the local level, they drive production elsewhere.
    And what we have seen in the last 10 years is those 
communities that have been able to add affordable housing 
stock, whether it is for renters or home buyers, they attract 
businesses, they attract jobs. Columbus, Ohio, is a good 
example of that with the new Intel facility. So it is getting 
that regulatory burden, whether it is at the Federal level or 
the State and local level, as low as possible so we can add the 
stock necessary to house that workforce housing.
    Senator Scott. Do wealthier households or poorer households 
end up struggling with the consequences of these bad policies, 
as I would describe them?
    Mr. Dietz. Yeah, I would echo some of the data that Dr. 
Herbert mentioned, which is if you look at the housing cost 
burdens, whether for renters or home buyers, they tend to be 
concentrated among lower-income individuals.
    And as we said earlier, if you talk about the housing that 
is most difficult to build, it is that smaller lot, slightly 
more dense, walkable-type housing that is appropriate for 
renters or first-time home buyers, and that is where the 
regulatory burden emerges the hardest, and it is the kind of 
housing that is most difficult to build.
    Senator Scott. The Chairman and I both really--when we 
heard the 1,600 square feet, we both said, wow. And 1,200 is 
darn near as bad. My mother's first house that I talked about 
earlier was 1,092 square feet, and so that is not even possible 
in some areas. It is just ridiculous.
    The prices of housing per square foot now has never been 
higher. If you have to have a minimum square footage to build a 
house, you are talking to first-time home buyers, and you are 
just saying, please do not bother thinking about being a part 
of the American Dream. Offensive, from my perspective.
    Dr. Dietz, you also mentioned exclusionary zones. Talk to 
me for a minute about that.
    Mr. Dietz. So exclusionary zoning are policies, I think, 
economists of the Left and the Right both agree are 
inefficient. That is things like minimum lot size 
requirements----
    Senator Scott. Yep.
    Mr. Dietz. ----that basically say, OK, if you want to build 
that 1,400 square foot house, it has got to be built on a half-
acre or larger lot. In fact, if you look at the data for New 
England, the typical lot size of a newly built home is 0.9 
acres. It is almost a full acre. Well, you cannot build entry-
level housing if you have got those kinds of zoning rules.
    So whether it is zoning rules or Federal regulatory 
policies, what it has done is made it much more difficult for 
those first-time home buyers to attain home ownership.
    Senator Scott. I am running out of time, which is something 
you will have to get used to, Mr. Chairman, but I will just say 
this. As a guy who used to run a county and chairman of 
Charlestown County government, many of the issues that we are 
grappling with here in Washington really are local issues.
    So one of the reasons why I asked you about exclusionary 
zoning is because it is uniquely and specifically a local issue 
that many parts of the country face. The truth is, though, that 
we need to be able to bifurcate out responsibilities versus 
somebody else's. Perhaps we can send smoke signals, but the 
truth of the matter is some things need to be challenged on the 
local level and not here in Washington.
    Chair Brown. Thank you, Senator Scott.
    Senator Menendez of New Jersey is recognized.
    Senator Menendez. Thank you, Mr. Chairman, and let me 
congratulate the new Ranking Member on his new position.
    Senator Scott. Take your time.
    Senator Menendez. If the Chairman lets me, I will. And, 
thrilled to also now have him as a member of the Senate Foreign 
Relations Committee, which I just came from, so we look forward 
to seeing you there as well.
    Senator Scott. Thank you, Senator.
    Senator Menendez. Flooding is one of the most expensive and 
most frequent natural disasters in the United States. Despite 
this, just 4 percent of Americans have flood insurance. With 
climate change bringing heavier rainfall and stronger 
hurricanes, we need to ensure that flood insurance remains 
affordable and homeowners are financially protected, but last 
year, FEMA implemented a new premium methodology for the 
National Flood Insurance Program that will lead to higher 
premiums. The Agency itself has estimated that premium 
increases will cause one million policyholders to drop coverage 
and, therefore, dilute this already small pool.
    And, to make matters worse, there is little transparency 
about how FEMA is pricing the premiums, leaving the 
construction industry in the dark about how to optimally build 
flood-resistant homes.
    So, Dr. Dietz, how have home builders been impacted by 
FEMA's new premium system, and what would be the long-term 
effects for coastal communities if flood insurance becomes too 
expensive?
    Mr. Dietz. Thank you for raising this issue, Senator. This 
is something you hear about from builders across the country in 
terms of not just the direct effect in terms of home buyers and 
their cost of higher insurance premiums--and clearly, flood 
insurance is an important part of making sure that we can build 
housing in areas where you have got job creation and economic 
activity--but it is the uncertainty of how those premiums are 
calculated, as data person, that is particularly concerning.
    How can you plan to do land development in an environment 
where that calculation is not known, in other words, the 
underlying equations? That makes it difficult to do land 
development. And I think it is really important to keep in mind 
that if you are talking about homebuilding, that process is 
proceeded by 3 to 5, in some cases, 10, years of land 
development.
    So the uncertainty of it harms the land development 
process, which then harms the lot supply process, and then 
results in what we have talked about today, which is pricing 
out home buyers from the market and makes home ownership more 
expensive.
    Senator Menendez. Yeah. And I would just note, if FEMA 
itself recognizes that it is going to lose a million 
policyholders and insurance is about spreading risk across the 
widest base possible, you lose a million policyholders; that 
means the rates go up for everybody else. And then we have 
natural disasters in our States across the country, and the 
Federal Government comes and helps instead of having an 
insurance program that can mitigate as well as cover the cost. 
It does not make any sense to me.
    So that is why Senators Cassidy and Kennedy and I have 
introduced bipartisan legislation that will reauthorize the 
National Flood Insurance Program, keep premiums affordable, 
invest in cost-saving mitigation measures to put the program on 
a firm financial footing, and I look forward to working with 
the Chairman and the Ranking Member on this critical issue.
    I am concerned about two things as someone who has sat on 
this Committee for quite some time. Affordable housing is 
increasingly located in areas that are away from job centers, 
forcing workers to pay transportation costs or work fewer 
hours. Thankfully, the Infrastructure Investment and Jobs Act 
passed the last Congress injected a much-needed $550 billion 
into reviving our Nation's transportation systems.
    So, Dr. Herbert, how can we leverage the investments of 
IIJA to help connect affordable housing to good jobs, and how 
critical is it that we build more affordable housing near 
public transit so that we can connect people to good-paying 
jobs and careers?
    Mr. Herbert. Thank you for that question, Senator. It is 
absolutely critical that we have well-located housing near 
transportation systems. I believe in his opening remarks 
Chairman Brown mentioned the importance of housing and 
transportation. We talk about not just the housing cost burden, 
but you have to add transportation costs which come with that 
house to the housing cost to understand how much people are 
burdened. So well-located housing can address housing 
affordability by reducing that overall burden.
    In terms of the Investment in Infrastructure and Jobs Act, 
my center recently did an analysis looking at the opportunities 
there to link that to housing. There is three ways. Much of 
that money is actually by formula, so it makes it difficult.
    But, one is to provide technical assistance to States and 
localities to understand those connections. The second is to 
take advantage of the competitive grant programs to instill in 
those elements that require localities that get those grants to 
take into account housing. And then the third is to use all the 
formula grant programs to try to build into those, using 
existing tools, maybe through best practices and the like, to 
make sure that States and localities understand how those 
investments can help.
    Senator Menendez. Finally, the Urban Institute says that 
16.1 million new household formations over the next 20 years, 
80 percent of them will be senior households. Now it seems to 
me that this increase in senior households is going to put a 
huge demand on senior public and assisted housing capacity and 
needs for the next Congress to consider. Do you see it that way 
as well?
    Mr. Herbert. Absolutely, Senator. In my written testimony, 
I talked about the increasing number of senior renters with 
worst-case housing needs. Since 2011, the Baby Boom generation 
started turning 65, and over that same last decade period, we 
have seen a 60 percent growth in senior renters who are either 
50 percent of their housing--their income for housing or living 
in some really inadequate housing. And this is, in many 
respects, the tip of the iceberg as that older population, 
particularly people 75 and older, where the Baby Boom edge is 
just now--will continue to grow over time. So we are absolutely 
going to see an enormous increase in need among our most oldest 
residents.
    Senator Menendez. Thank you, Mr. Chairman.
    Chair Brown. Thanks, Senator Menendez.
    Senator Vance, one of our new Members, from my State of 
Ohio, is recognized. Welcome.
    Senator Vance. Thanks, Mr. Chairman. And I guess since 
there are no Republicans between me and you that makes me the 
Ranking Member here? I am drunk with power for the next 5 
minutes here. Thank you for having me.
    Chair Brown. Keep thinking that way about this place.
    Senator Vance. I wanted to direct my first question to Mr. 
George. One of the things I have seen reported on lately is the 
idea--and we have certainly seen evidence of this in the data--
that you have this massive influx from more Progressive States 
into typically Red States, some very rural, from a very 
affluent portion of the home buyer population. What have you 
seen?
    And I am talking places like Florida, Montana, Idaho, Utah, 
and so forth. What effects are we seeing on housing prices from 
this influx of a pretty affluent group of home buyers? Is 
housing supply keeping up, and if not, why?
    Mr. George. Thank you, Senator Vance, for that question. I 
agree we are seeing this. It is hard to parse out in the data 
because it is a still a relatively new phenomenon. There is no 
doubt there was what we would call--and I am not a demographer, 
but there was population churn as a result of the pandemic. 
According to some of our analyses and mortgage analysis and 
various other housing data analysis, it does appear as if much 
of that population growth is in areas of high amenities or in 
relatively close proximity to large metropolitan areas.
    What we hear, again, we are trying to see in the data, and 
we have seen this some in mortgage prices, but is an acute 
shortage of rental housing in many of these communities. In 
general, rural communities lack--many rural communities lack of 
a good source of, or a good stock of, affordable rental 
housing. And when you have that relatively small stock, much of 
that is being, for lack of a better term, gobbled up or 
purchased up in many rural communities. You know, it is 
particularly causing affordability or housing affordability 
challenges among rural renters.
    Senator Vance. Great. Thank you.
    Mr. Dietz, I want to direct this one to you. So actually, 
staff brought this to my attention. I was not aware of this, 
but if you look both at the United States but also a lot of 
other OECD countries, you see this really stark decline in 
productivity of construction workers going back to the 1970s. I 
would love to hear your thoughts on what is driving that. When 
we sort of think of all of the innovations and technology but 
somehow we are less productive as a society than we were half a 
century ago, what is going on there?
    Mr. Dietz. Yeah, I mean, some of it could be a data issue.
    Senator Vance. Sure.
    Mr. Dietz. We are not measuring the remodeling sector 
correctly. But I think if we think about the economics, the 
challenge here is that the regulatory cost burden has grown 
during that period of time. So when we are talking about 
productivity, we are talking about output per worker, 
literally, and the number of homes and apartments we build per 
construction worker.
    And, it is a real challenge. It is both an impact of the 
labor shortage itself, but it does point to some opportunities. 
If we can get the regulatory burdens down, I think we can see a 
great deal of innovation in the home building sector, things 
like offsite construction, more capitalization of the work 
site, smarter products, and all those represent real market 
opportunities for the industry.
    Senator Vance. Yeah, I mean, it occurs to me that we all 
agree and think it is important to have basic public safety for 
both the construction workers but also the things that they 
build, but if productivity has declined or stagnated for 50 
years, that of course, means a lot of our construction workers 
are not earning the wages they should be earning. It also means 
a lot of the homes that we are building maybe not as high 
quality as they should be.
    I want to just sort of finish with one observation here, 
and this obviously a focus. The immigration crisis that we have 
in this country is a focus of especially this side of the 
aisle, the Conservatives. It is something that we talk a lot 
about.
    But I want to make this observation because I think very 
often we talk about the immigration problem, certainly in the 
State of Ohio, for very good reasons. There is fentanyl 
problem. Obviously, that affects the housing stock and the 
housing situation a little bit. But it is mostly a human 
problem, just the basic misery and the death and destruction 
cause by it. We talk about it as a law and order problem.
    But I want to plant the seed both for our colleagues on my 
side of the aisle, colleagues elsewhere, and also for those of 
you who are interested in this issue, that if you think about 
what it means to have 20 or 25 million undocumented, illegal 
immigrants in a country, in a situation where we are not 
building enough housing, that puts incredible pressure. You 
have way more buyers for way fewer homes, and that puts 
incredible pressure on home buyers and people who just want to 
live a good life.
    I am a very strong believer that we should think about our 
immigration problem and our immigration crisis as an economic 
problem as much as a cultural or a law and order problem. 
Immigration in this country right now, illegal immigration in 
this country, means wage theft in the form of competition for 
jobs from lower-wage migrants. And in this instance, in the 
context of housing, illegal immigration means theft of the 
American Dream of housing, when you have 25 million people who 
should not be here, by law, competing with American citizens to 
buy their first home, to rent a home, and that is a major 
problem that we should be talking more about in the context of 
the immigration crisis.
    That is it. Thank you.
    Chair Brown. Thanks, Senator Vance.
    Senator Warner from Virginia is recognized.
    Senator Warner. Thank you, Mr. Chairman, and let me also 
welcome our new Members as well.
    I am not going to ask a question in my first comment as 
much as to share. I would like to share with all of you, and we 
will send you some materials from my colleagues. I mean, lots 
of indications about the racial wealth gap in this country, but 
I mean, Black households and White households.
    Last Congress, I think we had a relatively innovative 
approach that said let us look at first-generation, first-time 
home buyers. By definition, that is about 60 percent, roughly, 
people of color. And if you qualify for that traditional 30-
year mortgage and you fit into this category, and you have to 
start at a relatively small basis, rather than giving you a 30-
year mortgage, we will give you a 20-year mortgage and the 
payment schedule will be based on 30.
    So it is an indirect subsidy, but what it does for that 
first-time home buyer is it literally allows them to accumulate 
equity at almost twice the rate, just the plain math on a 10-
year basis. And I think we think about wealth gap, creating 
that equity in an attainable manner is, I think, at least part 
of the solution, number one.
    Number two--and I want to get a quick response because I 
have got a third question or third point I want to make--is I 
am a big advocate around tax credits along the supply side. I 
think everyone, you have all mentioned, we have really a huge 
supply issue, particularly for affordable housing, low- and 
moderate-income housing.
    So I have supported LITEC, New Market Tax Credits. 
Actually, Senator Portman and Senator Cardin had a really 
interesting initiative, Neighborhood Homes Investment Tax 
Credit. How do you go at that housing stock in distressed 
communities? And we have got them all. Every one of us have got 
some those that could rebuild that structure or fix it up to 
code. In many cases, the equity may not be enough to refurbish 
that building.
    But, what can we do along the tax credit range to take 
these or other initiatives and really target it to those 
communities most in need? And I would ask relatively brief 
responses, so we will go down the line.
    Mr. Herbert. Senator, I would second that endorsement for 
the Neighborhood Homes Investment Act that would close the gap 
between what it costs to build housing and the market rate, and 
it is necessary to prime the pump in these areas where demand 
has fallen. So I think that is an incredibly important use both 
for rehab and new construction, and so I would just second 
that.
    Mr. Dietz. Yeah, you know, consider expansion and 
refinement of the Low-Income Housing Tax Credit is the most 
successful production program for improving rental 
affordability.
    On the home ownership side, consider taking the now 
modified Mortgage Interest Deduction after the 2017 Tax Reform 
Act and converting it into a broad-based home ownership credit 
that can be claimed whether you are an itemizer or not. That 
would help on the home ownership side.
    Senator Warner. Interesting suggestion.
    Mr. George. Thank you, Senator. As we noted in our 
testimony, there is a dearth of good quality rental housing in 
many rural communities. So production at any level, the tax 
credit is one of the largest production, rental production, 
programs in the United States. It does not work as well in some 
rural communities for various reasons. I am not an expert on 
that, but I would just say we need production in rural America 
of any scope. Thank you.
    Senator Warner. Yeah, and again, I strongly support all 
three of these. Mr. Chairman, I tell you I think there is a 
number of our colleagues on the Republican side that are 
interested on the supply issue around the tax credit, and I 
would welcome folks like our new colleague to join in that 
discussion.
    One of the things that a lot of folks from the traditional 
civil rights community have always advocated for as well is 
downpayment assistance. I am not sure that is going to take 
place for the current makeup in the House.
    So one of the things I have been trying to explore--and I 
would again--I will throw it out, would like your quick 
responses, but if we could get a longer response, is as we 
think about how we keep health care workers in rural 
communities, for example, I am interested in the idea of 
providing, giving an appropriate incentive for an employer to 
provide a tax-assisted downpayment assistance that might, to 
that employee, come on a tax-free basis. Help with that 
downpayment. Help retain that workforce.
    Have any of you done any work around employer-based tax 
credits in terms of downpayment assistance?
    Mr. Herbert. Senator, I have not although I have certainly 
heard of employers who are struggling to get employees into new 
markets. Most of the initiatives I have heard of have been 
focused on the rental side, but I think that adapting this for 
the home ownership side would have a lot of benefits as well. 
So I think employers have a need and an incentive to 
participate.
    Mr. Dietz. And our research has tended to focus more on the 
supply side, but you know, where employers get involved in the 
housing market is making sure that builders in those markets 
can construct and add supply to the marketplace because they 
know they do not want to expand to markets where housing is not 
available.
    Mr. George. Thank you, Senator. I would only agree with the 
other two commenters and also note that we hear, anecdotally to 
some degree, that businesses that want to move into rural 
communities do not have a good supply of housing across the 
spectrum for low, moderate, and high----
    Senator Warner. If we could combine that supply with some 
of our existing tools but also with some level of downpayment 
assistance, you have got a great retention tool, you have a 
benefit to workers in distressed communities.
    I am going to do some work on this, Mr. Chairman, and would 
love to work with you and others on both sides of the aisle to 
explore this. Thank you, Mr. Chairman.
    Chair Brown. Thanks, Senator Warner.
    The lady from Alabama, Senator Britt, for her first hearing 
is recognized.
    Senator Britt. Absolutely. Mr. Chairman, I want to thank 
you and the Ranking Member for your warm welcome today at my 
very first hearing. It is certainly an honor to be on this 
Committee, and I look forward to being a very productive and 
active part of it. So, thank you.
    My first question is for Mr. Dietz or Dr. Dietz. We know 
the Biden administration has actually put in more rules and 
regulations in the first 2 years of their Administration than 
Obama did in eight. When we look at that, it undoubtedly 
contributes to inflation and to stifled economic growth across 
the board, and I believe the housing sector is no exception to 
that.
    I understand the regulations add cost to building homes, 25 
percent of the cost of constructing a single-family home and 40 
percent of a multifamily home due to regulations. So I know 
that you face regulations both at a State and a local level, 
and I wanted to know if you could share some of those existing 
regulations that are really driving up cost for home buyers.
    Mr. Dietz. I think a good example at the Federal level is 
the Waters of the U.S. rule, which is both confusing but adds 
cost and makes it difficult to bring land to market, takes 
longer, provides a lot of money for consultants to do studies, 
but provides that uncertainty during the land development 
process that can take 2, 3, 4, 5 years.
    At the local level, we already talked about zoning rules, 
but you also have rising impact fees, delay requirements, just 
the delay itself of getting land approved, construction 
projects approved. All of that results in higher rents and 
higher home prices.
    So if we are really serious about tackling housing 
affordability, we need to find ways to reduce the red tape and 
bring homes to market faster.
    Senator Britt. Absolutely. Well, given those hurdles, can 
you tell me, is it harder--single-family homes, multifamily 
homes, who have been impacted more by this, ultimately?
    Mr. Dietz. Well, if you listen to builders enough, which I 
do--I travel across the country a lot--they will say, all of 
us. Right? It is not necessarily a competition. They are all 
sort of challenging in their own ways. Multifamily, it is more 
density issues. With single-family, it is concerns about land 
supply and lot development. With remodeling, it is the skilled 
labor shortage. But you know, if we are looking at low-hanging 
fruit, to improve the availability of housing in the country, 
reducing housing regulatory costs is a big way to get there.
    Senator Britt. And you are saying home buyers across the 
board are impacted.
    Mr. Dietz. I mean, it probably disproportionately affects 
first-time buyers, first-generation buyers, because again that 
entry-level construction, that townhouse construction is 
difficult, too, that sort of light-touch density, but generally 
speaking, it is driving up the cost of all forms of housing.
    Senator Britt. So it is people that want to start the 
American Dream that are being stifled, I guess.
    Mr. Dietz. Exactly.
    Senator Britt. So the past 2 years, inflationary policies 
of the Biden administration have compounded the naive belief 
that the inflation would be transitory. We have seen it hit us, 
everything from groceries to gas, and obviously, home buying is 
no exception to that.
    The past year alone, the Federal Reserve has raised the 
Federal Reserve Fund rates nearly 5 percentage points, and that 
has materially impacted the price of housing, driving up 
borrowing cost and monthly mortgage cost to the average 
American home buyer.
    What is your outlook of the housing demand, and how does 
that impact the expected housing construction in the next, I 
would say--you know, what do we see in the next 2 years, maybe 
5 years, 10 years?
    Mr. Dietz. Yeah, right now, we are in a bit of a downturn, 
as Dr. Herbert talked about. Our expectation is that single-
family construction and multifamily construction are likely to 
decline this year, but we see a turning point ahead for single-
family home building. In fact, after 12 straight months of 
decline for builder sentiment that we measure each month, we 
actually got an uptick in January. So I think in the short run 
we are going to see some stabilization.
    And then 2025 through 2030, if we can just get the 
regulatory burdens out of the way, 2025 through 2030 will be a 
pretty good runway for home building growth because we have got 
to reduce that structural housing deficit that is in place, 
that shortage.
    Senator Britt. Absolutely. And as we talk, obviously, about 
the home building, I think it is important to make sure that 
people can get access to capital, that they can be financed. Is 
there anything you can tell us about the status of the loan 
market or anything that the Committee needs to consider to make 
sure that capital is available for these people who want to 
achieve the American Dream?
    Mr. Dietz. Yeah, this is where we do not see enough focus. 
I think when we talk about lending and loans in housing, we are 
typically thinking about mortgages on the demand side. But keep 
in mind about two-thirds of home construction is undertaken by 
smaller builders, and they get their capital by going to 
community banks and borrowing funds, so we call that 
acquisition development and construction lending.
    And one of the things we know about the business cycle is 
that particular market tightens when we go into a downturn. So 
the concern is we see mortgage interest rates begin to settle 
back, a turning point comes in view, but builders and land 
developers cannot get access to credit.
    So there is a lot of different ideas in terms of how to 
address some of those challenges. One would be extending the 
secondary market that currently exists for purchase mortgages 
over to builder and construction loans, and that would help 
reduce some of the costs of credit and make sure that capital 
is available, particularly in, I would say, like rural markets 
where it is more difficult to obtain that kind of lending for 
builders.
    Senator Britt. Absolutely. Thank you so much, Dr. Dietz.
    Chair Brown. Thank you, Senator Britt.
    Senator Warren from Massachusetts is recognized from her 
office, I believe.
    Senator Warren. Thank you very much, Mr. Chairman, and 
thank you all for being here today.
    We know that housing is the largest expense for American 
families every month, and the problem has just gotten worse. 
New research shows that for the first time the typical American 
renter is spending at least 30 percent of their income to cover 
the average rent. That makes them rent-burdened by Federal 
standards.
    Now a severe shortage of homes paired with growing 
persistence of greedy corporate landlords has made this problem 
worse and put housing out of reach for many families. Fixing 
this problem at its root is going to require serious 
investments in building more housing, like those I call for in 
my American Housing and Economic Mobility Act, and I am going 
to keep fighting for this.
    But the problems that renters face go far beyond the supply 
problem. In too many places across the country, renters have 
few protections from needless evictions, excessive fees, and 
exorbitant rent hikes.
    Dr. Herbert, you are one of the Nation's leading 
researchers on the housing market, so let me ask you. There has 
been a growing movement of tenants across the country calling 
on the Federal Government to establish tenant protection 
standards. Why is it important that the Federal Government act 
to protect tenants?
    Mr. Herbert. Thank you, Senator. Well, I would say that 
there is lessons that we have learned from the previous 
pandemic about the importance of housing and having stable, 
secure housing, which led us to take steps nationally to have 
an eviction moratorium and the like. I think there is a lesson 
there that says this is an issue of national interest. It 
should not be something that differs depending on what State 
you are in.
    The other precedent I would point to is in the mortgage 
market, where we have a number of Federal statues, RESPA, TILA, 
ECOA, that all relate to making sure that home buyers across 
the country, wherever you live, are treated fairly in the 
market. So I think there is a very similar parallel there 
between homeowners and renters.
    Senator Warren. That is a really important point, and it is 
part of the reason that I led a letter with Congressman Jamaal 
Bowman, joined by 47 of our colleagues, calling on President 
Biden to take Executive action to protect tenants and bring 
down rental costs.
    Two weeks ago, the White House announced a framework for 
enhanced renter protections, and I was glad to see this action. 
It is an important first step, but we need more.
    In fact, the day the White House's framework was announced, 
the real estate lobby celebrated, and they bragged that they 
had watered down the Administration's announcement. This is the 
very same industry that spent over a hundred million dollars on 
lobbying last year, including to fight against renter 
protections. The National Apartment Association, the 
organization that lobbies on behalf of corporate landlords, 
said, quote, what we can say with certainty about the Biden 
administration's blueprint for advancing a renter's bill of 
right is that NAA's advocacy helped avert an Executive order.
    Now, Dr. Herbert, what does it tell you that the landlord 
lobby is celebrating an announcement that was purported to be 
about protecting tenants?
    Mr. Herbert. Well, Senator, what I would say is that in a 
market where, as you said in your opening remarks, half of 
renters are cost-burdened, more than a quarter are severely 
burdened, we saw rents rising in high double digits and on top 
of this pain, I guess I would just urge the apartment industry 
and the industry--housing industry to take some ownership of 
the question of what do we do and how do we protect renters. 
Obviously, we want investors and owners of properties to make a 
reasonable return, but it cannot come at the expense of people 
being forced out on the streets.
    Senator Warren. Yeah, I think that is exactly right. And 
look, if the big corporate landlords see this blueprint as a 
cause for celebration, then I think it is probably safe to 
assume there is a lot more that the Administration could do to 
meaningfully protect renters.
    You know, in fact, they can start by making sure that the 
Federal Government is not in the business of subsidizing law-
breaking corporate landlords. A U.S. House subcommittee 
investigation found that four corporate landlords evicted 
nearly 15,000 families during--during--the COVID eviction 
moratorium. Some of these landlords receive Federal financing 
to help them buy up housing on the cheap. I think that is 
fundamentally wrong and that anyone that is breaking the law 
should not be permitted to participate in these Federal 
programs.
    So I just want to say, thank you to all of you for being 
here; thank you, Dr. Herbert.
    The Administration has an obligation to ensure that 
agencies are using all of their authorities to protect 
families' access to housing, and where the agencies lack the 
tools to forcefully protect renters, then I look forward to 
working with my colleagues to pass legislation to get them the 
tools that they need. It is going to take an all-of-Government 
approach to bring down housing costs for American families, and 
it is time for us to get to work on this.
    Thank you, Mr. Chairman.
    Chair Brown. Thank you, Senator Warren.
    Senator Van Hollen of Maryland is recognized.
    Senator Van Hollen. Thank you, Mr. Chairman. Thank all of 
you for being here and for your testimony.
    Dr. Herbert, I have a number of questions for you relating 
to housing vouchers because I agree with the strong sentiment 
that we have to get at the supply issue. Obviously, that is 
fundamental to making sure that we have more affordable 
housing, and I look forward to working with everybody here on 
creative solutions to that. But while we need to start that 
right away, it does not address the issue right away, and we do 
need more, in my view, affordable housing vouchers. I know you 
have testified about this in the past and written about it in 
the past.
    I have introduced legislation over the years that we are 
going to continue to push for. It is a bipartisan bill. It is 
called the Family Stability and Opportunity Vouchers Act. It 
really does two things. Number one, it would provide more 
affordable housing vouchers, period, so more people would have 
access to affordable housing. But the opportunity part of the 
bill is important. It is focused on families with young kids, 
along with mobility services, to really provide opportunities 
for more upward mobility, as the name indicates.
    Could you talk a little bit about the need for additional 
housing vouchers and how they can also be used to achieve 
greater opportunity for families?
    Mr. Herbert. Thank you, Senator, for that question. You 
know, I would say we absolutely need more subsidies, and I 
think we need to have a balance of subsidies. We talked a lot 
today about supply. But you are right; housing vouchers are 
more immediate, and they also address issues around access to a 
broader range of communities. And thinking about different 
market conditions and places where we have a tight supply, 
vouchers may be challenging to use, but other places we have 
plenty of housing.
    And, as your bill points to, I think there is both a need 
for more vouchers but more supports. There was a study done by 
Opportunity Insights in conjunction with King County in 
Washington State, where they provided counseling to voucher 
holders to open up the range of information they had about 
communities, and they found an enormous increase in people 
coming from urban areas to looking and considering moving to 
higher opportunities areas. That counseling helped. That 
information helped. Support for moving costs helps, and also, 
engagement with landlords. It is important to have landlords 
who understand the program and are willing to engage to it.
    So I think if we are really going to make vouchers work, to 
have this ability to move to opportunity, we have to provide 
information and supports to make it happen.
    Senator Van Hollen. No, I appreciate that. As you 
indicated, as I said as well, this is a bipartisan initiative 
because it accomplishes those twin goals.
    Can you talk about the challenges that we continue to face 
where there are some homeowners that discriminate against those 
who are using vouchers? Obviously, if we are going to work to 
try to make sure that there are more opportunities here, we 
need to make sure that that people are not discriminating 
against those who are using a voucher as part of their rent 
payment.
    Mr. Herbert. Yes, Senator. And you know, in a number of 
States, they have passed so-called source of income 
discrimination laws which make it against the law to be able to 
say I refuse to rent to you because of how your rent is going 
to be paid, but in many States, those protections do not exist. 
Landlords in those cases may decide they will not rent to 
Section 8 vouchers, effectively closing off a whole range of 
the housing stock to those folks. So expanding those 
protections are a really important part of making sure the 
voucher program can be used.
    And I will say that there are ways in which the program can 
be challenging for landlords. So I would use a carrot-and-stick 
approach, where if you are going to do that I also would make 
sure that you are addressing the concerns landlords about 
equality inspections and the like. Doing both is important, but 
certainly starting with do not discriminate is an important 
first step.
    Senator Van Hollen. I am happy to look at both, you know, a 
requirement that people not discriminate based on source of 
income but also--what are some of the carrots that you think 
that need to be applied?
    Mr. Herbert. Well, I think help with the property 
inspections and making sure that those are not--you know, there 
is a whole set of equality standards that can be somewhat 
inconsequential. Matt Desmond's book, Evicted, talked about an 
inspector looking for a shower curtain as a step. So I think 
making sure that that process is not unduly cumbersome for the 
landlords and the like. So I think it is really a question of 
looking at it also from the landlords' perspective, to say, how 
can we make this process simpler and less fraught for them?
    Senator Van Hollen. Got it. Do either of the other 
witnesses have any comments on this? Dr. Dietz.
    Mr. Dietz. I would just issue a bit of caution. NAHB has 
been supportive of voucher programs. We think they are 
important, but you know, voluntary participation in the program 
is better.
    Keep in mind, for a typical multifamily owner-operator, 
they tend to be smaller businesses. So as you layer additional 
regulatory requirements on, it does increase the cost of 
housing and, therefore, deters investment in the multifamily 
sector.
    Senator Van Hollen. Right. Just a quick follow-up, but just 
so I understand, you agree that we should have a principle of 
nondiscrimination by landlords based on the source of income of 
the tenant. Do you agree with that principle?
    Mr. Dietz. In principle but not in terms of requirement and 
rules. The complexity of it is particularly difficult for 
owner-operators.
    Senator Van Hollen. No, I think this is, as I understand 
Dr. Herbert's point, in terms of more incentives. The idea 
would be to address--we agree on the principle?
    Mr. Dietz. Sure. Incentives, yeah.
    Senator Van Hollen. But understanding that there could be 
additional administrative burdens that someone has to go 
through, if we are addressing that issue, I am assuming that 
you would support enforcing the principle.
    Mr. Dietz. Our preference on incentives would be to expand 
the Low-Income Housing Tax Credit program because that 
increases supply.
    Senator Van Hollen. Well, no, as I said at the outset, I 
strongly support that and would like to see an expansion of 
that as well on the supply side, but we also have to address 
this immediate issue.
    Thank you very much, Mr. Chairman.
    Chair Brown. Thank you, Senator Van Hollen.
    Senator Scott and I each have one question, one more 
question. Then we will wrap up.
    Mine is to Mr. George. HAC found that affordable rental 
units developed under USDA's 515 program have been exiting the 
program when their loans mature at a faster rate than 
predicted. In the coming years, 515 buildings that are home to 
thousands of families and seniors may be eligible to leave the 
program. What would the consequences be for rural renters in 
States like mine, where there are a number of them, if we just 
let these affordable 515 units exit the program? What do we do 
then to preserve affordable housing?
    Mr. George. Thank you, Chairman Brown. Just to go back into 
the larger discussion we had on the importance of rental 
housing but a dearth of good quality rental housing in many 
rural communities, in this particular source of rental housing, 
if you go into a community, it is oftentimes among the best 
rental housing in a rural community. But the impacts can be 
profound, and they can be multiplying, the first of which, at a 
degree which I do not think Congress would allow, if you let 
every unit expire, you would lose somewhere between 350 and 
400,000 vital affordable rental units in rural communities. The 
second element I would note is the tenants in these properties 
tend to be among the most vulnerable in the United States. Two-
thirds of the tenant occupancy are elderly or disabled, and 
they have an average household income of just above $13,000, 
and in many respects there would be no place for them to go. 
That would be the final point. There are just not a lot of 
other good options. This is not--again, these are not tenants 
that are in the workforce. They are not highly mobile. And it 
would be very difficult for them to find affordable housing in 
many of these communities without this particular resource. It 
is just a very valuable resource in rural communities.
    Chair Brown. Thank you. Exactly what we thought and hoped 
you would say, thank you. I have been into these communities 
and know how vulnerable rural Ohio has become with the change 
in the economy. So, thank you.
    Senator Scott.
    Senator Scott. Thank you, Mr. Chairman. Thinking about 
housing affordability throughout South Carolina, I know that 
when you travel to my family's home town of Salley, South 
Carolina, that you see perhaps more manufactured homes or 
mobile homes or modular homes. The theory that modular or 
manufactured homes are of less quality and not as safe has 
consistently proven not true. I would love for us to one day 
visit the Innovative Housing Showcase put on by HUD at the 
National Mall, where home builders in the manufactured housing 
industry have an opportunity to demonstrate the innovations in 
home construction.
    My question, Dr. Dietz, is it seems that both manufactured 
and modular housing show great promise in terms of constructing 
decent, safe, quality housing that low-income families can 
afford. What are the threats to more of these housing 
opportunities being procured by modest families?
    Mr. Dietz. There is a real potential here for offsite 
construction, so particularly in home building, that is modular 
and panelized construction. It is only about 3 percent of 
single-family starts. In the late 90s, it was 8 percent. So 
just getting back to the market share we had--we talked about 
labor productivity in this sector--this is a way to do it.
    But like any innovation in any business sector, it is about 
rate of return, making sure the capital is available, and then 
making sure the regulatory environment is not so harsh that you 
cannot make those investments and then reap that investment 
return. So we do think that is one area where we are going to 
see innovation in housing and, we hope, housing affordability 
in the long run.
    Senator Scott. Any comments, Mr. George?
    Mr. George. No, only to reiterate that this is an extremely 
important source of housing in rural communities, but it is 
often maligned and overlooked. I would agree completely, 
especially since, you know, the construction of the what we 
call commonly the HUD Code in 1976, the quality, safety, size, 
amenities of these homes are indistinguishable from stick-built 
homes. What we do see in some respects are sometimes consumers 
have a foot in both worlds, where the quality of the homes are 
very high, but elements about how the home was sold, financed, 
appraised or warrantied are oftentimes in the automobile realm, 
and sometimes consumers are not as well served by those 
elements. And we are trying to make--I think it would be 
laudable to try to make, particularly home financing, to 
provide consumers of this product similar financing options 
like conventional or stick-built homeowners with mortgages.
    Senator Scott. Thank you.
    Chair Brown. Thank you, Senator Scott. Thanks to the 
witnesses today for being here and providing testimony. We 
chose ``The State of Housing'' because that is, to me, the 
number one priority on this Committee. So, thank you for your 
leadership and for speaking out. Senators who wish to submit 
questions for the record, they are due 1 week from today, 
Thursday, February 16th. To the witnesses, you have 45 days to 
respond to any questions. Thank you again. Any closing comment?
    Senator Scott. Thank you, Chairman. I think we had a very 
good hearing today, talking about the challenges and the 
burdens that Government can put on the home building business 
and, frankly, if you have more burdens on the business of 
building homes, you have more burdens on the ability to achieve 
the American Dream, which, for most of us, is home ownership.
    I appreciate the consensus approach to this Committee. I am 
sure we are going to have that on every single hearing we have 
this year. I will wait for a response.
    Chair Brown. Yes, Senator Scott.
    Senator Scott. Thank you so much, sir.
    Chair Brown. We will attempt to.
    Senator Scott. Yes, sir. Appreciate that.
    Chair Brown. Thank you. With that, the hearing is 
adjourned. Thanks, folks.
    [Whereupon, at 11:26 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
               PREPARED STATEMENT OF CHAIR SHERROD BROWN
    Welcome back to many of you, and welcome to the new Members of this 
Committee.
    I want to welcome Senator Scott as the new Ranking Member of this 
Committee.
    Senator Scott has played an important role on this Committee for 
nearly a decade.
    I am pleased to have worked with him on issues that matter to 
families across the country--from making sure expecting moms have 
health care to supporting investment in home revitalization so we can 
increase home ownership opportunities for all. I look forward to the 
work we'll do together over the next 2 years, starting with today's 
hearing on the state of housing.
    Senator Fetterman, Senator Vance, Senator Britt--welcome. We look 
forward to working with you on finding common ground and providing real 
bipartisan solutions to the issues that matter to the people we serve. 
I also wish Senator Fetterman a speedy recovery.
    Last Congress this Committee talked more about housing than we had 
for a long time. Around town, this Committee used to be referred to as 
Senate Banking. It was far too much about Wall Street and not nearly 
enough about the issues that matter to people's lives--about housing, 
transit, community development, and small and regional banks and credit 
unions.
    We're starting this Congress with a hearing on housing because it's 
one of the most important issues facing families from Aiken, South 
Carolina, to Zanesville, Ohio.
    Housing determines so much about your life--how long it takes to 
get to work, whether you have easy access to a bank or fresh food, 
whether you worry about your kids getting sick from lead paint or mold.
    It determines your access--and your kids' access--to opportunity.
    And for too many people, safe, affordable housing, and the 
opportunity it provides, is just too hard to find.
    There isn't a day that goes by that I don't hear about the 
challenges that Ohioans are facing in the housing market.
    In just the last few weeks, I've heard from Ohio seniors who have 
lived in the same manufactured housing community for years--or even 
decades--but are now worried they'll lose their homes after an out-of-
State investor bought their neighborhood and raised the rent.
    I've heard from renters in rural Ohio whose rent went up almost 90 
percent in a single year.
    I've heard from city council members and mayors who are excited to 
have new jobs bringing economic opportunities to their region. But now 
they're worried there isn't enough housing for new workers, or that 
existing workers will be priced out, as we've seen happen to teachers 
and cops and firefighters.
    The story is the same--there just isn't enough quality housing at 
prices that people can afford.
    Of course, this isn't happening just in Ohio.
    Nationwide, we're short an estimated 3.8 million homes, and the gap 
is growing.
    In my home State of Ohio, we're short 50,000 homes. In Senator 
Scott's home State, it's 12,000. And in Senator Sinema's home State, 
they're short 123,000 homes.
    And because there aren't enough homes, renters and homeowners are 
stuck paying more every month or living with peeling lead paint or 
leaks--if they can find a home at all.
    In 2021, a record number of renters--21.6 million households--paid 
more than 30 percent of their income for housing.
    That's about half of the Nation's renters. Many of these renters 
are working full-time jobs, or more than one job, but it just isn't 
enough.
    Eleven of the 25 most common occupations in the U.S.--workers we 
all depend on, like home health aides and office support staff--nearly 
half of the most common occupations don't pay enough to afford a one-
bedroom apartment anywhere in the country.
    More renters are struggling in part because rents have skyrocketed 
over the past 3 years.
    Nationwide, rents are 25 percent higher than they were in 2019. In 
some places, rent has gone up even more. And while rent growth is 
finally starting to slow in some places, millions of families are still 
paying more each month than they would have a year or two ago.
    That means less money for food, less money for childcare, less 
money for prescription drugs. Saving for a downpayment is nearly 
impossible.
    Combine sky-high rents with higher home prices, rising interest 
rates, and too few homes on the market. Home ownership is looking 
further and further out of reach for millions of working families.
    And the families who have already become homeowners are feeling 
squeezed, too.
    One-in-five homeowners is paying more than they can afford for 
their homes. That includes families who have to make tough choices 
about paying their water or their heat or their mortgage, and seniors 
who have to put off critical repairs to keep up with payments on a 
fixed income.
    This isn't just a problem in big cities or on the coasts. And it 
isn't a Republican problem or a Democratic problem.
    It's hitting every community--rural, suburban, urban, and Tribal 
communities--and every State in the country.
    As we heard last Congress, communities from Bozeman, Montana, to 
Tempe, Arizona, to Akron, Ohio, are struggling with a lack of 
affordable housing.
    It's a national problem. And it will take all of us working 
together to solve it.
    Today's witnesses are experts chosen together by the majority and 
minority. This bipartisan group will help us understand the housing 
conditions facing homeowners and renters across the country, and what 
we can expect in the months and years ahead.
    Their insights on the availability and affordability of housing, 
the barriers to new development of more affordable housing, and the 
unique challenges in rural and Tribal communities will help inform this 
Committee's work to make housing opportunities available to families 
across the Nation.
    I look forward to hearing from our witnesses today, and to working 
with all of my colleagues--including our three new Members--to find 
common ground on addressing these challenges.
                                 ______
                                 
                PREPARED STATEMENT OF SENATOR TIM SCOTT
    Thank you, Chairman Brown. It certainly has been a privilege to 
work with you and we have found some common ground between the two of 
us. We also very often see the same problem, and just see different 
paths to get to the solution.
    Today is a day when we celebrate bipartisanship. Thank you for 
working together on consensus witnesses who will help us understand the 
plight of so many Americans who are suffering through the challenges of 
home ownership or renting. I grew up with a mom who worked really 
hard--16 hours a day--and we rented through high school. We lived with 
my grandparents when we were younger, with my brother, my mother, and I 
sharing a bedroom in a rented house. The problems we see today aren't 
recent problems--they span back across history.
    And so today we have an opportunity to try to understand why 
housing in this country has become so expensive and out of reach for so 
many families.
    Federal housing policy has long been disconnected from economic 
reality. Partisan spending bills have contributed to housing inflation, 
and I worry that continuing to promote irresponsible Federal spending 
does not address affordability challenges. In fact, it may be the root 
cause. Too much money flooding into our market and leading to 
incredible inflation, causing the Fed to try to figure out how to tamp 
down inflation by slowing the economy.
    This Administration likes to talk about the need for more 
affordable housing, but as we all know, talk is cheap and leads to 
empty promises. For instance, when President Biden ends Federal 
apprenticeship programs that produce high paying jobs in the skilled 
trades, he shouldn't get to bemoan the lack of construction workers. 
Or, when he fails to address domestic supply chain bottlenecks, he 
shouldn't feign surprise when construction materials take months to 
arrive at job sites.
    Finally, threatening builders and housing providers with the 
possibility of rent control will only further increase the gap in 
housing supply.
    For decades, Washington's response to housing challenges has simply 
been more spending. We need to end this cycle and stop spinning our 
wheels.
    While the trillions spent on numerous Federal housing programs were 
well intended, the net result has made no meaningful and lasting impact 
on home ownership rates. Especially as we see burdensome regulations 
push closing costs higher and higher, making the path to home ownership 
more difficult.
    For African American families in particular, the home ownership 
rate remains unchanged since 1968, the year the Fair Housing Act was 
signed into law. For too long assistance programs have served as 
subsistence programs for the most vulnerable Americans.
    It's past time to rethink the tax-and-spend strategies that keep 
families trapped in generational cycles of poverty and find real 
solutions to meaningfully impact all households--breaking the cycle. 
Government must begin responsibly helping families rather than doubling 
down on programs that fail to generate results.
    We need to leverage the successes of American capitalism by 
encouraging private investment in the housing sector and eliminating 
needless barriers that artificially restrict supply. And most 
importantly, we should remember that effective housing policy is driven 
by communities--it is critically important the Federal Government 
encourages local solutions to uniquely local problems.
    These ideas are common sense and shouldn't be controversial. I 
sincerely believe Republicans and Democrats should be able to find 
common ground on many of these important matters that impact the 
American people. I thank Chairman Brown for working together on 
building this consensus panel.
    With that, I would like to welcome the witnesses and I look forward 
to your testimony.
                                 ______
                                 
               PREPARED STATEMENT OF CHRISTOPHER HERBERT
      Managing Director, Harvard Joint Center for Housing Studies
                            February 9, 2023

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                                 ______
                                 
                   PREPARED STATEMENT OF ROBERT DIETZ
  Chief Economist and Senior Vice President for Economics and Housing 
             Policy, National Association of Home Builders
                            February 9, 2023

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                   PREPARED STATEMENT OF LANCE GEORGE
    Director of Research and Information, Housing Assistance Council
                            February 9, 2023

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
                    FROM CHRISTOPHER HERBERT

Q.1. You mentioned in your testimony that restrictive zoning 
hinders the construction of affordable starter homes. What 
types of zoning requirements can restrict the ability to build 
these more affordable homes, and have we seen any communities 
successfully address those barriers?

A.1. In my testimony I relayed an anecdote I had recently heard 
from a homebuilder who specializes in entry-level housing that 
a community in Colorado had a minimum house size of 1,600 
square feet that made it impossible for them to build their 
most common entry-level home. However, systematic information 
on zoning restrictions is extremely limited so it is difficult 
to document the extent to which such restrictions limit the 
building of small single-family homes generally. However, one 
systematic analysis of zoning codes in all jurisdictions in 
Connecticut has found that even in a State that outlawed the 
use of minimum house sizes there were a number of jurisdictions 
that imposed such limits, including a number that set a minimum 
house size of 2,000 square feet. \1\ But a related and very 
common regulatory limit that makes it difficult to build entry-
level homes are minimum lot size requirements that increase 
land costs per home. The same study of Connecticut's zoning 
found that 91 percent of all land in the State was zoned 
exclusively for single-family homes and in 73 percent of these 
areas the minimum lot size was at least 0.92 acres and in 45 
percent of these areas the minimum was 1.84 acres.
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     \1\ Bronin, Sarah C. ``Zoning by a Thousand Cuts''. Cornell 
Journal of Law and Public Policy, February 24, 2022.
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    But this issue is by no means limited to Connecticut as 
another recent study on zoning in Texas concluded that minimum 
lot sizes in that State also constrained housing supply 
generally and specifically of homes on 5,000-7,000 square foot 
lots that have strong demand. \2\ In addition, a study by 
researchers at the University of Pennsylvania examining survey 
results on regulatory conditions in suburban jurisdictions 
across the country and how they have changed over the period 
from 2006 to 2008 found that increases in minimum lot sizes 
were one of the most significant trends toward more restrictive 
development over this period. \3\ Slightly more than 40 percent 
of jurisdictions were found to have increased minimum lot 
sizes, with the share reporting a minimum size of over \1/2\ 
acre increasing from 39 to 52 percent. In addition to minimum 
lot sizes, another important way in which zoning restricts the 
development of entry-level housing is through limiting 
development to detached single-family homes. The same 
Connecticut study found that very little land is zoned as of 
right for multifamily housing that would allow for duplex, 
triplex, town home, or condominium development.
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     \2\ M. Nolan Gray and Salim Furth. ``Do Minimum-Lot-Size 
Regulations Limit Housing Supply in Texas?'' Mercatus Research, 
Mercatus Center at George Mason University, Arlington, VA, May 2019. 
Available at: https://www.mercatus.org/students/research/research-
papers/do-minimum-lot-size-regulations-limit-housing-supply-texas.
     \3\ Gyourko, Joseph, Jonathan S. Hartley, and Jacob Krimmel. ``The 
Local Residential Land Use Regulatory Environment Across U.S. Housing 
Markets: Evidence From a New Wharton Index''. Journal of Urban 
Economics 124 (2021):103337.
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    There has been a growing movement to address these limits 
on more modest entry-level housing. At the jurisdiction level, 
the City of Minneapolis in 2020 changed its zoning to allow for 
three homes to built as of right in all areas of the city. \4\ 
Similarly, the City of Charlotte as part of its comprehensive 
plan process also upzoned many areas of the city formerly 
limited to single-family detached homes to allow for townhomes 
and duplexes. \5\ There have also been significant initiatives 
at the State level to overrule local resistance to such higher 
density development, including the elimination of single-family 
zoning in many areas of the State by both California and 
Oregon. \6\ The State of Massachusetts has passed a new mandate 
for all communities served by the mass transit system to zone a 
specified minimum amount of land within a half-mile of a 
transit stop for as-of-right housing at a density of 15 units 
per acre to allow for an increase of each town's housing stock 
by 10 percent over time. \7\
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     \4\ See Minneapolis 2040 at https://minneapolis2040.com/.
     \5\ See Charlotte's Unified Development Code available at https://
charlotteudo.org/wp-content/uploads/2022/08/CLT-UDO-Adopted-08-22-
22.pdf.
     \6\ Von Hoffman, Alexander. ``Single-Family Zoning: Can History Be 
Reversed?'' Housing Perspectives, October 5, 2021, Harvard Joint Center 
for Housing Studies. Available at: https://www.jchs.harvard.edu/blog/
single-family-zoning-can-history-be-reversed.
     \7\ Information on this regulation is available at https://
www.mass.gov/info-details/multi-family-zoning-requirement-for-mbta-
communities.

Q.2. What challenges do private, public, and nonprofit sectors 
face when attempting to reduce the cost of construction by 
pursuing more efficient means of building homes through offsite 
production? What policies can help reduce barriers and cost for 
more efficient means of building homes through offsite 
---------------------------------------------------------------------------
production?

A.2. Several recent studies have explored the potential and the 
challenges of more widespread use of offsite production 
methods. Most recently, a study conducted by researchers at Abt 
Associates for the Terwilliger Center for Housing Policy at the 
Bipartison Policy Center identified a series of obstacles to 
greater use of modular housing, including the need for a steady 
flow of production to support the high fixed costs of a factor, 
the long learning curve for adopting this new method, the lack 
of experienced installers, and difficulties in the Government 
inspection process. \8\ This study suggests that one way in 
which the public sector can support the development of the 
sector is through support for minimum purchase commitments that 
support the development of factories to produce these homes. It 
also cites examples of two public programs, one by the State of 
Colorado providing financial support for starting offsite 
factories and another by the State of Virginia housing finance 
agency providing grants of up to $500,000 to support innovative 
construction techniques, which included support for a new 
modular housing factory.
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     \8\ Burnett, Kimberly, Jeffrey Lubell, Lindsay Elam, and Mary 
Tingerthal. ``Using Economies of Scale To Produce Starter Homes''. Abt 
Associates and the Bipartisan Policy Center, November 2022. Available 
at: https://bipartisanpolicy.org/report/economies-produce-starter-
homes/.
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    A 2018 report by the Terner Center for Housing Innovation 
at the University of California at Berkeley also explores the 
potential of and barriers to offsite production. The list of 
barriers is similar to that of the Abt Associates study, 
highlighting the need for consistent production to support the 
factory and the challenge of timely inspections of modules. \9\ 
The Terner Center study also focuses on the challenges of using 
traditional construction financing which does not align with 
the high upfront costs of factory production and argues that 
the public sector could play a role in providing loan 
guarantees that could facilitate the development of financing 
for this form of production.
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     \9\ Galante, Carol, Sara Draper-Zivetz, and Allie Stein. 
``Building Affordability by Building Affordably: Exploring the 
Benefits, Barriers, and Breakthroughs Needed To Scale Off-Site 
Multifamily Construction''. Terner Center for Housing Innovation, UC 
Berkeley. March, 2017. Available at: https://ternercenter.berkeley.edu/
wp-content/uploads/2020/08/offsite-construction.pdf.
---------------------------------------------------------------------------
    A study by the American Enterprise Institute was more 
pessimistic about the potential for the offsite construction 
industry to achieve greater scale in the U.S. reviewing the 
history of previous initiatives that failed to gain traction. 
\10\ The study notes the advantage of the flexibility of 
existing homebuilding methods to adapt to specific demands and 
unique site features as well as the high transportation costs 
for modular components as difficult barriers to overcome. 
However, the study does note the significant cost advantage of 
manufactured homes and concludes that if all offsite 
construction methods were subject to a similar single national 
code there would likely be much greater production of modular 
and panelized construction methodologies.
---------------------------------------------------------------------------
     \10\ Fisher, Lynn M., and Scott Ganz. ``Will Homebuilding Finally 
Evolve? Lessons From the American Experience With Factory-Built 
Housing''. AEI Economic Perspectives, American Enterprise Institute, 
April 22, 2019. Available at: https://www.aei.org/research-products/
report/will-homebuilding-finally-evolve-lessons-from-the-american-
experience-with-factory-built-housing.
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       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                    FROM CHRISTOPHER HERBERT

Q.1. The Federal Reserve rate hikes have clearly affected the 
broader economy. However, within the housing market, prices 
still remain stubbornly high. This is unusual considering how 
interconnected the housing market is with borrowing rates. One 
possible explanation is homeowners with low, fixed rates are 
locked into their current homes due to higher borrowing costs, 
which in turn further locks housing supply.
    Who is bearing the brunt of the rate hikes in the housing 
market? Is it fair to say low-income and first-time home buyers 
are feeling the most economic consequences? Which generation is 
being affected the most by these market conditions?

A.1. Interest rate hikes are certainly most consequential for 
first-time homebuyers as they attempt to qualify for a 
mortgage. Lower-income households will also be more impacted. 
However, higher interest rates are also consequential for 
current homeowners who would like to change homes but face much 
higher mortgage costs if they do. Homeowners who would like to 
tap home equity for home improvement, funding education or 
businesses also face higher costs. But all told, it seems fair 
to say though that the largest impact is on younger households 
who are unable to afford to buy a home.

Q.2. If rate hikes won't free up supply and lower prices, how 
can we open up supply in the short run? ls there a legislative 
solution you would recommend to approach this problem?

A.2. Higher interest rates will make it more difficult to 
supply new housing, adding to the shortfall in supply that has 
been evident in recent years. Of most concern for policy is the 
shortage of affordable housing, including subsidized rental 
housing. Perhaps the most effective legislative solution would 
be to increase funding for the Low-Income Housing Tax Credit to 
expand the supply of below mark rate rental housing. Proposals 
such as the Neighborhood Homes Investment Act which would 
provide subsidies to expand the rehabilitation and new 
construction of housing in distressed communities could also 
help expand the supply of affordable housing.

Q.3. For the first time since it began tracking data, the 
Federal Reserve Bank of Atlanta designated the Atlanta housing 
market as unaffordable, keeping more and more prospective 
homeowners in the rental market. All the while, rents continue 
to rise, causing folks to spend a significant proportion of 
their income on rent. Last Congress, I introduced the Rent 
Relief Act, which would give low- and middle-income folks who 
spend over 30 percent of their income on a rent a fully 
refundable tax credit.
    Do you believe supplementing rent, especially for 
vulnerable renters, is effective at keeping people housed?

A.3. Households facing very high housing cost burdens are 
clearly more vulnerable to experiencing homelessness and so 
providing subsidies would certainly reduce this risk. A recent 
book by Gregg Colburn and Clayton Page Aldern undertake a 
thorough review of factors that might explain differences in 
the rate of homelessness across markets in the United States 
and conclude that the most important factor is differences in 
the cost and availability of rental housing. \1\
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     \1\ Colburn, Gregg, and Clayton Page Aldern. ``Homelessness Is a 
Housing Problem: How Structural Factors Explain U.S. Patterns''. Univ. 
of California Press, 2022.

Q.4. Do you recommend any other short-term solutions to protect 
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low and middle-income renters?

A.4. The Emergency Rental Assistance that was provided during 
the pandemic to help renters make up arrears to avoid eviction 
has proven quite effective at both stabilizing renters and in 
supporting landlords who would otherwise experience higher 
financial losses. While the economic impacts of the pandemic 
are fading the financial challenges facing low-income renters 
continue as indicated by the continued high share of renters 
reporting being behind on rent in the Census Bureau's Household 
Pulse Survey. Providing ongoing support for this form of 
emergency rental assistance would be a significant improvement 
in the Nation's rental housing safety net. In addition, funding 
to provide tenants with advice and counsel about their rights 
as tenants and help with housing search as well as support for 
the cost of moving could also help to improve renter stability.

Q.5. Foreign and out-of-State investors have had an outsized 
influence on Georgia's residential real estate market over the 
past decade. The buy-to-rent model has been particularly 
prevalent in the metro Atlanta area and targeted toward Black 
and Brown communities, keeping more and more Georgians from 
home ownership.
    Do you think the issues I brought up in my two previous 
questions are some of the symptoms of this investor activity?

A.5. The previous questions were related to affordability in 
the rental market overall. There have been very few studies 
that I am aware of that have examined the relationship between 
the extent of investor activity in a market and growth in 
overall rents. One study by researchers from the Federal 
Reserve Bank of Philadelphia examined this question and did 
find that investor activity explained about a third of the 
change in single-family rent growth across the markets studied 
(although they did not examine changes in overall market 
rents). \2\ Another study does examine rent changes at the 
neighborhood level in cases where two large single-family 
investors merged and find that rents increased by 0.5 
percentage points more in these neighborhoods compared to other 
neighborhoods where the two firms operated, suggesting that 
investor activity does push up rents faster than they otherwise 
would have risen. Still, with overall rent increases of several 
percentage points in most years this degree of increase is only 
a portion of the overall rise in rents. In short, while there 
is some evidence that investor activity is contributing to 
increases in rents it does not explain a majority of these 
increases.
---------------------------------------------------------------------------
     \2\ Lambie-Hanson, Lauren, Wenli Li, and Michael Slonkosky. 
``Leaving Households Behind: Institutional Investors and the U.S. 
Housing Recovery''. Research Department Working Papers, Federal Reserve 
Bank of Philadephia, WP19-01, January 2019.

Q.6. Why do you believe investors are choosing to target 
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Atlanta and the surrounding areas?

A.6. Investors appear to have been drawn to sunbelt markets 
generally because of relatively low cost of housing compared to 
high-cost coastal markets and also because the housing stock is 
generally newer and more standardized in typology that makes 
valuation and management easier. The faster growth of these 
States also provides more stable demand for housing. Finally, 
these States generally experienced higher levels of foreclosure 
following the Great Recession that provided an opportunity for 
investors in these areas that they are now able to build on.

Q.7. How do Georgia's tenants' rights, which are largely 
determined at the State level, compare to the rest of the 
Nation?

A.7. Not being a legal scholar, this is not my area of 
expertise. However, several sources suggest that Georgia's laws 
are among the most favorable for landlords in the country in 
terms of ability to evict quickly, charge fees, and enter 
properties. \3\
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     \3\ See, for example, reviews by: ConsumerAffairs (https://
www.consumeraffairs.com/moving/best-states-for-renters.html), Roofstock 
(https://www.consumeraffairs.com/moving/best-states-for-renters.html), 
and SparkRental (https://sparkrental.com/anti-landlord-laws-worst-
cities-states-for-investors/).
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               RESPONSES TO WRITTEN QUESTIONS OF
        SENATOR FETTERMAN FROM ROHIT CHRISTOPHER HERBERT

Q.1. I have grown increasingly concerned about the outsized 
role private equity is playing in the housing space, including 
reported growth in the manufactured housing sector. Observers 
have seen institutional investors target manufactured housing 
communities, purchasing the land and raising rents, increasing 
evictions, and deferring even basic maintenance.
    As private equity increases its presence in manufactured 
housing communities, what impact will we see on residents' 
pocketbooks? Could you share any data or specific examples you 
have regarding increases in rent or fees after private equity 
firms purchase manufactured housing communities.

A.1. Concerns about investors raising rents substantially on 
residents of manufactured housing communities has been covered 
widely by the media, although I am not aware of any academic 
studies that have documented the extent of this phenomena. \1\ 
The academic Esther Sullivan of the University of Colorado at 
Denver has done a number of studies examining the impact of 
rising rents and evictions in manufactured home communities, 
which highlight the devasting impact that these increases have 
on residents. \2\
---------------------------------------------------------------------------
     \1\ See for example: Kasakove, Sophie, ``Investors Are Buying 
Mobile Home Parks. Residents Are Paying a Price''. New York Times, 
March 27, 2022; Kolhatkar, Sheelah. ``What Happens When Investment 
Firms Acquire Trailer Parks''. The New Yorker, March 8, 2021; 
Bhattarai, Abha. `` `We're All Afraid': Massive Rent Increases Hit 
Mobile Homes''. Washington Post, June 6, 2022.
     \2\ Sullivan, Esther. ``Displaced in Place: Manufactured Housing, 
Mass Eviction, and the Paradox of State Intervention''. American 
Sociological Review 82, no. 2 (2017): 243-269.

Q.2. What do we know about the role federally backed loans are 
---------------------------------------------------------------------------
playing in these purchases?

A.2. There is no systematic information that I am aware of on 
the extent of these purchases or the prevalence of different 
forms of financing for these purchases. However, in 2021 
several high profile media reports found cases where 
manufactured home community residents facing significant rent 
increases lived in communities that had been acquired using 
financing from the Government-sponsored enterprises, Freddie 
Mac and Fannie Mae. \3\ In response to these concerns the 
Federal Housing Finance Agency required the agencies to 
increase their protections for residents on loan they financed 
under their Duty to Serve mandates. \4\ Since 2022 both GSEs 
require manufactured home park borrowers to include a series of 
mandated tenant protections as part of their loan terms 
including renewable lease terms, written notice of rent 
increases, grace periods for late rental payments, and rights 
governing the sale of a manufactured home at an MHC. However, 
there are certainly other protections that could be extended to 
residents as part of FHFA's oversight of this aspect of GSE 
lending.
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     \3\ See, for example, Arnold, Chris, Robert Benincasa, and Mary 
Childs. ``How the Government Helps Investors Buy Mobile Home Parks, 
Raise Rent and Evict People''. National Public Radio, December 18, 
2021. Available at: https://www.npr.org/2021/12/18/1034784494/how-the-
government-helps-investors-buy-mobile-home-parks-raise-rent-and-evict-
pe.
     \4\ Federal Housing Finance Agency, Listening Session on 
Manufactured Housing, July 12, 2022. Available at: https://
www.fhfa.gov/Media/Documents/FHFA-Listening-Session-on-Manufactured-
Housing-07-12-2022.pdf.

Q.3. How could Fannie Mae and Freddie Mac better support 
residents seeking to purchase these properties, particularly as 
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co-ops or other community ownership structures?

A.3. Resident ownership of manufactured home communities has 
been proven effective at increasing affordability and stability 
in these communities. A number of factors are needed to support 
resident purchase of these parks, including State laws 
requiring adequate notice of sale, a right of first refusal by 
residents, and tax incentives to support these transactions. 
\5\ Access to long-term, affordable financing is also key to 
supporting these transaction. Both GSEs do provide such 
financing, \6\ although the scale of these efforts could be 
increased. However, such an increase would be most likely in 
conjunction with efforts by policymakers to increase tenants 
right to purchase. A 2021 policy brief by Enterprise Community 
Partners outlines a number of ways in which there could be 
greater financial and other supports for these transactions. 
\7\
---------------------------------------------------------------------------
     \5\ National Consumer Law Center. ``Promoting Resident Ownership 
of Communities''. January 2021. Available at: https://www.nclc.org/wp-
content/uploads/2022/08/cfed-purchase-guide.pdf.
     \6\ See https://www.multifamily.loans/freddie-mac-manufactured-
housing-community-resident-owned-loan/ and https://
multifamily.fanniemae.com/financing-options/specialty-financing/
manufactured-housing/non-traditional-ownership-pricing-incentive.
     \7\ Abu-Khalaf, Ahmad, Flora Arabo, and Steven Swann. ``Preserving 
the Affordability of Manufactured Homes in Land-Lease Communities''. 
Policy Brief, Enterprise Community Partners, 2021. Available at: 
https://www.enterprisecommunity.org/sites/default/files/202110/
Manufactured%20Home%20Communities%20Policy%20Brief-updated.pdf.

Q.4. I am incredibly proud of the work Pennsylvanians have been 
doing to preserve our existing housing supply, like through the 
Whole-Home Repairs Program. In 2022, the Pennsylvania State 
legislature passed a first-in-the-Nation law establishing this 
program, which uses funding from the American Rescue Plan Act 
to provide streamlined grants for homeowners and landlords to 
repair and weatherize their homes. Instead of needing multiple 
grants to address specific repair needs, recipients can address 
the totality of habitability, safety, accessibility, or 
sustainability concerns.
    What impact will there be on affordability and supply if we 
fail to maintain existing housing?

A.4. According to the U.S. Department of Housing and Urban 
Development's Worst Case Housing Needs 2021 Report to Congress 
among very-low income households earning less than 50 percent 
of Area Media income there are 5.1 million renters receiving 
rental assistance. \8\ But this represents just over one in 
four of households at this income level who are generally 
available for rental subsidies. Of the remaining households, 
most are facing either severe or moderate housing problems, 
paying more than 50 percent or 30 percent of income on housing, 
or living in severely or moderately inadequate housing. Still, 
some 3.5 million households at these income levels live in 
affordable, decent quality housing provided by unsubsidized 
housing. For low-income households earning 50-80 percent of 
AMI, who are increasingly facing rent burdens, the number 
living in affordable, unsubsidized housing is even larger at 
3.7 million. In short, existing housing affordable to low-
income households without subsidies is of great importance for 
millions of renter households.
---------------------------------------------------------------------------
     \8\ U.S. Department of Housing and Urban Development. Worst Case 
Housing Needs 2021: Report to Congress. Available at: https://
www.huduser.gov/portal/sites/default/files/pdf/Worst-Case-Housing-
Needs-2021.pdf.
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    As my Center's work has documented, renters who face 
housing cost burdens are forced to cut back on spending on 
essentials such as food, health care, transportation and 
savings and face an increased risk of housing instability. \9\ 
Our work has also documented the significant loss of affordable 
rentals over the last decade as market pressures have pushed up 
rents across the board in markets across the country so that 
the number of rentals for $600 or less declined by 3.9 million 
between 2011 and 2019.
---------------------------------------------------------------------------
     \9\ Harvard Joint Center for Housing Studies. America's Rental 
Housing 2022. Available at: https://www.jchs.harvard.edu/americas-
rental-housing-2022.
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    Policies that support the preservation of existing housing 
at lower rents would have great benefit. Such approaches could 
include favorable loan terms, grants, or tax breaks in exchange 
for limiting rent increases on these properties. In addition, 
there is also a need to support investments to maintain older 
homes, with a particular need for supports for low-income 
households who may have difficulty affording these investments. 
Researchers at the Federal Reserve Bank of Philadelphia have 
estimated that there is a need for $149B in investment to 
remedy deficiencies in the existing housing stock, including 
$57B for homes occupied by low-income households. \10\
---------------------------------------------------------------------------
     \10\ Divringi, Eileen. ``Updated Estimates of Home Repair Needs 
and Costs'', Research Brief, Federal Reserve Bank of Philadelphia, 
March 2023. Available at: https://www.philadelphiafed.org/-/media/frbp/
assets/community-development/reports/23-02-home-repairs-update.pdf.

Q.5. What do we know about the match--or mismatch--between the 
---------------------------------------------------------------------------
current housing supply and our aging population's needs?

A.5. I am very glad you are asking this question as my Center 
has an initiative specifically focused on the challenges we 
face in meeting the housing needs of a rapidly aging society 
and has produced a broad range of research on this topic. \11\ 
First, there is enormous unmet need for affordable rental 
housing for older adults. Over 10 million households headed by 
someone 65 and over are cost burdened (paying more than a third 
of their income on housing); half of these pay more than 50 
percent. Nearly three-quarters of renters earning under $15,000 
per year are cost burdened. To compensate, households often cut 
back on food and medical care, which can be detrimental for 
those with chronic health conditions. Renters, often on fixed 
incomes, are particularly at risk of rising housing costs, and 
have a much smaller personal safety net: in 2019, the median 
older renter had a net wealth under $6,000.
---------------------------------------------------------------------------
     \11\ For more information on the Joint Center's work in this area 
see https://www.jchs.harvard.edu/research-areas/aging.
---------------------------------------------------------------------------
    At last measure, over 2.2 million older, very low-income 
renter households had ``worst case housing needs,'' defined as 
having severe cost burdens, living in severely inadequate 
housing, or both. Only 36 percent of income-eligible older 
adults receive Federal housing assistance, and trends point to 
greater demand for support in the coming years: the number of 
income-eligible households will increase with population growth 
and widening income disparities, and rentership rates are 
rising, in part because people now nearing retirement were 
particularly hard hit by the foreclosure crisis. Expanding 
rental assistance can provide needed stability to these 
households--and also help address a growing homelessness crisis 
among older adults.
    Affordability challenges are disproportionately felt by 
older people of color. Longstanding disparities in access to 
well-paying jobs and home ownership opportunities have resulted 
in steep gaps in home ownership with White households and 
greater financial insecurity, particularly for older Black and 
Hispanic households.
    Second, very little of the Nation's housing stock offers 
even the most basic of accessibility features. Our analysis 
shows that less than 4 percent of homes offer a no-step entry, 
single-floor living, and wide enough doors and hallways to 
accommodate a wheelchair. Older people are also most likely to 
report difficulties entering, navigating, and using different 
parts of their homes. Support is needed for renters and 
property owners, as well as older homeowners, to make 
modifications and maintain housing in safe condition.
    Third, the need for assistance and services that support 
older adults with activities of daily living and household 
tasks is escalating. Service-enriched affordable housing has 
been shown to support independence--and reduce health care 
costs--but need outstrips supply. Demand will grow for supports 
and services delivered to middle-income older adults who 
typically also cannot afford assisted living settings.
    Finally, our research shows that many older adults live in 
places that lack livability features, such as neighborhood 
services, transportation alternatives, safe streets, and 
opportunities for engagement. These all contribute to 
wellbeing, and can even combat isolation and loneliness, both 
serious health issues in their own right. This lack points to 
the need for support for the development of new housing options 
in well-located areas where these needs can be met.

Q.6. Can you outline the historical relationship between rental 
building repairs or infrastructure improvements and 
affordability, eviction rates, or rent increases?

A.6. Unfortunately I am not aware of any studies that have 
examined the relationship between building repairs and 
infrastructure improvements and these outcomes.

Q.7. How will an effort like the Whole-Home Repairs Program 
fill in gaps in existing grant and loan opportunities?

A.7. The Whole-Home repairs program does hold great potential 
for improving the ability of lower-income households to invest 
in improvements in the quality and energy efficiency of their 
homes. As the Joint Center documented last year, there are a 
variety of Federal, State, and local programs that support 
remodeling but they vary widely in eligibility, uses of funds, 
and the amount of funding available relative to the need. \12\ 
It will be valuable to study the implementation and outcomes 
from this Pennsylvania program to assess how well it fill the 
gaps in the significant need for repairs referenced above as 
well as the ``deferral gap'' that makes a home ineligible for 
the Weatherization Assistance Program until other physical 
deficiencies are remedied.
---------------------------------------------------------------------------
     \12\ Mayes, Taylor, and Carlos Martin. ``Home Repair Programs 
Serve Critical Needs for Low-Income and Vulnerable Homeowners''. 
Housing Perspectives, Harvard Joint Center for Housing Studies, June 
27, 2022. Available at: https://www.jchs.harvard.edu/blog/home-repair-
programs-serve-critical-needs-low-income-and-vulnerable-homeowners.
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                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                       FROM ROBERT DIETZ

Q.1. The demand for affordable housing has far outpaced the 
supply of available units. According to the Arizona Department 
of Housing, the State is short 250,000 units to meet the 
demand. We know that supply chain disruptions, zoning 
constraints, and other local barriers have impacted the 
development of affordable housing. A few weeks ago, I held a 
roundtable discussion in Arizona with industry experts and 
housing developers. It was brought to my attention that the 
Department of Energy is proposing a rule that would require 
electrical transformers to use amorphous steel cores. Can you 
tell me about the availability of amorphous steel, other 
industries that will be in direct competition with affordable 
housing developers to obtain this material, and the impact you 
see this Federal regulation having on the development of 
affordable and available housing units?

A.1. Amorphous metals are used to manufacture countless items, 
including: Solar cells, casings for electronics and 
telecommunications equipment (such as cell phones), protective 
coatings for petroleum drill pipes and for boiler tubes in 
electrical plants, armor-piercing ammunition being developed by 
the military.
    Amorphous metals are also used in aerospace, medical 
devices, electric motor parts, and robotics. \1\ Both amorphous 
and grain-oriented electrical steel (GOES) will continue to 
experience increasing demand both domestically and 
internationally. Demand for amorphous metals will be driven by 
global electric grid modernizations as well as increased demand 
for higher-efficiency industrial motors.
---------------------------------------------------------------------------
     \1\ Industries and Applications of Amorphous Metals, Heraeus Amloy 
(available at https://www.heraeus.com/en/landingspages/hat/markets-hat/
markets.html#anchor-2) (last visited March 25, 2023).
---------------------------------------------------------------------------
    Although amorphous metals are not yet suited to EV motors, 
\2\ amorphous metals are extremely well suited for other 
applications in EV manufacturing and will experience increased 
demand with that segment of the automotive market in addition 
to use in high-efficiency, high-cost transformers.
---------------------------------------------------------------------------
     \2\ Development of Motor with Amorphous Metals, Hitachi (Nov. 18, 
2018) (available at https://www.hitachi.com/rd/sc/story/amorphous/
index.html) (last visited March 25, 2023).
---------------------------------------------------------------------------
    Energy rationing policies in China caused a global deficit 
of electrical steel as the country accounts for more than 70 
percent of worldwide production. This resulted in increasing 
prices in 2021-2022. Prices began to stabilize as China's 
output normalized but are expected to increase as demand for 
both GOES and NOES increases in large part due to regulations 
and infrastructure plans developed by the world's advanced 
economies in recent years.
    While NAHB supports efforts to address energy conservation 
throughout the country, it is concerning that DOE's efforts to 
change energy efficiency standards in distribution transformers 
are coinciding with an unprecedent shortage in distribution 
transformers affecting the ability of NAHB's members and other 
interested stakeholders from completing, or even starting 
projects to meet downstream customer demands.
    Lack of adequate competition is compounded by severe 
disruptions in the supply chain for these and other products, 
which continue to create significant issues for downstream 
stakeholders and to date remain unresolved. Continuing 
shortages remain unresolved and significantly impede industry 
efforts to meet requirements of even minimal user needs.
    For example, a decline in imports of finished transformers 
has added exponentially to the problems being experienced by 
end users. Prior to the pandemic, the United States relied on 
imports for 82 percent of its large transformers. The number of 
high-capacity transformers has fallen substantially due to both 
the pandemic as well as restrictive trade policy. Imports of 
transformers rated for 50kVA-500kVA has fallen from 1.6 million 
in 2018 to 537,000 in 2022. Mexico has exported more than twice 
as many units to the United States in 2022 than the next 
largest international supplier, France, but the number of units 
exported is still 66 percent lower than it was in 2018.
    Imports of transformers rated 16kVA-50kVA have shown a 
similar downward trend, declining 150,000 units--or 33 
percent--between 2021 and 2022. The 2-year total fell nearly 
one-third between 2018/2019 and 2021/2022. Vietnam, Mexico, and 
China were the leading source countries in 2022. Consequently, 
vastly reduced imports into the United States are exacerbating 
the current transformer crisis across the country.
    Restrictive trade policy has also decimated the available 
supply of GOES in the United States. Without electrical steel, 
transformers cannot be made. Without transformers, new 
residential development cannot occur, adversely affecting 
roughly one-sixth of the U.S. economy.
                                ------                                


         RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
                       FROM LANCE GEORGE

Q.1. What kinds of capacity challenges do rural communities 
face when doing economic development and housing stability 
work? What types of tools could help to increase local capacity 
to support investments in rural communities?

A.1. The power of capacity building in rural communities cannot 
be overstated. Rural communities often have small and part-time 
local governments, inadequate philanthropic support, and a 
shortage of the specialists needed to navigate the complexities 
of Federal programs and modern housing finance, and compete for 
government and philanthropic resources. Targeted capacity 
building through Federal investments in training and technical 
assistance is how most local organizations build the skills, 
tap the information, and gain the wherewithal to do what they 
know needs to be done. Without deeply embedded, high-capacity 
local organizations, available Federal funding and other 
capital will never evenly flow to rural communities.
    A variety of Federal programs invest in local organizations 
with the training and technical assistance they need to serve 
their communities effectively. The Rural Capacity Building 
(RCB) Program at the U.S. Department of Housing and Urban 
Development (HUD) and the Rural Community Development 
Initiative (RCDI) at the U.S. Department of Agriculture (USDA) 
are two critically important capacity building programs that 
focus specifically on rural areas. Other targeted programs, 
like the Community Facilities Technical Assistance and Training 
Grant and the Multi-Family Housing Non-Profit Transfer 
Technical Assistance Grant, fund hyper-targeted technical 
assistance for specific Rural Housing Service programs. HAC 
supports increased funding for these programs, as well as new 
capacity building programs like the Rural Partnership Program, 
and the creation of a robustly funded Federal rural housing 
intermediary.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR FETTERMAN FROM LANCE GEORGE

Q.1. People across Pennsylvania have shared with me their 
struggles with rising rents and home prices in our cities, 
suburbs, and rural regions. It has been reported that apartment 
rents have increased 40 percent in central Pennsylvania since 
2017, and the median metro sale price increased 6.9 percent 
from October 2021 to October 2022. In many areas, demand is 
vastly exceeding supply. Projections vary, but the National Low 
Income Housing Coalition estimates that the State is short 
266,000 rental homes affordable and available for extremely 
low-income renters.
    One of the existing tools we have to address housing 
shortages in rural areas is the Department of Agriculture's 
(USDA) Section 515 Rural Rental Housing Loan Program. Yet 
despite the real potential of this program to increase the 
stock of needed affordable rental housing, funding has been 
cut. There have been no new rural rental homes financed under 
Section 515 since 2011.
    How can Congress use existing programs like Section 515 to 
kickstart rural housing development?

A.1. An important source of housing in many rural communities 
are rental homes financed by USDA. Today, there are nearly 
13,000 USDA rental properties providing around 400,000 
affordable homes to families and individuals across rural 
America. However, due to Federal funding cuts, no new USDA 
direct financed rental housing has been developed in years, and 
the existing properties are increasingly losing their 
affordability provisions. Once the mortgage on the property 
matures, the units lose their rental subsidy and thus their 
affordability. For many rural communities, these units 
constitute the only affordable rental housing available. 
Significant Federal commitment is needed to address this rising 
crisis. We elaborate on the Federal tools needed in the 
responses to Questions 2 and 3 below. But more generally, 
programs like Section 515 are important to maintaining a 
healthy housing ecosystem in rural communities. Economic and 
community development can be hobbled by a lack of workforce and 
low-income housing sources, especially housing for rent.
    You can explore more about rural multifamily production in 
this 2018 study from the Urban Institute and HAC entitled ``A 
Platform for Production''. The key takeaways from that report 
suggests the following core strategies for improving affordable 
rental housing production across rural communities:

  1.  Increase public-sector resources for the production of 
        new affordable rental housing in rural America.

  2.  Set priorities and preferences, and provide incentives, 
        for development projects in rural communities with the 
        most-severe needs.

  3.  Minimize risk and attract private-sector investment by 
        using innovative strategies.

  4.  Improve the capacity of Federal agencies to mobilize and 
        coordinate funding to rural communities.

  5.  Improve developer capacity in underserved rural places 
        and provide incentives.

  6.  Promote more flexible building types for rental housing 
        in rural communities.

  7.  Establish, maintain, and provide access to a national 
        and/or statewide database of existing market analyses 
        in diverse types of rural markets.

  8.  Encourage proactive local planning for rental housing 
        development, prioritizing areas where local 
        infrastructure and services already exist.

Q.2. Additionally, USDA loans from the main period of Section 
515 activity are reaching maturity, meaning that the bulk of 
the USDA's stock will exit the program within this decade.
    What mechanisms can the Federal Government leverage to 
preserve this rental housing stock?

A.2. HAC supports increased funding for the USDA Section 515 
program to allow for new multifamily construction to resume; 
increased funding for the Multifamily Preservation and 
Revitalization (MPR) program, the Preservation Revolving Loan 
Fund (PRLF) program, and the Multifamily Preservation Technical 
Assistance program, to address the preservation needs of the 
multifamily portfolio; the extension of rural rental assistance 
to all USDA multifamily units; and improved protections for 
tenants in USDA properties that are being preserved. All of 
these tools would help to preserve and expand this important 
rental stock. Additionally, other Federal and State programs, 
such as the Low Income Housing Tax Credit, can help to preserve 
Section 515 properties.

Q.3. Are there certain incentives we know help willing owners 
restructure their loans and remain in the program?

A.3. USDA has a few programs that help to restructure Section 
515 loans or otherwise keep properties in the program. The MPR 
program, mentioned above, helps owners to restructure their 
loans to stay in the program. However, the MPR program is 
woefully underfunded compared to the need, which is projected 
to be $30 billion over the next 30 years to preserve 80 percent 
of the portfolio, according to informal USDA estimates. 
Additionally, the Multifamily Preservation Technical Assistance 
program helps owners navigate the complex process of preserving 
properties or transferring them to new mission-driven owners 
who will preserve the properties. USDA also rolled out a new 
Simple Transfer Pilot in 2022 to streamline property transfers, 
but only certain properties and transactions are eligible for 
this streamlining. Adding some prioritization for transfers to 
nonprofits and smaller preservation deals into Federal funding 
streams could help the smallest, lowest capacity communities 
better preserve their properties. And finally, some advocates 
support ``decoupling'' the Section 521 rental assistance from 
the Section 515 mortgage to ensure that rental assistance can 
continue after the mortgage matures. This decoupling concept 
could be tested as a pilot initially, to assess its efficacy 
before being expanded to the entire portfolio.
              Additional Material Supplied for the Record
        Statement submitted by Senator Cynthia Lummis of Wyoming

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

 Letter submitted by Jeffrey Bode, President and CEO, Click n' Close, 
                                 Inc. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

 Joint letter submitted by Cedar Band of Paiutes Indians, Lower Brule 
                  Sioux Tribe, and Rosebud Sioux Tribe

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                    Letter submitted by NAA and NMHC

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     Statement submitted by Zillow

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]