[Senate Hearing 118-238]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 118-238

                  A BLUEPRINT FOR PROSPERITY: EXPANDING 
                           HOUSING AFFORDABILITY

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                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            January 31, 2024

                               __________

           Printed for the use of the Committee on the Budget
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            www.govinfo.gov
                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-924                      WASHINGTON : 2024                    
          
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                        COMMITTEE ON THE BUDGET

               SHELDON WHITEHOUSE, Rhode Island, Chairman
PATTY MURRAY, Washington             CHARLES E. GRASSLEY, Iowa
RON WYDEN, Oregon                    MIKE CRAPO, Idaho
DEBBIE STABENOW, Michigan            LINDSEY O. GRAHAM, South Carolina
BERNARD SANDERS, Vermont             RON JOHNSON, Wisconsin
MARK R. WARNER, Virginia             MITT ROMNEY, Utah
JEFF MERKLEY, Oregon                 ROGER MARSHALL, Kansas
TIM KAINE, Virginia                  MIKE BRAUN, Indiana
CHRIS VAN HOLLEN, Maryland           JOHN KENNEDY, Louisiana
BEN RAY LUJAN, New Mexico            RICK SCOTT, Florida
ALEX PADILLA, California             MIKE LEE, Utah

                   Dan Dudis, Majority Staff Director
        Kolan Davis, Republican Staff Director and Chief Counsel
                   Mallory B. Nersesian, Chief Clerk
                  Alexander C. Scioscia, Hearing Clerk
                           
                           
                           C O N T E N T S

                              ----------                              

                      WEDNESDAY, JANUARY 31, 2024
                OPENING STATEMENTS BY COMMITTEE MEMBERS

                                                                   Page
Senator Sheldon Whitehouse, Chairman.............................     1
    Prepared Statement...........................................    30
Senator Charles E. Grassley, Ranking Member......................     3
    Prepared Statement...........................................    32
Senator Sherrod Brown............................................     5

                    STATEMENTS BY COMMITTEE MEMBERS

Senator Ron Johnson..............................................    17
Senator Tim Kaine................................................    18
Senator Alex Padilla.............................................    20
Senator Mike Braun...............................................    22
Senator Chris Van Hollen.........................................    24
Senator Jeff Merkley.............................................    26

                               WITNESSES

Ms. Peggy Bailey, Vice President of Housing and Income Security, 
  Center on Budget and Policy Priorities.........................     6
    Prepared Statement...........................................    34
Mrs. Carol Ventura, Executive Director, RIHousing................     8
    Prepared Statement...........................................    46
Mr. Kevin Boyce, Commissioner, Franklin County Board of 
  Commissioners..................................................    10
    Prepared Statement...........................................    52
Mr. Bill Slover, Principal, AVCO Interests, LLC..................    11
    Prepared Statement...........................................    66
Dr. Todd Walker, Walter Professor of Financial Economics, Indiana 
  University.....................................................    13
    Prepared Statement...........................................   143

                                APPENDIX

Responses to post-hearing questions for the Record
    Ms. Bailey...................................................   145
    Mrs. Ventura.................................................   149
    Mr. Boyce....................................................   157
    Mr. Slover...................................................   162
    Dr. Walker...................................................   171
Document submitted for the Record by Chairman Sheldon Whitehouse.   176
Document submitted for the Record by Senator Tim Kaine...........   188
Statement submitted for the Record by American Enterprise 
  Institute......................................................   192
Statement submitted for the Record by the J. Ronald Terwilliger 
  Center for Housing Policy......................................   247

 
      A BLUEPRINT FOR PROSPERITY: EXPANDING HOUSING AFFORDABILITY

                              ----------                              


                      WEDNESDAY, JANUARY 31, 2024

                                           Committee on the Budget,
                                                       U.S. Senate,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:00 
a.m., in the Dirksen Senate Office Building, Room SD-608, Hon. 
Sheldon Whitehouse, Chairman of the Committee, presiding.
    Present: Senators Whitehouse, Merkley, Kaine, Van Hollen, 
Padilla, Johnson, Brown, Marshall, Braun and R. Scott.
    Also present: Democratic Staff: Dan Dudis, Majority Staff 
Director; Josh Smith, Budget Policy Director; Tyler Evilsizer, 
Senior Budget Analyst; Connor Jennings, Budget Analyst.
    Republican Staff: Chris Conlin, Deputy Staff Director; 
Krisann Pearce, General Counsel; Ken Acuna, Professional Staff 
Member; Ryan Flynn, Staff Assistant.
    Witnesses:
    Ms. Peggy Bailey, Vice President for Housing and Income 
Security, Center on Budget and Policy Priorities
    Mrs. Carol Ventura, Executive Director, RIHousing
    Mr. Kevin Boyce, Commissioner, Franklin County Board of 
Commissioners
    Mr. Bill Slover, Principal, AVCO Interests, LLC
    Dr. Todd Walker, Walter Professor of Financial Economics, 
Indiana University

          OPENING STATEMENT OF CHAIRMAN WHITEHOUSE \1\
---------------------------------------------------------------------------

    \1\ Prepared statement of Chairman Whitehouse appears in the 
appendix on page 30.
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    Chairman Whitehouse. Good morning, the hearing of the 
Budget Committee will come to order. We continue to extend our 
very best wishes and affectionate and regards to Senator 
Grassley, who is actually here. He and I encountered each other 
at the vote last night and he was his usual, cheerful self and 
we hope will be back, but in the meantime, Senator Johnson has 
been kind and courteous enough to stand in for him as the 
Ranking Member, so I'm grateful to Senator Johnson for that. I 
welcome all the witnesses. We are here this morning to discuss 
how investments in expanding housing affordability can drive 
American economic growth.
    For decades, our country has faced a housing affordability 
problem. It's a market failure many years in the making and the 
2008 financial crisis and the COVID-19 pandemic didn't help. 
After the housing market collapsed in 2008, the new housing 
supply for single and multiunit buildings declined. Even as 
demand recovered, supply continued to lag.
    Now, housing is taking up a larger share of American's 
household budgets and low- and middle-income families are being 
priced out of the market. Owning a home, once seen as a 
foundational piece of the American dream, is further out of 
reach for more Americans than ever before. The National 
Association of Realtors finds that first-time homebuyers made 
up just 26 percent of homebuyers in 2022 compared to 38 percent 
in 1981. And today, the typical age of a first-time homebuyer 
has risen to a record high of 36 years old, up from 29 years 
old in 1981.
    With fewer people able to purchase homes, more people must 
rent and that's created a shortage of rental units driving up 
the cost of rent. New research finds that half of all renters 
in the United States spend more than 30 percent of their income 
on rent and utilities, more than at any other time in history. 
Across the country the U.S. faces a shortage of four to seven 
million housing units available for sale or rent.
    In Rhode Island, there are currently no communities where 
families earning the state's median income can afford to buy a 
typical home and there's only one town where Rhode Islanders 
earning the state's median income can affordably rent. 
According to Zillow, the Providence area experienced the 
largest year-over-year rent increase in the country last year, 
a 7.5 percent increase.
    The squeeze is bad for our entire economy. It's bad for 
income inequality, it's bad for families, and it's particularly 
bad for young people. I've heard from young people around Rhode 
Island about the importance of affordable housing and I intend 
to do something about it. Unaffordable housing decreases job 
retention and lowers productivity. It can force businesses to 
relocate, taking job opportunities with them. A lack of 
available housing reduces local tax revenue, reducing local 
resources for education, public safety, and infrastructure.
    Nationwide, the shortage of affordable housing 
opportunities cost the American economy an estimated two 
trillion dollars each year. High housing costs reduce 
disposable income and economic mobility, stifling economic 
opportunity. Investing in our nation's housing infrastructure 
would provide relief to millions of Americans and drive 
economic growth, particularly in local economics.
    Helping families have a safe, stable place to call home 
should not be controversial. This isn't Red state versus Blue 
state. It's not urban versus rural. Americans in all 50 states 
struggle with higher housing costs. Today there's not a state, 
metropolitan area, or county where a worker earning the local 
minimum wage at 40 hours a week can afford a modest, two-
bedroom rental at the U.S. Department of Housing and Urban 
Development's (HUD) fair market rate standard.
    As a nation, we underinvested in housing. It's created a 
harmful situation for millions of families, and it is now a 
significant drag on our economy, so we can and must take action 
to ensure housing is safe and affordable for all. The Biden-
Harris Administration has taken sweeping new steps to increase 
the housing supply, protect renters, and ease cost burdens.
    The American Rescue Plan kept people housed during the 
worst of the pandemic recession and laid the foundation for 
jumpstarting new construction. Over $14 billion of the Rescue 
Plan state and local fiscal recovery funds have already gone 
towards expanding housing supply, investing in homeless 
services, and providing 3.7 million additional households with 
rent, mortgage, and utility relief.
    Under President Biden's Housing Supply Action Plan, more 
new apartments were under construction in 2023 than in any year 
on record. Our appropriations support housing programs like the 
Home Investment Partnerships, community development block 
grants, and housing choice vouchers, but it obviously isn't 
enough.
    Over these next few months, I'll be introducing bills to 
assist home ownership and access to affordable rentals for 
lower income Americans. Next month, with Congressman Panetta 
and Blumenauer, I'll propose a $15,000 first-time homebuyers 
tax credit for lower income Americans, refundable, advanceable, 
and available for homeowners at the time of purchase.
    My Democratic Budget colleagues have also come to the table 
with detailed proposals to expand housing affordability. This 
includes Senator Wyden's Decent, Affordable, Safe Housing for 
All (DASH) Act, the Low-Income First-Time Homebuyers (LIFT) Act 
of 2021, lead by my colleagues Senators Warner, Van Hollen, and 
Kaine. The Fair Housing Improvement Act lead by Senators Kaine 
and Sanders, Senator Merkley's End Hedge Fund Control of 
American Homes Act, the Delivering Essential Protection, 
Opportunity, and Security for Tenants (DEPOSIT) Act lead by 
Senators Lujan and Padilla, and Senator Padilla's Housing for 
All Act. We'll hear about many of those programs and proposals 
today.
    Ensuring access to safe and affordable housing is a moral 
and economic imperative. I hope it is something upon which we 
can find common ground and advance this year. Senator Johnson.

         OPENING STATEMENT OF SENATOR GRASSLEY \2\ \3\
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    \2\ Prepared statement of Senator Grassley appears in the appendix 
on page 32.
    \3\ Senator Grassley's opening statement was read by Senator 
Johnson.
---------------------------------------------------------------------------
    Senator Johnson. Thank you, Mr. Chairman. I obviously want 
to express my sentiment for a full and speedy recovery to 
Senator Grassley, but also for you. I see you're in quite a bit 
of back pain. I hope you recover quickly. And I'm happy to read 
Senator Grassley's opening statement.
    ``Mr. Chairman, I appreciate your calling today's hearing 
on housing affordability. In Senator Grassley's 99 county 
meetings, he regularly hears from Iowans about the lack of 
housing, especially to pricing afford.'' I hear the same thing 
in Wisconsin and I'm sure every senator hears that back in 
their states as well.
    ``While affordable housing is in short supply in many 
communities, this isn't due to a shortage of federal housing 
programs. Currently, there are more than 100 housing programs 
at the federal level, costing more than $100 billion per year. 
This includes over $70 billion in the Department of Housing and 
Urban Development budget alone. Billions more are provided in 
programs outside of HUD, including through United States 
Department of Agriculture (USDA), the Department of Defense, 
and the Department of Veterans Affairs.
    ``On top of these programs, the tax code includes 
incentives for homeownership and the construction of low-income 
housing. There are also government loan guarantees and 
government-sponsored enterprises to support the housing credit 
market. Despite this litany of programs, affordable housing 
concerns remain a perennial issue. In recent years, inflation, 
driving by reckless federal spending under the Biden 
Administration has made problems worse.
    ``In 2021, the price of homes increased by the largest 
amount in the history of the Case-Shiller National Home Price 
Index at 19.3 percent and home prices are up over 32 percent 
since Biden took office. Well, good for homeowners, except for 
increased property taxes, renters felt the pain with rental 
prices increasing to the third largest amount over the last 100 
years in 2022. Rents are now over 19 percent higher than when 
Biden took office.
    ``Before spending billions more on additional federal 
housing programs, we should take a good, hard look at why 
existing programs have fallen short. For decades, Senator 
Grassley's conducted oversight over HUD and local housing 
agencies, exposing widespread waste, fraud, and abuse. Too 
often, the government overpays for poorly executed projects, 
and a maze of housing programs creates inefficiencies and a 
lack of accountability.
    ``Senator Grassley has found HUD does very little, if any, 
oversight of the housing authorities, so they get away with 
lavish office spending on salaries, vehicles, parties, and 
travel. All this while poor people are waiting in line, 
sometimes for years, for actual housing. Of today's witnesses, 
Bill Slover, knows this all too well from his time exposing 
waste, fraud, and abuse in our housing programs right here in 
D.C.
    ``While we work to reform and improve our housing programs, 
the last thing American homebuyers need right now is more 
budget housing spending given our dire fiscal situation. As a 
nonpartisan congressional budget office recognizes, higher debt 
tends to increase borrowing costs in both the public and 
private sectors by driving up interest rates. Our current 
decades-high interest rates aren't only causing taxpayers to 
pay record amounts of interest on the national debt, but also 
making it harder to afford their mortgage.
    ``This past fall 30-year mortgage rates peaked at nearly 8 
percent, a 20-year high. Left unchecked, our rapidly rising 
national debt will continue to place upward pressure on 
interest rates, making the American dream of homeownership less 
attainable. Senator Grassley understands the desire to do more 
to help working families obtain affordable housing, but that 
won't be achieved simply by throwing money at the problem. In 
fact, it only makes things worse.
    ``We need to start by rooting out the enormous amount of 
waste, fraud, and abuse.'' We both welcome all of today's 
witnesses. And I'll only add, the numbers are quite shocking. 
In January 2021, the 30-year fixed mortgage rate average was 
2.65 percent. That's more than two and a half times over that 
now at 6.7 percent. I think the real shocking number is in 
Quarter 1, 2020. The average monthly payment for a new home was 
$1,787. Now, it's 1.86 times higher than that at $3,322 per 
month, just under $40,000 a year.
    Those are shocking numbers, again, caused by massive 
government spending, which has turned a dollar that people held 
at the start of the Biden Administration into 85 cents. And 
from my standpoint, that's one of the primary root causes of a 
very significant problem, particularly for young people. So 
again, I appreciate the hearing, look forward to hearing more 
about what the root causes are. Thank you, Mr. Chairman.
    Chairman Whitehouse. Thanks, Senator Johnson. I'll 
introduce the witnesses now. Our first is Ms. Peggy Bailey. 
She's the Vice President for Housing and Income Security at the 
Center on Budget and Policy Priorities and also served in the 
Biden-Harris Administration as senior advisor on rental 
assistance to HUD Secretary Marcia Fudge. Welcome, Ms. Bailey.
    Our second witness is Mrs. Carol Ventura of our own Rhode 
Island Housing. She's the Executive Director. She has over 30 
years of experience in expanding access to housing, building 
livable communities, and leading economic efforts. She has 
dedicated her career to helping Rhode Islanders access housing 
opportunities and she leads a terrific organization that is 
very effective, and I actually served on its Board for a while 
as the Director of Business Regulations, so it's wonderful, 
Carol, to see you here in Washington. Thank you so much for 
sharing your time and expertise with us.
    Our next witness will be introduced by our esteemed 
colleague from the great state of Ohio, who's visiting the 
Budget Committee today for purposes of making this 
introduction. Senator Brown.

                   STATEMENT OF SENATOR BROWN

    Senator Brown. Mr. Chairman, thank you. Ranking Member 
Johnson, thank you. A tremendous panel you've convened today. 
I'd like to quickly recognize Ms. Peggy Bailey for her work on 
my Banking, Housing, Urban Affairs Committee from the Center of 
Budget and Policy Priorities. She shared her expertise with our 
Committee many times. Good to see you, Ms. Bailey, but I'm 
going to introduce one member. I promise.
    I'm honored to welcome a long-time friend I've known for 20 
years, him and is family, have so many of our friends in 
common, Franklin County Board of Commissioners, Board of 
Commissioners' President. We have three commissioners in each 
county. He's the President of the County Commissioners in 
Columbus, Kevin Boyce. Welcome to the Senate Budget Committee, 
Mr. Boyce.
    He's been a leader in Ohio for more than two decades. He 
was a member of the Columbus City Council. He's been State 
Treasurer. He's been a member of the legislature and now is 
County Commissioner in Ohio's largest and fastest growing 
county. Commissioner Boyce deals every day with the housing 
challenges this Committee will discuss today. Central Ohio, as 
I said, is the fastest growing region of the state, by far, 
thriving business, growing investment, more and more families 
are making Central Ohio, especially Franklin County, home 
because of the work we've done to bring crucial industries like 
semiconductor manufacturing to Ohio.
    There's tremendous opportunity. That's the good news. The 
demand for affordable housing will only increase, as will 
transportation challenges. Columbus residents, whose family 
ties to the city go back generations, are now all too often 
being displaced from neighborhoods that they've called home for 
decades. Commissioner Boyce was on the frontline of these 
challenges as a member of the Board of Franklin County Land 
Bank, the Mid-Ohio Regional Planning Commission, the County 
Planning Commission, he's seen the challenges. He's also 
helping to craft the solutions and the Committee will gain from 
that today.
    He brought his expertise to the National Association of 
Counties. He was co-chair of the Housing Taskforce last summer. 
Under Commissioner Boyce's leadership, the taskforce released a 
report to help communities across the country to tackle housing 
challenges. He also, last year, in a very busy schedule, he 
also helped establish Adelphi Bank, Ohio's first Black-owned 
bank, to advance economic opportunity. I cannot overestimate 
how important that venture is, how significant that effort is.
    He serves as a member of Adelphi's Board, along with 
friends whom I've also known for 15, 20, 25 years, former 
Columbus Mayor Coleman, Karen Morrison, and Alex Shumate, Larry 
James, helping to support homeownership at some of the most 
challenging times, helping to support entrepreneurship and 
investment, particularly in Ohio's Black community and 
Columbus's Black community. It's about creating opportunity for 
people who've been denied for too long to buy homes, to start 
businesses, build wealth, and have been victimized by predatory 
housing investors.
    Commissioner Boyce, thanks for appearing today to share 
your expertise. Thank you, to the Committee, for giving me the 
opportunity to, Mr. Chair, to introduce Mr. Boyce. Thank you.
    Chairman Whitehouse. Thank you, Senator Brown. Following 
Mr. Boyce, we will hear from Mr. Bill Slover, who is Principal 
at AVCO Interests and a former chair and commissioner of the 
D.C. Housing Authority Board. Welcome, Mr. Slover.
    Our final witness today will be Dr. Todd Walker. Dr. Walker 
is the Walter Professor, Professor of Financial Economics and 
Director of the Center for Applied Economics and Policy 
Research at Indiana University. He's also a research professor 
at the Deutsche Bundesbank Bank, the German Central Bank. We 
welcome his testimony. And if I may turn first to Ms. Bailey, 
you may proceed with your statement. Your complete testimony 
will be made a part of the record, and we look forward to your 
five-minute testimony orally.

STATEMENT OF PEGGY BAILEY, VICE PRESIDENT OF HOUSING AND INCOME 
      SECURITY, CENTER ON BUDGET AND POLICY PRIORITIES \4\
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    \4\ Prepared statement of Ms. Bailey appears in the appendix on 
page 34.
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    Ms. Bailey. Thank you, Chairman Whitehouse and Senator 
Johnson, and members of the Committee. I really appreciate the 
opportunity to testify before you this morning. We're currently 
facing a housing affordability crisis and it is most acute for 
people with the lowest incomes who are more likely to be 
renters.
    Over the 20 plus years of my career in housing policy, 
rarely does a week go by where I don't receive at least one 
call or an email from someone desperate for housing assistance 
without any idea of where to get help. Every time I reply I 
can't shake the worry and concern I have knowing that getting 
assistance is like hitting the lottery.
    Solving this problem rooted in the longstanding and 
persistent gap between average renters' income and the cost of 
rent requires congressional action in four key areas: expanding 
rental assistance, increasing supply of new units, preserving 
existing affordable housing, and strengthening fair housing and 
tenant rights protections.
    In order to solve a problem, the reasons behind the problem 
have to be properly diagnosed. As a nation, we have spent too 
long blaming and punishing people for being poor, for not 
having a home, for being evicted, or for struggling to pay 
their bills. The primary reason people struggle to pay their 
rent is that there is a gap between 30 percent of their 
income--the general standard for determining housing 
affordability--and their rent costs.
    Imagine the grocery store worker you depended on so much 
during the pandemic. This worker might be a single parent with 
two kids. If they make $15 an hour, their salary is about 
$31,000 a year if they work full time. Thirty percent of that 
income a month is $775. Even if the kids share a room, please 
tell me where that parent can rent a two-bedroom apartment for 
$775 a month. With the average monthly rent for a two-bedroom 
apartment in 2022 being $1300, the answer is likely nowhere.
    As Chairman Whitehouse mentioned, recent estimates from the 
Joint Center for Housing Studies at Harvard, show that about 22 
million renters pay more than 30 percent of their income on 
rent and about 12 million of these people pay 50 percent or 
more, an all-time high. And this is not a new phenomenon. This 
chart shows that the gap between rents and incomes is 
persistent. And even when incomes go up overall, they don't 
completely catch up with rent costs.
    Workers with low wages, seniors, people with disabilities, 
people living outside, and many other people aren't paid 
enough, through no fault of their own, to afford rent. They 
urgently need financial assistance to afford a place to live. 
Housing is not a ``nice to have'' for any of us. It is a basic 
human need. Housing assistance prevents people from 
unnecessarily dying on the street. It helps children do better 
in school, it prevents evictions that make it even harder for 
people to find housing, and it helps ensure families don't have 
to choose between paying the rent or paying for other basic 
needs like medicine, clothing, and food.
    It's also an economic issue. People can't work in 
communities where they can't afford housing. Increasing access 
to affordable housing helps employers attract employees and 
creates more jobs, thus stimulating the economy. We need a 
comprehensive strategy to make rental housing affordable for 
all.
    First, Congress needs to fully fund rental assistance to 
meet the need. In the short term, Congress should fund voucher 
renewals in 2024. In the long-term, rental assistance should be 
expanded to reach all families who need it, prioritizing the 
people with the lowest incomes. And Congress should utilize the 
mandatory side of the budget for rental assistance expansion to 
ensure funding adjusts as costs and needs rise.
    Next, we need to invest in revitalizing public housing and 
other aging, affordable housing developments. Existing 
affordable housing must be preserved, or we'll never keep up 
with the supply need. Also, we must increase and streamline 
funding for affordable housing supply, both rental housing and 
single-family developments. Affordable rental housing is often 
expensive to build and then is often more expensive to build 
than market-rate housing due to complicated financing and other 
regulations and rules. And affordable single-family housing is 
needed because it can help ease cost pressures in the rental 
market and help families attain an important step towards 
stabilizing their financial futures. Some of these are state 
and local issues, but program alignment at the federal level is 
critical.
    Finally, federal, state, and local governments should 
increase investment in fair housing solutions and tenant 
protections that contain rent costs, ensure housing quality, 
and allow tenants to live in neighborhoods of their choice that 
work for them and their families. Thank you again for the 
opportunity to testify and I look forward to answering your 
questions.
    Chairman Whitehouse. Thank you very much. Mrs. Ventura.

 STATEMENT OF CAROL VENTURA, EXECUTIVE DIRECTOR, RI HOUSING \5\
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    \5\ Prepared statement of Mrs. Ventura appears in the appendix on 
page 46.
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    Mrs. Ventura. Mr. Chairman, Senator Johnson, and members of 
the Committee, thank you for this opportunity to testify on the 
serious housing affordability challenges facing our country. 
I'm Carol Ventura, the Executive Director of Rhode Island 
Housing, the housing finance agency for the State of Rhode 
Island. We provide financing and counseling to help low- and 
moderate-income households buy and keep a home, provide rental 
assistance to low-income renters, finance the development and 
preservation of affordable housing, and service our single and 
multi-family mortgage portfolios.
    Like many states, Rhode Island is facing a critical housing 
shortage, which has contributed to significant increases in 
housing prices. The state is simply not producing enough 
housing to meet the needs of its residents. Over the past 
decade, Rhode Island's rate of housing permitting has ranked 
last in the nation, and as housing production has slowed, 
vacancy rates have decreased. Not surprisingly, as vacancy 
rates have decreased, housing costs have increased 
significantly. Over the past five years, the median price of a 
single-family home has increased 49 percent, and the average 
rent has increased 23 percent. Across Rhode Island, around 
150,000 households, one third of our population, are housing 
cost burdened.
    Federal investments made through the American Rescue Plan 
Act played an important role helping Rhode Island recover from 
the effects of the pandemic. The state has invested $321.5 
million in state and local fiscal recovery funds to support 
housing and homeless programs. Rhode Island Housing is 
administering just over $206 million of these resources, $30 
million has provided first-time homebuyers with downpayment 
assistance, and $175 million is financing the development and 
preservation of affordable housing.
    To date, over $100 million has been committed to financing 
more than 1,400 affordable homes and another $32 million is 
supporting site acquisition and pre-development activities for 
62 proposed affordable housing developments. These new 
development resources have been particularly impactful because 
they've allowed us to better leverage other important 
development resources like the Federal Low Income Housing Tax 
Credit, particularly, the 4 percent housing credit.
    The historic investments that Congress has made in housing 
and homeless programs have been vital, but much more needs to 
be done. There are several steps that the federal government 
could take to address housing affordability challenges. First, 
increase appropriations for housing production and rental 
assistance programs. Affordable housing development programs 
like HOME Investment Partnerships Program (HOME), the National 
Housing Trust, and the Capital Magnet Fund are critically 
important.
    Inflation, supply chain issues, and increasing land costs 
have all contributed to significant increases in the cost of 
housing development. That means we need significantly more 
subsidies through these programs to produce the same number of 
units. The cost of renting and operating housing has also risen 
significantly. To mitigate these increases, more investment is 
needed in rental assistance programs.
    Second, pass the Affordable Housing Credit Improvement Act 
(AHCIA). One of the most important steps Congress can take to 
increase the supply of affordable housing is to pass the Act. 
This bill would significantly increase the allocation of 9 
percent housing credits building upon the success of this 
powerful financing tool. The Act also reduces the amount of 
tax-exempt bond financing required to access 4 percent housing 
credits and making other important improvements to the program. 
The AHCIA will significantly increase affordable housing 
production and we urge you to pass it.
    I know Congress is currently considering a tax package that 
includes several important elements of the Act. Rhode Island 
Housing strongly supports these provisions and urges Congress 
to act quickly to adopt this important package. Finally, 
permanently extend the Federal Financing Bank, HUD Risk Sharing 
Initiative. HUD's risk sharing program provides mortgage 
insurance for affordable housing developments financed by 
housing finance agencies.
    In 2014, a new tool was made available that combined HUD's 
Risk Sharing Mortgage Insurance with low-cost financing 
provided through Treasury's Federal Financing Bank. This 
program has been a very effective tool in Rhode Island and in 
many other states, and we urge Congress to make the program 
permanent.
    Thank you again for dedicating this hearing to the 
important housing affordability challenges facing our country. 
I'm honored to have had this opportunity to testify before the 
Committee and to share Rhode Island Housing's experiences.
    Chairman Whitehouse. Thank you, Mrs. Ventura. We're 
delighted to have you here. Mr. Boyce.

 STATEMENT OF KEVIN BOYCE, COMMISSIONER, FRANKLIN COUNTY BOARD 
                      OF COMMISSIONERS \6\
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    \6\ Prepared statement of Mr. Boyce appears in the appendix on page 
52.
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    Mr. Boyce. Chairman Whitehouse, Ranking Member Grassley, 
Senator Johnson, and certainly, Senator Brown, thank you for 
the warm introduction, as well as distinguished members of the 
Committee. Thank you for the opportunity to testify today on 
the state of our nation's housing crisis, the approach counties 
are taking to address it, and the critical role that our 
intergovernmental partnership plays in crafting comprehensive 
solutions.
    My name is Kevin Boyce and I currently serve as the 
President of the County Board of Commissioners in Franklin 
County, Ohio. Additionally, over the last year, I've had the 
honor of serving as co-chair of the National Association of 
Counties, NACo, Taskforce on affordable housing.
    Franklin County is Ohio's largest county with over 1.3 
million residents and one of the fastest growing in the region. 
Our county seat, Columbus, is the state capital and America's 
14th largest city. This size makes our region a major economic 
engine, not only for the state, but for our nation. Currently, 
we are home to many national institutions, including the Ohio 
State University, five Fortune 500 companies, and nearly 20 
Fortune 1000 companies. This growth does not come without its 
growing pains, though, which is why I'm honored to join you 
here today.
    Housing constraints within our county and the region have 
increasingly become a focal point of local policymakers, 
perspective employers, and community members alike. In addition 
to sharing my personal story on the vital role that stable 
housing placed in my life, I'll be touching on recommendations 
from NACo on how the federal government can further help and 
support counties local efforts to increase housing 
accessibility and affordability.
    Many colliding factors contribute to the current housing 
affordability crisis. Housing costs have been rising steadily, 
largely outpacing wages, which has placed an increased 
financial burden on renters and homeowners alike. In 2021, 
roughly half of the renters and one in three homeowners were 
cost burdened. The median price of homes increased by more than 
$107,000 in Quarter 1 2020 to Quarter 1 2023, while rents have 
increased by 16 percent in the same timeframe.
    Not only are Americans facing higher housing costs, but the 
stock available for renting and owning is increasingly limited. 
Nearly 80 percent of homeowners who currently have a mortgage 
hold an interest rate below 5 percent, keeping housing 
inventory at record lows. These statistics lend context to a 
problem counties know all to well. Housing affordability is 
increasing out of reach for our residents.
    In Franklin County, four of every ten renters are cost 
burdened, spending more than 30 percent of their annual income 
on housing. Since 2010, the population within the county has 
grown 14 percent while total housing units in the county have 
increased only 10 percent, further widening the gap.
    My story is similar to many American families that are 
stuck in cycles of poverty. In the course of my K through 12 
years of primary and secondary education, I attended 11 
different schools. Statistics would suggest a pathway of 
outcomes that reflect a trajectory of instability, educational 
deficiencies, and even potentially incarceration, but I was 
fortunate to learn two very important lessons. First, the best 
social service is a good paying job. And secondly, housing is 
fundamental to stability.
    I sit here today as the former Treasurer of the State of 
Ohio, current president of Ohio's largest county, and the 
founder of Adelphi Bank, but I'm most proud of is seeing the 
cycle of poverty broken in my own family where my oldest son is 
a double Ivy League grad. Brown University, I might add, Mr. 
Chairman. And my youngest is a senior at a top institution in 
Los Angeles. My story is one of countless stories that the 
American people can tell about housing, how it's changed their 
lives and changed the lives of future generations.
    By 2050, the region is expected to grow by more than a 
million residents with an estimated regional population 
increasing to 3.15 million. Of that, Franklin County is 
expected to absorb at least half of the regional growth. With a 
team of more than 30 of my colleagues from across the country, 
NACo's Housing Taskforce worked to find county-led solutions to 
address our nation's growing housing crisis, understanding that 
counties have governance limitations, we looked towards our 
partnership with our federal government colleagues to enhance 
the current and future housing programs and ensure that we have 
the required tools to reduce the cost burden facing our 
homeowners and residents.
    In collaboration with NACo, I offer the following 
recommendations: (1) invest additional federal resources to 
adequately support housing needs, (2) modernize and strengthen 
current federal programs, (3) provide more direct and local 
government funding opportunities, and (4) simplify programs and 
reduce burdensome compliance requirements on local governments.
    In conclusion, Carol mentioned many of the programs that we 
support as counties need more of, quite frankly, but I'd be 
remiss if I didn't recognize the bipartisan nature working with 
Senator Brown and Vance, Congresswoman Beatty and Kerry, and 
even my wife, Congresswoman Sykes, to ensure that our 
partnership impacts the lives of the residents that we all 
serve.
    Mr. Chairman and members of the Committee, thank you so 
much for having me today and I look forward to your questions.
    Chairman Whitehouse. Thank you so much, Mr. Boyce. We'll 
next hear from Mr. Slover.

  STATEMENT OF BILL SLOVER, PRINCIPAL, AVCO INTERESTS, LLC \7\
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    \7\ Prepared statement of Mr. Slover appears in the appendix on 
page 66.
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    Mr. Slover. Thank you. Thank you, Chairman Whitehouse, 
Ranking Member Grassley and Senator Johnson, and members of the 
Committee. I appreciate the opportunity to discuss the critical 
issue of housing affordability. My name is Bill Slover and I 
have over 30 years of experience in both public and private 
sector real estate. My testimony centers on my near 10 years on 
the D.C. Housing Authority Board (DCHA) emphasizing the 
challenges faced, the impact of poorly functioning agencies on 
housing affordability, and recommendations for reform.
    DCHA plays a critical role, housing over 18,000 low-income 
families with an annual budget of over $500 million. When I was 
first appointed as chairman by the mayor in 2009, my goal was 
to enhance affordability and housing quality. Immediately 
recognizing the need for fundamental change, I pushed for 
greater accountability, improved financial management. My 
efforts faced resistance, resulting in my swift removal as 
chair. My term ended without tangible progress.
    Rejoining the Board in 2015 as the advocate representative, 
I again pushed for efficiencies, reform, and better financial 
stewardship. Despite exhaustive efforts, the agency's decline 
persisted. By the fall of 2021, the situation necessitated 
reaching out to HUD, resulting in a scathing review published 
in September of 2022. The HUD report highlighted DCHA's 
systematic failures through 80 plus findings, including 
potential violations of conflict of interests from multimillion 
dollar contracts and suspected overspending in the $300 million 
plus voucher program, just to name two.
    The HUD report identified five principal issues 
contributing to DCHA's failure, including inadequate oversight, 
poor management, lack of expertise, and a failure to provide 
decent, safe housing. The report emphasized the need for 
immediate remedial action. Rather than addressing the HUD 
findings collaboratively, the mayor and the D.C. City Council 
disbanded the independent board, replacing with mayoral 
appointees and awarded the existing executive director a 
$40,000 bonus. This drastic response removed all independent 
voices from the Board.
    A year after these changes, there is little evidence of 
meaningful reform at DCHA. Recent news in the Washington Post 
highlights continued struggles in the voucher program, the 
city's largest program. The need for decisive intervention 
remains. Despite my experience at DCHA, I'm a strong believer 
that Public Housing Authorities (PHA) play a critical role in 
solving the housing affordability crisis. They are tasked with 
housing, as many of our most vulnerable populations possible 
with the resources they have.
    It's simple math. If the agency is inefficient and spends 
more money on basic operations, fewer people get housed, 
causing a negative ripple effect across the entire housing 
space. HUD needs to completely rethink its oversight of PHAs as 
the current process is failing far too often. Absent this, no 
amount of money pumped into PHAs will result in sustainable 
progress towards increased access to housing. Money will not 
solve what is a failure of execution compounded by a lack of 
oversight and accountability.
    HUD should do these three things before providing any 
additional funding to PHAs: enhanced oversight. HUD must revamp 
its oversight of PHAs, setting clear, key performance indexes 
to track, report, and achieve results, and intervene as soon as 
an agency gets off track. Change governance structure. PHA 
governing bodies need to be held directly accountable to HUD 
rather than local and municipal leaders.
    As Senator Grassley has pointed out repeatedly, PHAs rely 
too heavily on local officials to be good stewards of billions 
of taxpayer dollars, which is no way to exercise fiduciary 
responsibility. Demand qualified leaders. Until PHAs can 
execute the basic functions of managing properties, setting 
rental rates, and overseeing waiting lists, they will continue 
to underperform. PHAs are operating businesses and need to be 
run as such.
    I hope my experience can inform this Committee as it 
considers how to best allocate taxpayer dollars towards our 
nation's housing challenge. We need to better understand why 
costs are so high and production is so low and begin to make 
the necessary market corrections needed to increase the 
efficiencies of the space.
    Thank you again and I look forward to answering any of your 
questions.
    Chairman Whitehouse. Thank you, Mr. Slover. Dr. Walker is 
next.

  STATEMENT OF DR. TODD WALKER, WALTER PROFESSOR OF FINANCIAL 
               ECONOMICS, INDIANA UNIVERSITY \8\
---------------------------------------------------------------------------

    \8\ Prepared statement of Dr. Walker appears in the appendix on 
page 143.
---------------------------------------------------------------------------
    Dr. Walker. Chairman Whitehouse, Ranking Member Johnson, 
Committee members, thank you for the opportunity to speak with 
you today on such an important topic. It is an honor to be 
here.
    With the recent increase in mortgage rates, housing has 
become substantially less affordable today than just a few 
years ago. Let's compare two families. Family One purchases the 
median priced home with a 20 percent downpayment at the 30-year 
fixed rate mortgage available in January of 2021. Family Two 
purchases the same home at today's mortgage rates. Family Two 
will pay an additional $800 per month and an additional 
$285,000 in interest payments over the life of the loan.
    For a family making the median income, the additional 
mortgage payments of $800 per month constitute 20 percent of 
disposable income. This prohibitive increase in the cost to 
purchase a home comes at a time when the price of all goods and 
services are increasing dramatically. The good news is the rate 
of inflation has been coming down. The bad news is that changes 
in the price level since 2020 have made essentials like 
groceries 25 percent more expensive.
    Inflation is a tax on everyone, and families are still 
feeling the pinch. Housing costs are, by far, the largest items 
in a family's budget. If housing becomes more affordable, this 
makes food, education, childcare, transportation, and all other 
necessities more affordable as well. What does this analogy 
have to do with the budget of the United States Government. The 
only difference between these two families is the mortgage 
interest rate they pay. This interest rate is tightly connected 
to the interest paid on the 10-year U.S. treasury bond.
    Since 1990, these two-time series have moved in lockstep 
with a near perfect correlation of 0.98. As the common phrase 
reminds us, correlation is not causation, but in this case the 
economics are clear. Causality runs from the 10-year yield to 
mortgage interest rates and not the other way around. If the 
interest on the 10-year treasury increases, mortgage rates will 
increase. If the 10-year yield falls, mortgage rates will fall.
    So, what determines the interest rate on a 10-year U.S. 
treasury? This question is much more difficult to answer. 
However, the long-run foundational anchor of U.S. sovereign 
debt must be fiscal policy. There are three important 
considerations for the Committee. First, in response to the 
financial crisis of 2008 and the COVID-19 pandemic, the Federal 
Reserve engaged in a policy called quantitative easing that 
opposed the 10-year yield below market-based equilibrium. This 
diminished the sensitivity of long data maturities to fiscal 
policy over the last 15 years. These policies are currently 
being undone. As quantitative easing gives way to quantitative 
tightening, fiscal policy will once again take center stage in 
price discovery for the treasury market.
    Second, paying interest to bond holders for debt service is 
now the third largest expense of the federal government, only 
behind Social Security and Medicare. Debt service will soon 
exceed one trillion dollars per year, if it hasn't already. The 
CDO projects debt service to grow to 3.6 percent of GDP over 
the next decade, an all-time high. Bond traders recently burned 
by unanticipated inflation to the tune of a record-breaking 46 
percent decline in bond prices are now much more leery of 
inflation-inducing fiscal expansions.
    When inflation is anticipated, higher rates of interest are 
required to compensate for the lost purchasing power. As debt 
service grows, it will crowd out other spending needs. Finally, 
increases in government spending to support the economy during 
the pandemic were on par with increases to finance World Wars I 
and II. Following the great Wars, through a reduction in 
spending and increases in tax revenue, debt Gross Domestic 
Product (GDP) ratios gradually, yet substantially declined.
    This is consistent with optimal economic policy. Shocks 
like wars and COVID should be smoothed over time. However, no 
such fiscal consolidation is currently on the horizon. Sizable 
deficits are projected for the foreseeable future. This will 
certainly put upward pressure on the 10-year treasury yield, 
making housing less affordable. When it comes to housing 
affordability, there aren't many things more important than 
mortgage rates, given that mortgage rates track the value of 
U.S. debt very closely, fiscal policies initiated by this 
Committee have a direct impact upon housing costs.
    While other countries have struggled to reopen following 
the pandemic, the strength of the U.S. economy has been on full 
display. This economic growth can and should be used to 
coordinate a well thought out and gradual fiscal consolidation 
consistent with optimal economic theory. Such a consolidation 
will make housing more affordable. I look forward to your 
questions. Thank you.
    Chairman Whitehouse. Thank you very much, Dr. Walker. Let 
me first ask Mr. Slover a question for the record, which means 
you can answer in writing and give a chance to sharpen your 
pencil and put your head to it. You've given general 
recommendations to make sure that Public Housing Authorities 
avoid the problem of the D.C. Authority. If you'd be good 
enough to submit for the record more detailed proposals, you 
have a lot of members here who've proposed legislation. None of 
us support fraud or abuse and to the extent we can get helpful 
proposals to consider in legislation, consider this your 
opportunity to do that. Would you be willing to do that?
    Mr. Slover. I'd be very happy to, and I appreciate the 
opportunity. Thank you.
    Chairman Whitehouse. Great. Thank you. And Mrs. Ventura, 
you heard Mr. Slover about his unfortunate experience with the 
District of Columbia Authority. Are we seeing some more 
problems around Rhode Island in your dealings with other 
housing organizations in other states? How endemic do you think 
the problems are that he has spoken of in the District of 
Columbia?
    Mrs. Ventura. We are not experiencing a similar situation 
in Rhode Island. We have extremely competent housing 
authorities that are doing solid work on the ground, serving 
the people of Rhode Island, providing excellent housing 
opportunities, and frankly, services. Services are very key to 
helping people transition from public housing, the voucher 
program, into solid working environment, home ownership 
opportunities, so no, we are not experiencing this, Senator.
    Chairman Whitehouse. And given the number of parties that 
it takes to pull together a Housing deal, when we go to the 
ribbon cuttings there're usually five to ten different 
parties--private banks, consultants, different government 
funders. There are a lot of eyeballs on these deals before they 
come to fruition. Correct?
    Mrs. Ventura. Yes, that's correct.
    Chairman Whitehouse. So, tell me a little bit about your 
experience with first-time homebuyers. The average age for a 
homebuyer climbing from 29 to 36 is a statistic. It's a pretty 
grim fact for young families. How do you see that playing out 
and do we need to repair that?
    Mrs. Ventura. Yes. Thank you for that question, Chairman. 
As housing prices have increased, and they certainly have 
increased, along with mortgage interest rates. We're seeing 
significant increases in the average income of a buyer in Rhode 
Island, and in the size of their mortgages. The average income 
for a homebuyer in Rhode Island in 2023 was $92,000 and that's 
up around 44 percent.
    Chairman Whitehouse. You have to be making around $92,000 
to be affording a home.
    Mrs. Ventura. Yes. Over that same timeframe, our average 
loan amount increased to $344,000, so that's an increase of 55 
percent compared with 2019, so there are certainly challenges 
in the market. One of the barriers that we see to achieving 
homeownership is the downpayment and that's why the $30 million 
that our governor set aside for downpayment assistance was 
extremely helpful. We provided a $17,500 grant to first-time 
homebuyers and we were able to assist over 1500 first-time 
homebuyers purchase their homes, so it was an important tool. 
Unfortunately, those resources are fully reserved, and we don't 
have any additional funding available. We'll continue to 
provide our resource, which is a $10,000 deferred loan, but 
it's challenging to find homes that are affordable. You know 
that, Chairman.
    Chairman Whitehouse. Thank you. Ms. Bailey, make the policy 
case between housing affordability and economic growth.
    Ms. Bailey. Thank you, Chairman. The connection between 
housing affordability and economic growth is inseparable. 
Having affordable housing helps people be able to access work. 
Also, building more affordable housing creates jobs for the 
people that are building it and for the people that will have 
to operate it. It helps people, in general, be able to be more 
stable in the community and engage in work, but engage in all 
of the things that a community provides. And lastly, it helped 
being able to provide rental assistance is particularly 
important because we know that when people with low incomes are 
given housing subsidies and other subsidies by the federal 
government, it allows them to invest those resources back into 
the community. They don't save that money. They spend it in 
their community, which helps economic growth as well.
    Chairman Whitehouse. And Mr. Boyce, you used the phrase 
intergovernmental partnerships. That implies a federal role. 
What is the importance of a federal role in those 
intergovernmental partnerships supporting adequate housing?
    Mr. Boyce. Thank you, Mr. Chairman. Let me begin with the 
many programs that Carol identified from Home Funds to Choice 
Voucher programs, I mean all of those are catalysts to helping 
families, people like me who grew up in a tough and 
impoverished environment. But moreover, it's the continued 
creativity around the partnership, having access to new ideas 
and new resources and thinking through some of the proposals 
that allow for increased homeownership like expanding the 
duration of mortgage lending or with the FHA mortgage lending 
standards or home funds that allow us to expand affordable 
housing.
    Throughout our community in Central Ohio, there are 
communities that kind of have the NIMBY syndrome, Not In My 
Backyard syndrome where they cite housing standards as a 
barrier to affordable housing, but those home funds in many 
cases allow us to mitigate the cost of certain materials or 
certain products that allows us to spread the affordable 
housing in communities that otherwise might not have the 
permitting or variance resources to allow for it.
    Chairman Whitehouse. Thank you very much. The order now is 
for Senator Johnson and then Senator Kaine. I will take 
advantage of Dr. Walker being here and his commitment with 
Deutsche Bundesbank to put into the record the report from the 
Network for Greening the Financial System of which Deutsche 
Bundesbank is a member in which the network makes the point 
that we've made in this Committee before that climate-related 
risks are a source of financial risks. I'm quoting the 
executive summary here.
    ``Climate change will affect the global economy and so the 
financial system that supports it, the financial risks it 
presents are inconsequence systemwide,'' a phrase we've heard 
repeatedly in our testimony, ``and potentially irreversible if 
not addressed.'' Senator Johnson, without objection, that'll be 
put in the record, and Senator Johnson, the floor is yours for 
questions.

                  STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Mr. Chairman. I want to start 
talking--tell a little story. A few years ago, I was invited 
down to Milwaukee to visit and learn about a program called the 
ACTS, A-C-T-S, Housing Program. It was started by a catholic 
priest. And basically, this catholic priest was taking 
advantage of a number of foreclosures on very-well constructed 
homes in the early 1900s that had fallen into disrepair and 
were under foreclosure and he was able to buy these homes for a 
few thousand dollars. And then with the help of private 
lenders, some Wisconsin banks, individuals that were renting, 
low-income individuals renting, paying too high rent, were able 
to borrow 15 to $30,000, put a sweat equity, and own a home, 
and literally cut their rental payments in half or more.
    And it was a great program. I toured a number of homes. The 
homeowners did a great job of repairing these homes on a 
shoestring, but one of the main reasons the priest invited me 
down was to complain about the impact of the low-income housing 
tax credit on his program. What was happening is contractors 
were using that low-income housing tax credit. They were 
snatching up all those homes in foreclosure, putting hundreds 
of thousands of dollars into those well-constructed homes and 
pretty well taking the opportunity away from lower income 
individuals.
    So again, that was a well-intended program, a federal 
government program impacting a private sector program and 
disadvantaging low-income individuals, so I just had to kind of 
tell that.
    My questions really have to do with a functioning market, 
generally supply will meet demand, particularly when demand is 
boosted by $100 billion plus of government funding. I'll start 
with you, Dr. Walker, and this is a general question for 
everybody. Why isn't supply meeting demand? What is causing it? 
Obviously, inflation is a huge problem affecting interest 
rates, causing costs, but ahead, Dr. Walker.
    Dr. Walker. So, I think based upon the expert testimony, we 
all agree that housing affordability is important. I hear a lot 
of supply constraints, so on the supply side, if it's the 
supply side and supply constraints are the problem, and some of 
the policy proposals that are on the demand side, like 
vouchers, would make the problem even worse. It gets back your 
example of an unintended consequence, right? So, if you have a 
demand side solution to a supply side constraint, then you're 
going to have an increase in home prices which will make 
matters worse, or you're going to displace people who don't 
have access to the voucher. That's going to lead to a race to 
the bottom where people are going to try to get just below the 
point where they can access the voucher.
    Why supply is so constrained I think there's regulatory 
issues that could be addressed. Mr. Slover probably have more 
information about those, but I just wanted to briefly mention, 
again, based upon your example, there are untended consequences 
of all these policies. And I think when you have a supply side 
issue, and you address it what a demand side policy you have 
unintended consequences that could be much worse.
    Mr. Johnson. I'd like a little more detail on that. Again, 
I just want to throw a couple of things, rent controls, 
obviously keep down the supply because it's just not worth 
investing in things. Obviously, high interest rates drive up 
the costs, over regulation. Mr. Slover, and I apologize for 
mispronouncing your name in the opening statement, but can you 
enlighten us on this?
    Mr. Slover. Just to sort of build on what Dr. Walker was 
saying, I think one of the unintended consequences of some 
government programs I think it's sort of an idea versus 
execution which is a way I like to simplify things sometimes. 
You know in Washington, D.C., as an example, the D.C. Housing 
Authority Board approved a rent payment standard of 187 percent 
of what HUD thinks fair market rent is. So now, the D.C. 
Housing Authority has 12 to 15,000 rents that they're willing 
to pay upwards of 187 percent of what HUD thinks is the fair 
market rent.
    What that does is floods the market with people--with 
payments that are above what the market is and that puts 
pressure on the rest of the market because now you have someone 
overpaying significantly for units which pushes up prices lower 
and also creates an industry where people actually go out and 
purchase organically existing low-income housing and remove 
those residents and backfill it with higher paying vouchers. 
It's an entire business model out there were people promote a 
business plan which says the arbitrage, the government-funded 
subsidies is my business plan.
    I'm going to buy a building at a cap rate of ``X''. I'm 
going to empty it out and I'm going to fill it back in and my 
cap rate is going to double because the rent doubled and that's 
an unintended consequence.
    Senator Johnson. I mean that's really exactly what happened 
in Milwaukee, similar to that, with the low-income housing tax 
credit. I guess for the majority witnesses, I only say all 
you're asking for is more and more federal government spending 
and I understand that. Some of it's appropriate, but when we 
have this massive amount of deficit spending, which is the 
cause of the inflation which drives up the interest rates, 
which drives up the cost of housing, I mean, it's just a self-
perpetuating problem. It's not the solution. It's part of the 
root cause. Thank you, Mr. Chairman.
    Chairman Whitehouse. Senator Kaine, the sponsor of the LIFT 
Act and the Fair Housing Improvement Act.

                   STATEMENT OF SENATOR KAINE

    Senator Kaine. Thank you, Mr. Chair, and thanks to the 
witnesses. This is a very important topic. Since we are in a 
discussion about macroeconomic trends, I do think it's 
important to mention the set of articles that have just come 
out in the last few days, exemplified by one in the Washington 
Post of January 28th from David Lynch that I'd like to add to 
the record, ``Falling inflation, rising growth give the U.S. 
the world's best recovery.'' There are economic challenges, but 
one of the ways to look at these challenges is to look at how 
other nations, Europe, Canada, Mexico, Japan, China have dealt 
with COVID and post-COVID and the assessment is that the U.S. 
has done the best job in coming out of COVID, and not that 
every economic issue is solved, but in terms of inflation going 
down and the recovery dramatically stronger than what was 
predicted, dramatically stronger than other nations, there's a 
lot to be said for the policy actions that have been taken by 
Congress in order to help the U.S. have this strong economic 
recovery.
    Now, on housing, I was a fair housing lawyer for 18 years 
before I got into state politics and so this is a topic that's 
very, very close. I was also a local elected official and a 
governor dealing with the Low Income Housing Tax Credit 
(LIHTC), dealing with HOME funding, and knowing how important 
it is. During my time, now nearly 30 years on July 1, in 
elected office from the local, state, and federal levels, I go 
around the state and talk to a lot of people. And I will say 
the cost of housing usually would be in the Top 10 over much of 
my career and in the Top 3 in Northern Virginia, but now it's 
Top 5 everywhere in Virginia.
    I could go to the most rural parts of my Commonwealth or 
Northern Virginia, it's going to be Top 5 or a Top 3 issue, so 
this is a significant one and I would say particularly for 
first-time homebuyers--the Chairman put some stats in about 
that, that I think are important, the percentage of purchases 
that are first-time homebuyers has been going down and so we 
need to figure it out.
    One of the things I'm real concerned about are obstacles 
and barriers within housing that enable people, even if they 
could afford housing, to find obstacles in their way and so I 
want to ask about a particular bill that I've been working on, 
the Fair Housing Improvement Act. The Housing Choice Voucher 
Program provides rental assistance to allow families to find 
rentals that work for them. There are other programs like 
Section 8 vouchers. Veterans Affairs (VA) has some housing 
choice vouchers. And in theory, families can use this 
assistance to move to neighborhoods of their choice and get 
access to schools, get access to transit, and get access to 
jobs.
    However, what we find is many landlords and those who have 
rental properties say that they refuse to take vouchers. They 
refuse to take government income as a source of income, and 
they use that as a reason to turn people down. We don't accept 
Section 8 vouchers. We don't accept Housing vouchers. We don't 
accept some of the VA vouchers. I think there's a significant 
body of evidence that suggests that that's pretextual. The 
notion of we don't take vouchers. You'll take somebody's 
paystub when they could be sacked tomorrow as evidence of their 
ability to pay. Somebody having a voucher--a voucher is a much 
more likely long-term reliable source of income than anybody's 
paystub would be.
    What we've seen around the country, including in Virginia, 
is commonwealths and states adding to the Fair Housing laws and 
prohibiting discrimination on the grounds of source of income. 
I introduced a bill first with Senator Orin Hatch to do this. 
Utah was one of the early states in the country that prohibited 
discrimination on the source of income, and we haven't yet been 
able to get that passed. I have helped and encouraged Virginia 
to pass it at the commonwealth level and I think it's working.
    But I have a bill at the federal level, and I guess I'd 
like to ask Ms. Bailey how would you see something like the 
Fair Housing Improvement Act making it easier for people to 
afford housing when they have a source of income that would 
enable them to pay the rent?
    Ms. Bailey. Thanks Senator and thanks for the work on this 
really important issue because we also know that source of 
income discrimination can also be a proxy for racial 
discrimination and discrimination for people with disabilities 
because we know the voucher program serves all people and 
particularly people with disabilities and people of color. So, 
this is critically important, and it can make a difference.
    Having a law is important, also putting the resources 
behind enforcement of the law is a critical component of any 
source of income antidiscrimination measures because we have to 
make sure that landlords know that there will be action taken 
if they discriminate against voucher holders because we just 
need everyone to be able to have a safe place to call home.
    Senator Kaine. Great. Thank you. The last thing I'll say 
and then hand it back, Mr. Chair, is that I'm a big fan of the 
LIHTC Program. Just watching how--the Virginia Housing used to 
be the Virginia Housing Development Authority--uses those 
federal dollars to incentivize the construction of low- and 
moderate-income rental property and putting requirements in 
that means significant percentages of those receiving the LIHTC 
funding have to be accessible units for seniors, for folks with 
disabilities.
    Much of the accessible housing stock in Virginia has been 
produced through smart use of LIHTC, so I'm a strong believer 
that you don't have to create a new program when you have one 
that's working. You just need to do more of it, and I think 
LIHTC is one of those. With that, thanks to the witnesses. I 
hand it back.
    Chairman Whitehouse. And thank you to Senator Kaine for his 
extremely knowledgeable leadership in this area. Senator 
Padilla.

                  STATEMENT OF SENATOR PADILLA

    Senator Padilla. Thank you, Mr. Chair. Maybe not for as 
many years as Senator Kaine, but I too have a diversity of 
experience having started in the local government, a member of 
Los Angeles City Council once upon a time, having served a 
couple terms for the California legislature before coming to 
the Senate, so I've seen the challenges of creating additional 
housing, whether it's a need for additional affordable housing 
to housing affordability crisis through multiple angles, and 
so, yes, our housing crisis is primarily a crisis of supply at 
this point.
    Having been intimately familiar with negotiating deals and 
seeing successful development and those that were great 
visions, but failed to come to fruition it's because of 
oftentimes the bottlenecks or the bureaucracy, and the well-
intended measures to regulate housing production have also, at 
times, become a barrier to increasing the housing supply that a 
growing population needs.
    Typically, a developer will first secure a site before 
pursuing subsidies in the forms of grants or loans from 
multiple sources to amass the capital necessary before then 
applying for tax credit, if that's what it takes to get a 
project to pencil. Clearly, that can take a long time, often 
years and years and years. This has essentially also shut out 
small scale developer who lack the financial resources or 
expertise to navigate government bureaucracy and has increasing 
driven builders to turn to the private sector for capital to 
fund permanent and affordable housing units. But most of us 
agree housing is a human right and private investment alone 
cannot be the solution to the housing crisis.
    We must provide additional funding to improve the 
efficiency of the traditional affordable housing development 
process in order to increase the pace of housing production to 
keep up with the need that is clearly out there. A question for 
both Ms. Bailey and Mrs. Ventura. How could we streamline 
federal programs so that developers can more easily navigate 
and maximize available public funds?
    Ms. Bailey. Thank you, Senator, for this question. First, 
what I think is critically important is to think about the HUD 
programs that have been put together to invest in capital 
resources. Those programs were developed independent of each 
other and not designed to be able to necessarily work together, 
so they're critically important--and they also haven't been 
reauthorized in quite some time.
    So, looking at those programs collectively so that we 
streamline them, make them easier to work together and do 
exactly as you suggest, close those gaps because in development 
time is money.
    Senator Padilla. Mrs. Ventura, same question.
    Mrs. Ventura. Thank you. I would certainly echo what Ms. 
Bailey had to say, Senator. I think that it's like a jigsaw 
puzzle when you try to put these transactions together. They 
are complicated and they're difficult and very often we will 
provide technical assistance to help developers get through 
that process, but certainly agreeing that streamlining process 
on a federal level, aligning the programs better would 
certainly help expedite the process.
    Senator Padilla. Thank you. I look forward to working with 
both of you to pursue that, recognizing that, first of all, we 
need the input from the folks who practice this, the developing 
community, but also recognizing that what it takes to build in 
Los Angeles can be different than what it is to build in 
Bakersfield, California, which is going to be different than 
Texas versus New York versus Montana, et cetera.
    I want to make sure my time remaining to touch on one other 
area and that's homelessness and the lack of affordable housing 
are not new issues, but clearly unacceptable that more than 
650,000 people--I'm taking veterans, families, young people, 
seniors experience homelessness on any given night in the 
United States each and every year. And even more American 
experience housing insecurity. So, they may not be experiencing 
homelessness yet, but one small stroke of bad luck and they may 
very well find themselves in that situation, which is why I was 
proud to introducing my Housing for All Act, which would 
strategically surge federal investments in existing programs to 
reduce housing insecurity and increase funding for innovative, 
locally developed solutions.
    As Senator Kaine said, if we have successful programs, we 
don't need additional programs to compete with them. Let's just 
amplify, let's scale up. And homelessness is not just an urban 
or just a rural issue. It's not just a Red state or just a Blue 
state issue. It affects all states, all counties, all 
communities.
    Ms. Bailey, what innovative solutions could the federal 
government invest in to keep more people housed and prevent 
more Americans from falling to homelessness?
    Ms. Bailey. So, the pandemic actually showed us the way in 
this space. With the Emergency Housing Voucher Program, HUD was 
given additional flexibility to alter how the voucher program 
worked and gave housing authorities additional resources to 
provide the services and be able to lease up a population that 
we generally consider among the hardest to serve, folks who 
have been experiencing homelessness and the housing authorities 
were able to do that in record time. This has been one of the 
more successful programs we've had in being able to take a 
resource from Congress and house folks quickly.
    The other thing I would say is experimentation in how to 
streamline the voucher program would be really critical and one 
idea is to provide direct rental assistance to tenants. Right 
now, rental assistance goes to the landlord. If we could 
provide rental assistance that looks more like cash from the 
landlord's perspective it could get rid of some of the source 
of income discrimination and streamline the process so that 
renters would be able to use the dollars more flexibly.
    Senator Padilla. My time is up, but I just call my 
colleagues attention to not just helping address housing 
affordability in the short term, but you can appreciate the 
ripple effects in terms of greater economic benefit for local 
communities, for the state, and for the nation. Thank you, Mr. 
Chair.
    Senator Kaine. Next up, Senator Braun.

                   STATEMENT OF SENATOR BRAUN

    Senator Braun. Thank you, Mr. Chairman. I heard coming in 
successful programs and the things try to do through the 
federal government. Always commend any good idea that looks 
like it's got sustainability and is actually addressing a 
problem. I can tell you when I travel across my own state the 
issues that come up most often would be the high cost of 
healthcare, workforce, and if it's not third, it's fourth, 
would be affordable housing and high-speed Internet.
    So, my concern is I think you're always going to get decent 
ideas, but for them to be dependable it's got to be based on a 
foundation of sustainable financing. And what concerns me most, 
and we're in the Budget Committee, is that we've got to pay 
more attention that regardless of what topic we're talking 
about. And here, of course, it's housing. So, I think my 
concern, and I'd like to get some opinions on what you think 
about sustainability when--I'll cite these numbers and how 
confident you'd be that the business partner, the federal 
government is going to be there for the good idea that might 
come across a legislative bow, so to speak.
    We were five trillion in debt, I think, cumulatively, up 
through the Bush Administration, added another five trillion 
from 2000 to 2008. To keep score, that's 10 trillion. From '08 
to '16, the Obama Administration, we added another six 
trillion. That's 16 trillion. Structuralized annual deficits, 
meaning cumulative debt with it, at a trillion dollars a year 
'17 and '18. I arrived in '18 and have been the loudest voice 
on for whatever you like through the federal government, 
hopefully, you'd get the operation working, prioritize, and 
make the best decisions.
    Well, COVID came along and kind of blew the doors off that 
thought. That was kind of a once, hopefully, in a century that 
we have to contend with. I think we spent a ton of money. Every 
penny was borrowed basically. The next result is we're 34 
trillion in debt and the only template out there has been put 
out by the White House. It has us 42 trillion in debt in five 
years, 52 in 10 years. I'm not going to go through the 
arithmetic, but start pricing in part of the interest rate 
increase, it's going to overwhelm the system.
    Indiana University, we appreciate balanced budgets. We 
generate one annually. We live within our means. And I want to 
ask a few others the same question. Does it make sense to be 
talking about more when we're burdening future generations at 
the tune of a trillion dollars every six months currently that 
we borrow? Mr. Walker.
    Mr. Walker. So, the numbers themselves are alarming. That a 
percentage of GDP that are increasing, which deficits as a 
percentage of GDP are going to continue to go up. I'll defer to 
my testimony, making a very tight link between Treasury 
interest rates which are supported by fiscal policy and 
mortgage rates, which is all about housing affordability. I 
think there's a very tight link there.
    So, what concerns me is we do have an amazing economic 
recovery and yet we continue to spend higher and higher 
fractions of GDP, which means debt GDP ratios are going to 
increase, and as I said in my testimony, I think this is going 
to put upward pressure on 10-year U.S. treasuries which is 
going to put upward pressure on mortgage rates, which is----
    Senator Braun. Which, ironically, housing is the most 
sensitive part of our economy to that very phenomenon.
    Mr. Walker. Absolutely. And that's going to make housing 
much less affordable.
    Senator Braun. Thank you. Mr. Slover.
    Mr. Slover. Yes. I think as part of my testimony, I think, 
and then listening to everybody on the panel as well, I just 
think we have an idea versus execution problem, as I said 
before. I think the inefficiencies of the execution, at least 
in the places I've been in government, in the D.C. Housing 
Authority, in the Chicago public schools, Detroit public 
schools, I've worked in a lot of small cities. Inefficiencies 
are abounding and so I think what you have to----
    Senator Braun. If you took care of the inefficiencies, 
could you still take on the onslaught of those heavy numbers I 
just described with our current behavior?
    Mr. Slover. Well, I think what I'm trying to say is you've 
got--no. I think what you have to do is--before you can 
continue to ask for more and more money, you have to actually 
have accountability. You have to have a return on investment. 
You have to understand are you being efficient with the money 
that you have----
    Senator Braun. That's a great point.
    Mr. Slover [continuing]. Prior to asking for more.
    Senator Braun. Bravo. Okay, Mr. Boyce, would you want to 
weigh in on that?
    Mr. Boyce. Thank you, Senator. The only thing that I would 
add with my background a little bit here is I'm an investment 
banker by practice and license, and I was the former treasurer 
of the State of Ohio, and I firmly believe--I certainly believe 
what Mr. Slover was saying, but I firmly believe that analyzing 
debt is more about not how much you have of debt, but your 
ability to pay on it.
    Senator Braun. So, you feel good about--with everything I 
just mentioned that we'd have the ability to pay. I come from 
the finance world, and I can tell you the biggest issue we're 
going to have as a country, and it's inevitable, the numbers 
never relent, will be that you couldn't extrapolate what you 
said into this place working reasonably. Sooner or later that--
you can't just keep doing that, can you?
    Mr. Boyce. But embedded in that is the ability to pay on 
your debt. And again, what I look at----
    Senator Braun. Principal as well as interest?
    Mr. Boyce. Of course. Of course. Of course. Embedded in 
that, though, in the debt, is the job creation and all of the 
various tentacles that expand from job creation. When you talk 
about LITHC and the use of those tools and what it actually 
means in the bigger sense of the debt allocation is--you know, 
there you're talking about creating stable housing 
opportunities so that families can become self-sustained, so 
that they don't have to rely upon the system. And so, somewhere 
in this conversation is balance, somewhere in this conversation 
is reasonable analysis of both your ability to manage your debt 
and your ability to pay on your debt.
    Senator Braun. Thank you.
    Senator Kaine. Senator Braun, thank you very much and I now 
turn to Senator Van Hollen.

                STATEMENT OF SENATOR VAN HOLLEN

    Senator Van Hollen. Thank you, Mr. Chairman. Thank all of 
you for being here today to talk about this very important 
subject. And clearly, housing affordability is a huge issue 
everywhere in our country. I hear about it all the time in the 
State of Maryland and the lack of adequate supply is a big 
piece of that and we need to look for more ways to incentivize 
and encourage more supply. It's also very important, in my 
view, that we continue to support the rental assistance 
programs like the Housing Choice Voucher Program. I've 
introduced a bipartisan bill, along with Senator Todd Young of 
Indiana. It's entitled the Family Stability and Opportunity 
Vouchers Act and what it does is make use of the housing choice 
vouchers combined with wraparound services for families with 
young children. And there's been ample research, including by 
Raj Chetty that indicates that when you provide families with 
that opportunity to move to areas of greater opportunity, both 
the housing component as well as wraparound services, you see 
significant breaks in generational poverty.
    Ms. Bailey, I know that you've looked at these issues 
broadly, the Housing Choice Voucher Program, the impact on 
making sure that kids have a secure place to call home. Could 
you comment on why it's important, both to maintain that, but 
also to look at providing these wraparound services for 
families with young kids?
    Ms. Bailey. Yes, absolutely, Senator. And this actually 
ties well to Senator Braun's question as well, right? We have 
to remember that there's a cost to doing nothing as well. 
There's a cost to families and to kids and to people who are 
living unhoused on the street to doing nothing that oftentimes 
isn't talked about. We also talk about affordable housing as 
purely an issue of homelessness. It is a larger issue than 
that. Many people are currently housed. If we gave them a 
little bit more assistance to be able to afford where they live 
today, then that also controls the affordability crisis as 
well. And that stems into how the role that housing can play in 
children's lives.
    We know that children with stable housing do better in 
school and in the long run, as Dr. Chetty's work shows, earn 
more as adults and it's the wraparound services that are the 
secret sauce to that. Being able to help families connect to 
childcare locally, being able to help families navigate the 
school system and staying with families for as long as they 
need it, and as flexibly as they need services is a key 
component of that.
    Senator Van Hollen. Well, I appreciate that. So, Senator 
Young and I pushed a number of years ago to create a pilot 
program to help these families with young kids move to areas of 
greater opportunities with those wraparound services and it 
very quickly demonstrated what the research has shown, which 
is, this is a way to help break the cycle of poverty, which is 
why we proposed to expand that particular program by 250,000 
vouchers over the next five years.
    As we indicated, all of you have indicated in your 
testimony, supply is another major factor here. In December of 
last year, AXIOS estimated, based on data from the Census 
Bureau and Moody's that there is a shortage of around 3.2 
million housing units relative to population demand in the 
United States. I know in my home state of Maryland we're 
talking about a shortage of at least 96,000 units. There are a 
number of programs designed to help address the supply thing. 
You've all mentioned the low-income housing tax credit piece. 
There's also the Home Investment Partnership Program, Community 
Development Block Grant (CDBG). If you could, Mrs. Ventura, and 
maybe Mr. Boyce, just speak briefly to how those programs can 
help expand the supply of housing and therefore improve the 
situation with respect to affordability.
    Mrs. Ventura. The programs that you mentioned, the Home 
Program, the Capital Magnet Fund, and the National Housing 
Trust are all critically important programs, and we use them in 
partnership with the 9 percent credits, the 4 percent housing 
credits. Without those resources, we would not have the numbers 
that we have in Rhode Island in terms of production and 
preservation of housing, so they are terrific programs. We hope 
for more resources to be invested in these programs so that we 
can do more for the people of our state.
    Senator Van Hollen. Thank you.
    Mrs. Ventura. Thank you.
    Senator Van Hollen. Mr. Boyce.
    Mr. Boyce. Thank you for the question, Senator. I would 
just add to Carol's comments that CDBG funds, in particular, in 
home funds I know in Franklin County have allowed us to use 
those funds to invest in infrastructure dollars that often can 
tie directly into a specific development to reduce the cost of 
rent or the cost of purchase on those homes. And so, to me, 
there is a direct correlation to the ability to access more 
affordable and quality housing.
    The other point I would like to raise is just that it 
allows us, as counties, to think about the public 
infrastructure, ranging from roads and streets to public 
transit access and even planning of medical resources, medical 
institutions and so forth. And so, all of those are things that 
we, as county commissioners, take into account when we're 
planning out the growth or development of certain corridors 
within our community.
    Senator Van Hollen. Thank you and thank you all. Thank you, 
Mr. Chairman.
    Senator Kaine. Senator Merkley.

                  STATEMENT OF SENATOR MERKLEY

    Senator Merkley. The shortage that my colleague from 
Maryland mentioned is certainly true in Oregon. We estimated 
we're about 110,000 units short, but in addition, we have the 
challenge that any developer wants to develop high end housing 
because there's so many folks to the south of us in California 
in the San Francisco area where the Dot Com boosted the value 
of houses, so you can sell your house for a million plus 
dollars to move to Oregon. So, there was a ready supply of 
buyers for high-end and so a developer doesn't want to develop 
normal family housing when they can make more money building 
McMansions.
    I want to turn to a different part of the puzzle, though, 
and that is the involvement in hedge funds. Since 2009, when we 
had massive foreclosures, they were sold in bulks of a thousand 
or more houses at a time. The only people that could buy them 
were hedge funds. Hedge funds discovered that this was a 
fabulous investment, both from appreciation, appreciation that 
would've gone to middle-class families.
    I lobbied the Obama Administration hard to make them 
available to families because they were being sold 50 cents on 
the dollar at the time and they said it was just to complicated 
and they were worried about slowing the process where houses 
might be exposed to frozen pipes or vandals stripping copper 
and so forth. But the long and short of it is the hedge funds 
became deeply invested in this market and they've continued to 
do so seeing how fabulously profitable it is.
    They're buying now about a quarter of the houses that are 
available, especially in the southern marketplaces like Phoenix 
and Atlanta, but it's affecting states like Oregon as well. Ms. 
Bailey, this situation affects rents and the price of 
homeownership both and people have said, well, how does it 
affect the renters. And my basic understanding that I want 
clarification from you on is, first of all, if an investor pays 
more for a house, they're going to charge higher rents. It's 
going to drive up the rental market, in general. But also, if 
renters who have the income to buy a house can no longer buy a 
house because they're competing against a hedge fund that means 
they don't move out of the rental housing and that rental 
housing supply is going to remain shorter and therefore at a 
higher market price. Can you help us understand? Are the hedge 
funds having an impact on the affordability of rents as well as 
home ownership?
    Ms. Bailey. Yes, Senator. As you explained it, that's 
exactly right. We're really concerned about renters, especially 
higher-income renters who are staying in the market longer than 
they would otherwise and therefore driving up the cost because 
30 percent of their income is higher and so they can pay more. 
But we're also concerned for the renters themselves, not only 
paying more rent, but also for families, in particular families 
with kids.
    Single-family housing is one of the ways--it's really 
important to them. It provides the size, it's often in places 
with better schools and other amenities that families with kids 
need and so we really need to maintain affordability in the 
single-family rental market for low-income families with kids.
    Senator Merkley. I really saw when I was director of 
Habitat for Humanity how an affordable mortgage or affordable 
rental housing was huge to the stability of family, and I saw 
kids whose lives improved enormously when they had that stake 
in the community through an affordable, decent home and a 
decent community.
    Mrs. Ventura, your organization has helped tens of 
thousands of families enter home ownership through mortgage 
financed programs and tens of thousands that is awesome. That 
is tremendous. Now, if the hedge funds are targeting, if they 
were, I don't know to what degree they are, start targeting 
Rhode Island and driving up the prices how would that affect 
the opportunity of families to buy homes? Because they'd then 
be competing against all cash, no inspection offers at a higher 
price point than the houses have been shortly before?
    Mrs. Ventura. So, Senator, I haven't heard that hedge funds 
are buying properties in Rhode Island. It's possible. I think 
that single family opportunities in Rhode Island, the 
opportunity to either lease a home or purchase a home is 
challenging. We're not building enough single-family inventory 
now. You mentioned Habitat and thank you for your work with 
Habitat. Habitat affiliates in Rhode Island do a terrific job 
providing just those opportunities, but we need to do more in 
our state in providing financing opportunities to develop that 
next level, leaving rental, home ownership, affordable 
homeownership, and the ability to build wealth.
    Senator Merkley. Thank you. And I hope for our sake they 
don't start to target Rhode Island. You can visit your 
colleagues in Atlanta and Phoenix to find out the impact, or in 
Oregon.
    Ms. Bailey, several state legislatures, including Oregon, 
have considered creating a rental housing registry system to 
provide clear data on landlords and homes in the rental market 
to really understand the dynamics of that market better. Would 
the benefits outweigh the challenges in setting up this kind of 
registry system?
    Ms. Bailey. Senator, it could. It could really help. 
Sometimes it's a black box, related to renting and being able 
to locate units for families, so putting in the resources that 
it would take to be able to--and making it as easy as possible 
for landlords to register, putting in the resources to maintain 
a system like that could play a significant role in helping 
families find a place to live. Right now, we know that housing 
authorities and other housing agencies are having to use 
resources to pay for realtors and others in order to help 
people with low incomes find rental units. Oftentimes, many of 
us have to do the same thing. Having such a registry could make 
a difference in just making it easier to access rental housing.
    Senator Merkley. I'll just close out with a comment on the 
hedge funds side. We have all our traditional programs, for 
example, housing vouchers. I spent an afternoon calling in the 
westside of Portland trying to find an apartment that would 
take a housing voucher and all the rents were way above the 
housing, so I didn't find one. And I just did that to kind of 
understand it personally. So, we have to amplify all of those 
programs, but we also have this factor, this factor since 2009 
that has become a competitor with ordinary American families 
for basic, three-bedroom family--two or three-bedroom family 
house. That is something we could do that could make a profound 
difference that doesn't cost the government a single dime and 
then we should do it. We should get the hedge funds out of the 
housing business. Thanks.
    Senator Kaine. Thank you, Senator Merkley. Here's what 
we're going to do. We have a vote that will start in a couple 
minutes. Senator Johnson has one additional point or question. 
I have one for Mrs. Ventura and then we're going to adjourn the 
hearing. Senator Johnson.
    Senator Johnson. Thank you, Mr. Chairman. Chairman 
Whitehouse did ask Mr. Slover if he would give some thought to 
and provide questions for the record. I want to make the same 
request from all of you and this is a very sincere request. As 
I said in my questioning, and it's been kind of reinforced 
throughout this thing. We've got a problem of supply. We have 
tremendous demand, whether it's from hedge funds, whether it's 
from $100 billion plus in government funding--and again, I come 
from free market system. I've got a great deal of respect for 
how a functioning market responds to demand, you know, from 
high end all the way to low end products.
    So, there's a breakdown in the marketplace. I have my 
suspicion. I used one example of a very well-intentioned 
program that I'm sure does a lot of good. The low-income 
housing tax credit, but it has some unintended consequences. 
And Mr. Slover, you talked about it, unintended consequences in 
the D.C. market as well. So, I guess I'm really asking all of 
you to give some real thought to what is the fundamental root 
causes. And again, I think it's a little more complex. I think 
there are a number of factors in here, but what is preventing 
the market from responding to the demand?
    When you heard a figure of 3.3 million housing units, so 
that's a market opportunity and it doesn't necessarily have to 
be three, four, five hundred thousand dollar homes. I know in 
Oshkosh, philanthropists funded I think something like 50 micro 
housing units for families to get in. And again, it maybe not 
be where everybody would want to live, but it's clean, it's 
safe. There are alternatives here the marketplace can respond 
to, so it's really a very sincere request if you can really 
rack your brain and go, what is preventing the market from 
responding with all this demand? There is. There's tremendous 
demand. There are tremendous dollars being thrown at this. Why 
do we have such a constriction of the supply?
    Senator Kaine. If I could, just to back to what I was 
talking about my fair housing career, first-time homeownership 
is really important and yet there's significant racial 
disparities. The racial homeownership gap in Virginia is more 
than 20 percent. A lot of the federal programs we've talked 
about today deal with affordable rentals and of course that's 
very, very important, but I think we need to look at smart 
strategies that will help more people become homeowners.
    I've joined with Senators Warner and Warnock on a bill, the 
LIFT Act, which would provide more affordable mortgage options 
for first generation homeowners. And I understand, Mrs. 
Ventura, that Rhode Island Housing has piloted a down payment 
and closing cost assistance program for first generation 
homebuyers who complete a homeowner education course. Talk a 
little bit about that program and what you've learned that 
might be helpful to us as we think about trying to do something 
similar.
    Mrs. Ventura. Yes. Thank you for asking about this program. 
We did a pilot a first gen downpayment assistance program. It 
is geographically targeted in areas that have very high 
concentrations of low-income renters, so it tends to be in our 
urban core, and we provide a $25,000 grant to participants in 
the program. They have to complete a higher level of homebuyer 
assistance in our traditional downpayment assistance program. 
We think that it's important to educate them as they are first 
generation buyers. And so, they can take that $25,000 down 
payment and buy anywhere in the State of Rhode Island and we're 
seeing a high percentage of people purchasing in what we would 
call high opportunity areas, great schools. So, we believe 
we're certainly moving the dial on creating homeownership 
opportunities for people of color and we plan to continue it.
    One other thing I would add, Senator, is we created a home 
secure program that accompanies this. It's a $5,000 escrow that 
we create for participants in the program and it's almost like 
a security deposit if something goes wrong.
    Senator Kaine. A major system, furnace, or something. Yes.
    Mrs. Ventura. Exactly. Exactly. So, they can use that. If 
they use their resources to pay for the boiler, if it goes, 
then they can use that security fund to make their mortgage 
payment. If at the end of five years, they don't use the 
resource or whatever the balance is, we apply a principal 
reduction to their mortgage.
    Senator Kaine. Thank you for sharing about that. And to all 
the witnesses, this has been a really good hearing. We 
appreciate the work that you all do, your willingness to 
testify today, and we, obviously, have included your full 
written statements in the record. As information for all 
senators, should any senators have questions, and you've gotten 
a couple of questions from the record from Senator Johnson and 
Senator Whitehouse, particularly to Mr. Slover and others. If 
any other senators want to put questions in from the record, we 
would ask that they do that by noon tomorrow. Email copies will 
be accepted. And then, if there are such questions, some have 
been raised already, we would ask witnesses to try to respond 
within seven days of receipt. With no further business before 
the Committee, and with a vote on, the hearing is adjourned.
    [Whereupon, at 11:36 a.m., Wednesday, January 31, 2024, the 
hearing was adjourned.]

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