[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
BUILDING CAPACITY: REDUCING GOVERNMENT
ROADBLOCKS TO HOUSING SUPPLY
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HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
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DECEMBER 3, 2025
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Serial No. 119-47
Printed for the use of the Committee on Financial Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
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www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
63-575 PDF WASHINGTON : 2026
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HOUSE COMMITTEE ON FINANCIAL SERVICES
FRENCH HILL, Arkansas, Chairman
BILL HUIZENGA, Michigan, Vice MAXINE WATERS, California, Ranking
Chairman Member
FRANK D. LUCAS, Oklahoma SYLVIA R. GARCIA, Texas, Vice
PETE SESSIONS, Texas Ranking Member
ANN WAGNER, Missouri NYDIA M. VELAZQUEZ, New York
ANDY BARR, Kentucky BRAD SHERMAN, California
ROGER WILLIAMS, Texas GREGORY W. MEEKS, New York
TOM EMMER, Minnesota DAVID SCOTT, Georgia
BARRY LOUDERMILK, Georgia STEPHEN F. LYNCH, Massachusetts
WARREN DAVIDSON, Ohio AL GREEN, Texas
JOHN W. ROSE, Tennessee EMANUEL CLEAVER, Missouri
BRYAN STEIL, Wisconsin JAMES A. HIMES, Connecticut
WILLIAM R. TIMMONS, IV, South BILL FOSTER, Illinois
Carolina JOYCE BEATTY, Ohio
MARLIN STUTZMAN, Indiana JUAN VARGAS, California
RALPH NORMAN, South Carolina JOSH GOTTHEIMER, New Jersey
DANIEL MEUSER, Pennsylvania VICENTE GONZALEZ, Texas
YOUNG KIM, California SEAN CASTEN, Illinois
BYRON DONALDS, Florida AYANNA PRESSLEY, Massachusetts
ANDREW R. GARBARINO, New York RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin RITCHIE TORRES, New York
MIKE FLOOD, Nebraska NIKEMA WILLIAMS, Georgia
MICHAEL LAWLER, New York BRITTANY PETTERSEN, Colorado
MONICA DE LA CRUZ, Texas CLEO FIELDS, Louisiana
ANDREW OGLES, Tennessee JANELLE BYNUM, Oregon
ZACHARY NUNN, Iowa SAM LICCARDO, California
LISA McCLAIN, Michigan
MARIA SALAZAR, Florida
TROY DOWNING, Montana
MIKE HARIDOPOLOS, Florida
TIM MOORE, North Carolina
Ben Johnson, Staff Director
C O N T E N T S
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Wednesday, December 3, 2025
Page
OPENING STATEMENTS
Hon. French Hill, Chairman of the Committee on Financial
Services, a U.S. Representative from Arkansas.................. 1
Hon. Maxine Waters, Ranking Member of the Committee on Financial
Services, a U.S. Representative from California................ 3
STATEMENTS
Hon. Mike Flood, Chairman of the Subcommittee on Housing and
Insurance, a U.S. Representative from Nebraska................. 4
Hon. Emanuel Cleaver, Ranking Member of the Subcommittee on
Housing and Insurance, a U.S. Representative from Missouri..... 4
WITNESSES
Mr. Kevin Sears, Immediate Past President, National Association
of Realtors (NAR).............................................. 5
Prepared Statement........................................... 8
Ms. Julie Smith, Chief Administrative Officer, Bozzuto, on Behalf
of The National Multifamily Housing Council, The National
Apartment Association, and The Real Estate Technology and
Transformation Center.......................................... 19
Prepared Statement........................................... 21
Mr. Tobias Peter, Senior Fellow and Co-Director, American
Enterprise Institute Housing Center............................ 34
Prepared Statement........................................... 36
Ms. Nikitra Bailey, Executive Vice President, National Fair
Housing Alliance............................................... 107
Prepared Statement........................................... 109
APPENDIX
MATERIALS SUBMITTED FOR THE RECORD
Hon. Barry Loudermilk:
National Association of Residential Property Managers (NARPM) 228
Hon. John W. Rose:
Manufactured Housing Institute (MHI)......................... 230
Hon. Monica De La Cruz:
Housing group in support of H.R. 6132........................ 232
Hon. Mike Flood:
International Code Council (ICC), dated December 2, 2025..... 233
American Property Casualty Insurance Association (APCIA),
dated December 3, 2025..................................... 237
Coalition statement from the National Taxpayers Union and
other Conservative advocacy organizations, dated December
2, 2025.................................................... 241
The American Institute of Architects (AIA)................... 243
Hon. Maxine Waters:
Grounded Solutions Network................................... 245
Habitat for Humanity......................................... 247
The National Community Stabilization Trust (NCST)............ 251
The National Low Income Housing Coalition (NLIHC)............ 259
RESPONSES TO QUESTIONS FOR THE RECORD
Written responses to question for the record from Mr. Kevin Sears
Representative Bill Foster................................... 271
Representative Brittany Pettersen............................ 273
Written responses to question for the record from Ms. Julie Smith
Representative Bill Foster................................... 275
Representative Brittany Pettersen............................ 276
Written responses to question for the record from Mr. Tobias
Peter
Representative Bill Foster................................... 278
Written responses to question for the record from Ms. Nikitra
Bailey
Representative Bill Foster................................... 280
Representative Brittany Pettersen............................ 283
LEGISLATION
H.R. 638, the Housing Temperature Safety Act of 2025............. 286
H.R. 1078, the Respect State Housing Laws Act.................... 294
H.R. 2362, the VA Home Loan Awareness Act........................ 296
H.R. 2840, the Housing Supply Frameworks Act..................... 298
H.R. 3774, the HUD Accountability Act of 2025.................... 311
H.R. 4385, the Helping More Families Save Act.................... 314
H.R. 4568, the Supporting Upgraded Property Projects and Lending
for Yards (SUPPLY) Act......................................... 324
H.R. 4646, the Whistleblower Protection Act of 2025.............. 330
H.R. 4659, the Identifying Regulatory Barriers to Housing Supply
Act............................................................ 332
H.R. 4660, the Unlocking Housing Supply Through Streamlined and
Modernized Reviews Act......................................... 339
H.R. 4810, the BUILD Housing Act................................. 347
H.R. 4989, the Streamlining Rural Housing Act of 2025............ 350
H.R. 5077, the Strengthening Housing Supply Act of 2025.......... 354
H.R. 5263, To require approval from the Secretary of Housing and
Urban Development for any Federal manufactured home and safety
standards, and for other purposes.............................. 356
H.R. 5429, the HUD-USDA-VA Interagency Coordination Act.......... 359
H.R. 5577, the NFIP Continuation Act of 2026..................... 362
H.R. 5878, the HOME Reform Act of 2025........................... 364
H.R. 5907, To authorize the Secretary of Housing and Urban
Development to award grants to eligible entities to select pre-
reviewed designs of covered structures of mixed-income housing
for use in the jurisdiction of the eligible entity............. 378
H.R. 5913, the Community Investment and Prosperity Act........... 384
H.R. 6132, To modify the multifamily loan limits under title II
of the National Housing Act.................................... 386
H.R. 6269, To require the Secretary of Housing and Urban
Development to conduct a review of Federal Housing
Administration construction financing programs to identify
barriers to the use of modular home methods, and for other
purposes....................................................... 394
H.R. 6293, the Expansion of Attainable Homeownership Through
Manufactured Housing Act of 2025............................... 398
H.R. --------, the Housing for America's Middle-Class Act of 2025 407
H.R. --------, To direct the Comptroller General of the United
States to conduct a study that identifies options to remove
barriers and improve housing for persons who are elderly or
disabled....................................................... 410
H.R. --------, To direct the Comptroller General of the United
States to conduct a study that identifies how many residential
dwelling units, and how many dwelling units in public housing,
are located within 1 mile of a superfund site.................. 412
H.R. --------, the Accountability for NYCHA Act of 2025.......... 414
H.R. --------, To amend the Housing Act of 1949 to make
modifications to loans and grants for minor improvements to
farm housing and buildings, and to make modifications to income
eligibility for such loans and grants.......................... 420
H.R. --------, To amend the Housing Act of 1949 to require an
annual report on rural housing programs........................ 422
H.R. --------, To require the Comptroller General of the United
States to submit to the Congress a report on the use of
technology by the Rural Housing Service........................ 424
H.R. --------, To amend the Housing Act of 1949 to clarify that
accessory dwelling units which are leased qualify for certain
loan guarantees under section 502 of such Act, and for other
purposes....................................................... 426
H.R. --------, To require the Secretary of Agriculture to submit
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives a report with respect to the application
process under section 502 and 504 of the Housing Act of 1949,
and for other purposes......................................... 429
H.R. --------, To require the Secretary of Housing and Urban
Development to require public housing agencies to disclose
contracts entered into, and for other purposes................. 432
H.R. --------, To require the Secretary of Housing and Urban
Development to establish Federal guidelines for point-access
block buildings, and for other purposes........................ 434
H.R. --------, To require Federal monitors and receivers of
public housing agencies to testify before the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate. 438
H.R. --------, To exempt from the requirements of NEPA the
provision of certain assistance for the construction or
modification of residential housing on infill sites, and for
other purposes................................................. 440
H.R. --------, To amend the National Housing Act to require that
certain mortgagors be provided with a deed assurance document
(Waters)....................................................... 444
H.R. --------, To require the Comptroller General of the United
States to conduct a study that examines the cost and benefits
of a Federal uniform residential building code................. 446
H.R. --------, To require the Secretary of Housing and Urban
Development to submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report with respect
to incentivizing small dollar mortgages, and for other purposes 448
H.R. --------, To amend the Housing and Community Development Act
of 1976 to require grantees under such Act to maintain a
database of land............................................... 453
H.R. --------, To require the Secretary of Housing and Urban
Development to establish a grant program to assist in housing
planning activities, and for other purposes.................... 455
H.R. --------, the Build Housing More Affordably Act............. 461
BUILDING CAPACITY: REDUCING GOVERNMENT ROADBLOCKS TO HOUSING SUPPLY
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Wednesday, December 3, 2025
U.S. House of Representatives,
Committee on Financial Services,
Washington, DC.
The committee met, pursuant to notice, at 10:11 a.m., in
room 2128, Rayburn House Office Building, Hon. J. French Hill
[chairman of the committee] presiding.
Present: Representatives Hill, Sessions, Huizenga, Wagner,
Barr, Williams of Texas, Loudermilk, Davidson, Rose, Steil,
Timmons, Stutzman, Meuser, Kim, Garbarino, Fitzgerald, Flood,
Lawler, De La Cruz, Nunn, McClain, Salazar, Downing,
Haridopolos, Moore, Waters, Velazquez, Sherman, Meeks, Scott,
Lynch, Green, Cleaver, Himes, Foster, Beatty, Vargas, Gonzalez,
Casten, Pressley, Tlaib, Torres, Garcia, Williams of Georgia,
Bynum, and Liccardo.
Chairman Hill. The Committee on Financial Services will
come to order.
Without objection, the chair is authorized to declare a
recess of the committee at any time.
Today's hearing is entitled ``Building Capacity: Reducing
Government Roadblocks to Housing Supply.''
Without objection, all members will have 5 legislative days
within which to submit extraneous material to the chair for
inclusion in the record.
I now recognize myself for 4 minutes for an opening
statement.
OPENING STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE
COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
ARKANSAS
Today's hearing will explore the various factors
contributing to the high cost of housing and examine the tools
the Federal Government might wield in order to alleviate some
of that burden.
Over the last decade, housing affordability has rapidly
become one of the main issues facing our American families,
which have been primarily driven by a persistent lack of supply
needed to meet a growing demand. The delta between supply and
demand has resulted in an affordability challenge many
Americans face in looking to purchase a home.
This committee has held numerous hearings on critical
aspects of this issue, including barriers to building middle-
class housing, better utilization of modular and manufactured
housing to meet urgent needs, and the unique housing challenges
that rural America faces.
More recently, our Housing and Insurance Subcommittee held
a hearing reviewing the urgent need to modernize the Federal
housing construction program, the HOME Program, to make it the
most effective and responsive to today's market demands.
Each of these discussions has highlighted a severe,
decades-long shortfall in housing inventory that has hindered
many Americans' access to affordable homes. Our goal today is
to chart a path toward greater development capacity and a more
simplified regulatory framework.
Regulatory complexity, particularly those locally designed
and approved rules, remains a significant obstacle for property
owners and builders, complicating the development process and
often resulting in delays and increased expenses.
Rather than helping development, overburdensome building
regulations have made it nearly impossible for many housing
providers to navigate a maze of Federal, State, and local
rules, leading to less housing development across the Nation.
Likewise, homebuilders and hopeful homebuyers are being
crushed by the tailwinds of the 40-year high in inflation
brought about by trillions in new spending from the Biden
Administration and excessive laxity on the part of the Federal
Reserve in late 2020 and 2021.
This inflationary spike elevated the cost per square foot,
pushed down real incomes, contributed to higher insurance
premiums and, obviously, higher interest rates as the Federal
Reserve (Fed), behind the curve, fought to overcome these
errors. Inflation is down to 3 percent from its ugly peak of 9
percent in 2022.
In line with the committee's ``Make Community Banking Great
Again'' agenda, committee Republicans have been working
alongside the Trump Administration to ensure that community
banks remain viable, competitive, and able to serve their local
needs to combat rising housing costs. Greater capital, better
deposit funding, and lower compliance costs mean greater credit
availability by our banks for our construction industry.
We are committed to finding new ways to foster a
homebuilding and buying environment that is conducive to supply
growth and prudent lending practices. Our focus today is not
about expanding government control; it is about how our
government can work through to cutting red tape that is
stifling innovation and discouraging investment in housing
projects.
My Republican colleagues and I understand that the first
step in creating a well-functioning housing market starts with
streamlining regulatory processes and eliminating redundant
layers of bureaucracy. By doing so, we can create a more
predictable environment for builders, lenders, buyers, and
renters.
After we take feedback from today's hearing, we plan to
hold a markup later this month on a package of housing and
banking reform solutions for our Nation's housing challenges.
I want to thank our witnesses, and I look forward to our
discussion today.
I now recognize the ranking member of the committee, Ms.
Waters, for 4 minutes for an opening statement.
OPENING STATEMENT OF HON. MAXINE WATERS, RANKING MEMBER OF THE
COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
CALIFORNIA
Ms. Waters. Thank you very much, Mr. Chairman.
The cost of living is skyrocketing, and working-class
families are struggling to pay their rent and mortgages and
what is Donald Trump doing to solve this crisis? Raising
housing costs.
He is imposing tariffs on lumber and other building
materials, gutting the key civil-rights protections meant to
end housing discrimination, and unleashing masked Immigration
and Customs Enforcement (ICE) agents on American cities,
wreaking havoc on families and communities and fueling labor
shortages at places like home construction sites.
Now Trump wants to gut permanent supportive housing
funding, which would force 170,000 people back onto the
streets--a move that will significantly harm people with
disabilities, veterans, survivors of domestic violence, and
women with children.
Mr. Chairman, I do not have to tell you how severe the
housing crisis has become. As it stands, nearly 800,000 people
are experiencing homelessness, and most American families use
the bulk of their paycheck for their rent or mortgage. This is
a serious problem and requires serious solutions.
Federal Housing Finance Agency (FHFA) Director Bill Pulte,
who spends more time launching baseless political witch hunts
than solving the housing crisis, has proposed a 50-year
mortgage. This is the most preposterous housing policy anyone
has ever come up with. What is the next brilliant idea? A 100-
year mortgage? We should not expect any progress on the housing
crisis when people in charge are unserious and out of their
depth.
Committee Democrats are serious about solving this crisis.
Right after the administration proposed gutting funding for
permanent supportive housing, I demanded the Housing and Urban
Development (HUD) Secretary Scott Turner to reverse the
decision in a letter that I led with 52 other House Democrats.
At the same time, my Democratic colleagues and I in the
House and Senate have worked in a bipartisan manner to get the
Renewing Opportunity in the American Dream (ROAD) to Housing
bill included in the National Defense Authorization Act (NDAA),
a commonsense legislative package that would chip away at the
crisis while we all work in good faith to reach a deal.
I know there have been some concerns, and, Mr. Hill, I know
that some of your concerns are my concerns and I know that you
walked away from the negotiations. Well, while I am
disappointed in that decision, I am encouraged that you want to
work with me and committee Democrats to finally get something
done on housing. What you just said this morning is very
encouraging.
So I am looking forward to working with you to solve the
problem that we all know exists. We must move quickly, because,
while Congress bickers, rents are still going up, home prices
are still rising, and mortgage rates are still too high.
I also encourage my friends on the opposite side of the
aisle to not play around with the margins of housing policy.
Let us go big.
While the ROAD is an important and incremental step, we
need serious and substantial government intervention to build
the housing units needed to end this crisis. The private sector
cannot do it alone and certainly will not build housing for our
lowest-income families, so we have to be bold with this.
My housing package is just that. It is the single-largest
and most comprehensive investment in affordable housing in U.S.
history and will finally tackle the affordable housing crisis,
end homelessness, and eliminate the racial wealth and ownership
gap.
So I look forward to today's conversation and working with
my colleagues to get a bipartisan housing bill passed into law.
It is going to cost some money. Please do not start telling me
we are going to do it without paying for it. We have to pay for
it.
I yield back.
STATEMENT OF HON. MIKE FLOOD, CHAIRMAN OF THE SUBCOMMITTEE ON
HOUSING AND INSURANCE, A U.S. REPRESENTATIVE FROM NEBRASKA
Chairman Hill. The gentlewoman yields back.
I now recognize the chair of the Subcommittee on Housing
and Insurance, Mr. Flood, for 1 minute for an opening
statement.
Mr. Flood. Thank you very much, Mr. Chairman, and
especially thank you for your leadership on housing.
Housing costs, as we have noted today, have been rising for
the last several years, and this problem is taking its toll.
Housing affordability affects everyone. For example, the
American Dream of buying a home is out of reach for many of our
country's young people. Did you know the median age of a first-
time homebuyer today is, astoundingly, 40 years old?
The reason for this affordability problem is simple: We are
not building enough homes in this country to meet the demand.
We have a 5-million-unit shortage. This committee and the
Housing and Insurance Subcommittee have been working on
solutions that will cut costs, remove government barriers, and
unleash more building across the country. This hearing today is
the latest step in our work this year.
You will note that almost every hearing this subcommittee
has had has been on housing this year. We have a wide range of
bills that have been noticed today that will address different
aspects of the problem.
I am excited and honored to be a part of this process and
have enjoyed working with my colleague, Mr. Cleaver, from the
great State of Missouri. I look forward to our markup at the
end of this month.
With that, I yield back.
Chairman Hill. The gentleman yields back.
I recognize the ranking member of our Subcommittee on
Housing and Insurance, Mr. Cleaver.
You are recognized for a 1-minute opening statement.
STATEMENT OF HON. EMANUEL CLEAVER, RANKING MEMBER OF THE
SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S. REPRESENTATIVE
FROM MISSOURI
Mr. Cleaver. Thank you, Mr. Chairman.
I have been on this committee for over 20 years, and there
are at least two things I have found to be unquestionably true.
One, housing affordability has worsened over the past two
decades, and it creates an increased affordable housing supply
need. Number two, there is always a reason for Congress not to
work together to get something done.
Congress now has perhaps a once-in-a-generation opportunity
to advance housing legislation of consequence. This includes
ROAD to Housing, which includes House legislation such as my
own and dozens of other bills under discussion today.
It is right to ask whether Congress can overcome harmful
administrative action, but I have learned that the reasons not
to work across the aisle will always be there, and so will the
need.
I thank all the members of this committee who are working
in a bipartisan manner and look forward to open debate on the
legislation before us today.
Thank you, Mr. Chairman.
Chairman Hill. The gentleman yields back.
Today, we welcome the testimony of Mr. Kevin Sears,
immediate past president of the National Association of
Realtors; Ms. Julie Smith, chief administrative officer of
Bozzuto, here on behalf of the National Multifamily Housing
Council, the National Apartment Association, and the Real
Estate Technology and Transformation Center; Mr. Tobias Peter,
senior fellow and co-director at American Enterprise
Institute's (AEI's) Housing Center; and Nikitra Bailey,
executive vice president of the National Fair Housing Alliance.
We thank all of you for being with us today.
Each of you will be recognized for 5 minutes to give an
oral presentation of your testimony.
Without objection, your written statements will be made
part of the record.
Mr. Sears, we are going to start with you. You have 5
minutes for your presentation.
STATEMENT OF KEVIN SEARS, IMMEDIATE PAST PRESIDENT, NATIONAL
ASSOCIATION OF REALTORS
Mr. Sears. Chairman Hill, Ranking Member Waters, members of
the committee, thank you for inviting me to testify today.
My name is Kevin Sears. I am the 2024-2025 president of the
National Association of Realtors. I am also a practicing real
estate broker in Springfield, Massachusetts, where I have
worked for over 30 years helping families and individuals
achieve the American dream of home ownership.
Today, I am here on behalf of our nearly 1.5 million
Realtor members representing nearly every ZIP code across this
great Nation.
Every day, Realtors watch families struggle to find homes
that they can afford. These are families who have done
everything right--they have saved for years, they have stable
jobs, they have good credit--but buying a home is slipping out
of reach because they cannot find one they can afford. We
constantly see teachers, nurses, firefighters, police officers
priced out of the very communities that they serve.
This is not anecdotal. We surveyed real estate firms from
across America, and nearly 60 percent of them told us that
housing affordability is their single biggest challenge. The
lack of affordability in the market is a systemic crisis
locking entire generations out of home ownership.
At the root of America's affordability crisis is an
undeniable fact: Our Nation has a severe lack of housing
supply.
The numbers tell a stark story. There were more homes
available for purchase in 1995 than there are today, although
there are millions more Americans. After the Great Recession,
we experienced 14 consecutive years of severe underproduction,
creating a shortage, as Chairman Flood said, of nearly 5
million homes nationwide.
The impact on families is profound. First-time homebuyers
have fallen to a record low of 21 percent of purchases.
According to National Association of REALTORS's (NAR's) data,
the median first-time homebuyer is now 40 years old.
Let that sink in. An entire generation is waiting more than
a decade longer than their parents did to buy homes. Many may
never get there at all and this 10-year delay translates to
more than $150,000 of lost wealth--equity that could help them
educate their children or support them in their retirement.
The housing shortage also drives rents to record highs,
limiting ability for families to save for home ownership.
According to NAR's 2025 analysis, the median net worth of a
U.S. homeowner is approximately $430,000, while the median net
worth of a renter is $10,000. So what that means is that a
typical homeowner is 43 times wealthier than a typical renter.
This shortage is a result of specific policy choices and
market barriers that we can and must address.
Homeowners are increasingly locked in place. The capital-
gains exclusion, set in 1997 at $250,000 for a single owner and
$500,000 for married couples, has never been updated, even as
home prices have surged.
At the same time, rising interest rates mean that
homeowners who secured a 3-to 4-percent mortgage rate just a
few years ago may not be able to afford today's rates if they
were to move.
Millions of households with Federal Housing Administration
(FHA), United States Department of Agriculture (USDA), and
Veterans Affairs (VA) loans are also staying put rather than
giving up their low mortgage rates.
Improving buyers' ability to use existing assumable loans
would allow them to take over a seller's lower mortgage rate,
increase mobility, and unlock more homes on the market.
Builders face barriers at every level of government--
restrictive zoning, unpredictable permitting and rent control
at the local level, along with Federal red tape and high
financing costs, all of which slow construction and limit
supply of affordable and rental homes.
Realtors have taken action. We are working to empower
communities to remove barriers, expand supply, and help our
clients achieve the American dream of home ownership but local
action alone cannot close the housing shortage. Federal
leadership is essential.
We recommend the bipartisan leadership--we commend the
bipartisan leadership of this committee, particularly
Subcommittee Chair Flood and Ranking Member Cleaver, who have
championed practical solutions.
We must build on this momentum by unlocking existing homes
through modernizing the capital-gains policy, boosting new
construction, Federal and State local reforms, and expanding
financing for affordable and innovative housing.
My written testimony details the bipartisan legislation to
do just that, including the More Homes on the Market Act, the
Housing Supply Frameworks Act, and the HOME Reform Act, and
other solutions this committee has championed.
The housing supply crisis demands action at every level of
the government. This crisis is not a red or blue issue; it is a
red, white, and blue issue. NAR and our members stand ready to
work with Congress and the administration to deliver real
solutions.
Thank you.
[The prepared statement of Mr. Sears follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. The gentleman yields back.
Ms. Smith, you are now recognized for 5 minutes for your
presentation.
STATEMENT OF JULIE SMITH, CHIEF ADMINISTRATIVE OFFICER,
BOZZUTO, ON BEHALF OF THE NATIONAL MULTIFAMILY HOUSING COUNCIL,
THE NATIONAL APARTMENT ASSOCIATION, AND THE REAL ESTATE
TECHNOLOGY AND TRANSFORMATION CENTER
Ms. Smith. Chair Hill, Ranking Member Waters, and members
of the committee, my name is Julie Smith. I am the chief
administrative officer of the Bozzuto Group. Founded in 1988,
Bozzuto develops, builds, and operates over 130,000 apartments
nationwide.
This morning, I am here on behalf of the 95,000 members of
the National Multifamily Housing Council, the National
Apartment Association, and the Real Estate Technology and
Transformation Center.
Today, policymakers, housers, and, most critically, the
residents we serve agree on two things: One, we do not have
enough housing; and two, now is the time to address our
Nation's housing crisis.
We are grateful for today's hearing, and we hope it will
result in further consideration of legislation focused on
stimulating housing supply.
Our goal is to ensure that apartment providers can meet the
long-term housing needs of the 40 million Americans who
identify as renters. It is time to take meaningful steps to
ensure that everyone can have a safe and decent place to call
home at a price they can afford.
Regrettably, the current economic and regulatory
environment makes building incredibly difficult, and that is
unlikely to change without action that makes production more
economically viable. CoStar reports that multifamily starts
were down 32 percent year over year in the third quarter of
2025.
On the economic front, continued instability poses a
serious threat to our ability to leverage private capital
markets necessary to finance new housing. Elevated interest
rates have served to drive up the cost of building new housing
and, additionally, operating expenses have risen by an average
of 5.1 percent annually over the last 5 years.
The regulatory burden is also inhibiting housing
production. Many regulations go far beyond ensuring the health
and well-being of the public, and regulations imposed by all
levels of government account for an average of 40.6 percent of
multifamily development costs.
There is a clear path to solving this challenge. Rental
housing providers stand ready to help and we ask Congress to
prioritize and support pro-housing policies that will, in turn,
ensure greater housing stability and affordability for renters
of all income levels.
Congress took a strong step earlier this year by
substantially enhancing the Low-Income Housing Tax Credit, but
there is more to do. Several bills within the committee's
jurisdiction would be particularly impactful in boosting
housing supply and affordability, and while a full list is
included in my written statement, I would like to highlight
three.
Representatives Flood and Cleaver have introduced the HOME
Reform Act of 2025 to make it easier and faster to build
affordable housing. The bill would expand who qualifies for
home assistance, allow funds to be used for infrastructure, and
streamline the National Environmental Policy Act and ``Build
America, Buy America'' requirements.
The National Multifamily Housing Council (NMHC) is also
advocating for the bill to let communities use HOME dollars for
tax abatements and for studies that help remove local barriers
to building and preserving housing.
Representatives Flood and Pettersen have introduced
bipartisan legislation through the Identifying Regulatory
Barriers to Housing Supply Act, aimed at reducing
discriminatory land-use rules that restrict housing production.
The bill would require Community Development Block Grant
(CDBG) recipients to regularly report how they are addressing
these barriers and advancing inclusive affordable housing. This
added transparency is intended to encourage better, more
equitable local development practices.
Three, legislation introduced by Representatives Loudermilk
and Gonzalez through their Respect State Housing Laws Act would
strike the Coronavirus Aid, Relief, and Economic Security
(CARES) Act's 30-day-notice-to-vacate requirement and return
eviction policies back to the State and local levels, where
they are more effectively administered.
I would also like to address three other areas where the
committee has a role to play.
One, while we have seen stabilization in the property
insurance market this year, rates remain at historic highs
after 27 consecutive quarters of rate hikes over the past 7
years and while insurance is generally State-regulated, we
encourage Congress to provide long-term reauthorization of the
National Flood Insurance Program and the Terrorism Risk
Insurance Act of 2002.
Two, capital is the lifeblood of the multifamily industry.
It is critical that policymakers continue to support Fannie Mae
and Freddie Mac, which play a vital role in financial housing.
Policymakers must maintain the liquidity they provide and
retain at least an implicit guarantee; otherwise, there is
significant risk that borrowing costs will increase.
Finally, emerging technologies are helping providers
improve affordability, enhance resident experiences, and
modernize operations. These innovations are governed by robust
existing laws and consumer protections ensuring responsible
use.
Thank you. I look forward to answering the committee's
questions.
[The prepared statement of Ms. Smith follows:]
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Chairman Hill. Thank you very much.
Mr. Peter, you are now recognized for 5 minutes for your
oral presentation.
STATEMENT OF TOBIAS PETER, SENIOR FELLOW AND CO-DIRECTOR,
AMERICAN ENTERPRISE INSTITUTE HOUSING CENTER
Mr. Peter. Chair Hill, Ranking Member Waters, members of
the committee, thank you for the opportunity to testify today.
Housing and affordability are real and worsening. Home
prices have been rising faster than incomes for years. Low-
income households and today's first-time homebuyers now face
record-high prices and much high interest rates, leaving many
stuck renting instead of climbing the first rung of the housing
ladder. This is stunting family formation and economic growth.
The causes are straightforward. Zoning rules often mandate
large lots, banning multiple homes on a parcel and putting more
land off limits, while regulations at every level of government
add cost and adds complexity. In short, buildable land has
become scarce and homebuilding expensive. As a result, we now
face a nationwide shortage of several million homes.
The good news is that the problem is fixable with the right
policies, but we must focus on solutions that truly move the
needle, while avoiding costly unintended consequences.
The answer is to build more homes on smaller lots because
land costs are costly, smaller lots mean smaller and more
attainable homes, reducing costs and increasing the supply of
family size starter homes.
Consider that, since 2000, the country has built about 12
million single-family homes in subdivisions. Had we built them
on slightly smaller lots instead, we could have roughly 9
million more homes today, and those homes would be priced about
15 to 20 percent lower.
Smaller lots are essential to improving housing supply and
affordability.
Zoning and land use that determine these outcomes are
fundamentally State and local responsibilities, but many States
have already begun to address these issues by changing minimum
lot sizes, legalizing townhomes, and allowing homes to be built
where jobs are.
I applaud Congress and the sponsors of the ROAD to Housing
Act of 2025 for recognizing the urgency of housing
affordability and for including some useful elements, such as
that target at National Environmental Policy Act (NEPA) and
manufactured housing reforms.
However, ROAD is too Federal, too subsidy-driven, and too
apartment-centric. Instead, we need a greater focus on family
size starter homes. ROAD also risks pushing the Federal
Government deeper into State and local zoning decisions.
Washington should not override or micromanage these reforms
that are already underway in many States.
At the same time, the Federal Government does have powerful
levers, several of which are squarely within this committee's
jurisdiction, that can support, accelerate, and reward States
and local reforms which have unintended consequences.
First, to spur new home construction, HUD should offer a
bounty for States when they plat smaller lots, paying for
results when they achieve this plain and simple goal. This
would give States a strong incentive to reform while allowing
them flexibility in how to use these funds.
HUD should also expand the supply of starter homes by
adopting targeted FHA mortgage insurance pricing reductions
tied to modestly sized new homes. These efforts should be
funded from already-existing HUD grants and programs.
This committee can also help by accelerating efforts to
sell underutilized Federal land.
Second, the committee can help unlock existing homes. HUD
should phase out FHA's home retention options, partial claims
in particular, which have ballooned to over 1 million borrowers
today. Many of these borrowers could sell and walk away with an
average of over $100,000 in cash while reducing risk to
taxpayers and freeing up much-needed homes.
Beyond this committee's direct jurisdiction, Congress can
further unlock existing homes through targeted tax changes, and
I highlight several of them in my written testimony.
Third, Congress must avoid counterproductive approaches, so
we do not repeat the mistakes of the past. Federal involvement
in State and local zoning decisions, as proposed in several
ROAD Act provisions, is counterproductive. It risks poisoning
the bipartisan momentum underway in many States and pushing
policy toward subsidy-driven, government-centric solutions that
crowd out private and smaller builders.
Also, before expanding Federal housing programs, HUD should
conduct a full audit of existing subsidies, so we understand
what we are getting for the more than $100 billion a year we
spend across HUD, Treasury, and USDA.
We should also resist demand-side gimmicks. We cannot fix a
supply side problem by focusing on the demand side. We will
only bid up the prices of the same limited number of homes.
In conclusion, each level of government should focus on
what is properly within its purview to expand supply. The
``Strong Foundations'' playbook released by the AEI Housing
Center and the U.S. Chamber of Congress provide practical,
customized paths to affordability for over 6,000 jurisdictions.
Across the Nation, by focusing on just four key plays, we could
add more than 1.6 million additional homes a year without new
subsidies or Federal micromanagement.
Over 30 of our case studies show that builders can overcome
labor shortages and high interest rates, but they cannot
overcome restrictive government regulations. If we legalize
homebuilding by allowing more smaller lots, builders will
deliver the attainable homes American families need.
Thank you.
[The prepared statement of Mr. Peter follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Thank you so much.
Ms. Bailey, you are now recognized for 5 minutes for your
oral remarks.
STATEMENT OF NIKITRA BAILEY, EXECUTIVE VICE PRESIDENT, NATIONAL
FAIR HOUSING ALLIANCE
Ms. Bailey. Chair Hill, Ranking Member Waters, and other
distinguished members of the United States Committee on
Financial Services, thank you for the opportunity to testify
during today's hearing.
I am Nikitra Bailey, executive vice president of the
National Fair Housing Alliance (NFHA). NFHA leads the fair-
housing movement by working to eliminate housing discrimination
and ensure equitable housing opportunities for all people and
communities. NFHA also represents over 200 community-based,
nonprofit fair-housing agencies throughout the Nation.
Our Nation is in the throes of a fair and affordable
housing crisis, and it is impacting millions of people. The
actions of the current administration have caused chaos, fear,
insecurity, dysfunction, and rising prices around the country.
Instead of providing everyday people with practical
solutions to the housing crisis, the Trump Administration is
removing rungs on the ladders of opportunity for essential
workers, including police, teachers, firefighters, and others
who dedicate their lives to serving their communities.
The administration's haphazard executive actions are
causing serious economic and personal injuries that will
undermine our already-fragile housing market and, ultimately,
our Nation.
Housing is fundamental to the American Dream, and voters
want elected leaders to quickly implement solutions to ensure
they can fairly access opportunity and share in our Nation's
prosperity.
People are seeking solutions that will drive down the
skyrocketing cost of housing and provide fair market rents,
expand fair access to mortgage credit in underserved
communities, reduce homeowners' insurance costs, and produce
the development of millions of desperately needed affordable
housing units.
The Trump Administration's actions are leaving people
seeking housing free of discrimination unprotected, including
disabled veterans, seniors, people with disabilities, families
with children, survivors of domestic violence, and more.
Congress established fair housing as a national policy of
the United States with the passage of the Fair Housing Act of
1968 after the horrific assassination of Dr. Martin Luther
King, Jr. Yet, the Trump Administration is dismantling our
Nation's fair housing and fair lending infrastructure and
making it costlier for everyday people to afford the American
Dream despite demands for affordability.
The administration has failed to live up to its pledge to
make housing cheaper and increase access to home ownership.
Prior to the start of the administration, home ownership
was on an upward trajectory for all communities. The Black
homeownership rate grew 14 percent. The Asian American and
Pacific Islander homeownership rate grew nearly 9 percent. The
Latino homeownership rate grew nearly 5 percent, and White home
ownership was up by 1.57 percent and those are homeownership
rates.
This momentum is being reversed. The United States
Department of Housing and Urban Development rolled back
critical fair housing rules, eviscerated the Office of Fair
Housing and Equal Opportunity, closed field offices, and fired
whistleblowers. It is leaving renters everywhere vulnerable to
discrimination, at a time when renters already face soaring
rents and nowhere to go.
The Federal Housing Finance Agency has abandoned special-
purpose credit programs that have provided $82 million in
reduced costs to nearly 60,000 borrowers of all races and
helped lenders circumvent systemic barriers that limit fair
credit access for people of color.
The Consumer Financial Protection Bureau issued a proposal
to gut a 50-year-old fair lending rule that ensures that women
can get a loan without needing a male cosponsor.
The actions are injecting unnecessary risk, locking out the
people that the health of the housing system depends on and
over the next 10 years, all future net household growth will be
from households of color. If they are locked out of the housing
finance system, the system will fail.
The Fair Housing Act provides the blueprint to increasing
our Nation's supply of affordable housing. It is key to
reforming exclusionary zoning that locks out renters, low-
income people, and people of color from certain neighborhoods.
It can drive inclusionary practices that permit entry-level
homeownership opportunities and missing middle housing,
including condominiums and triplexes, quadplexes, and accessory
dwelling units.
Fair housing laws improve people's lives. They also improve
neighborhoods block by block. These vital protections also
strengthen our economy and make the Nation more prosperous.
Now is the time for Congress to increase its oversight of
the administration's actions so that more people in America do
not end up homeless.
Congress must also pass comprehensive legislation with
supply side and demand-side solutions like the ranking member's
Housing Crisis Response Act and other measures to ensure that
the housing needs of people living in rural, urban, and
suburban communities are met. Only an all-of-the-above strategy
can truly tackle the crisis.
Thank you, and I look forward to answering your questions.
[The prepared statement of Ms. Bailey follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Thank you so much.
We appreciate our panel's contributions to our hearing
today.
We will now turn to member questions. I recognize myself
for 5 minutes for questioning.
Across our country, families, as we have both, the ranking
member and I, have noted and you have noted, our families are
facing housing costs that have really climbed out of reach.
I outlined several of the macro reasons I believe that cost
per square foot has gone up, and now they are confronted with
higher financing costs as a result of the inflation I talked
about but, also, government subsidies originally intended to
support households have ended up helping prices rise faster
than wages, while outdated and duplicative regulations,
particularly at our State and local areas, have slowed
development and created a bottleneck that actively prevents
homes we need from getting built.
We got to do better, and I believe we can do better and I
am committed to working with my colleagues across the aisle to
advance these kinds of meaningful reforms that result in
increasing supply and responsibly restore more attainable
housing results in our communities.
Mr. Sears, you have your experience, your whole career in
realty, so you know people at all price points in Springfield,
and there is a supply gap in many communities. What does the
data tell us about why this gap persists and how that is
impacting existing inventories and home purchases?
Mr. Sears. Thank you, Chairman Hill.
You asked two parts to the question: The lack in existing
inventory, I can boil it down to three very specific reasons.
As I mentioned in my oral testimony, we have underbuilt
significantly over the last decade and a half since coming out
of the Great Recession. We also face significant regulatory and
zoning barriers at the local and State level as well as a
little bit at the Federal level but, also, higher interest
rates, the construction costs, delays that can be impacting
builders has also driven up costs, because there is a time
value to money, and so when it takes longer, it is going to
cost more.
You also asked about home purchasing, and you said
something very significant. I purchased my first home in 1996
as a 24-year-old. I paid $83,000 for it. Yesterday, I received
a text from my 25-year-old son, who is looking to buy a home in
the Boston area, a starter home. The price? $850,000. Ten times
as much, in 30 years.
What has happened in 30 years? A lot has happened, but
there has also been some stagnation.
Over 30 years ago, I was a college athlete, a Division I
athlete. I will not have you guess the sport, but I am going to
tell you, I was a diver and what did I do with that skill set?
In the summertime, I worked at a small amusement park,
Riverside Park.
Chairman Hill. Yes.
Mr. Sears. So that was Six Flags New England. I worked in
the stunt and high-dive show. I used to do high dives from 75
feet, get lit on fire, and got paid for it.
I do not do that anymore. A lot has changed in 30 years,
but what has not changed in 30 years is the fact that the
capital-gains exclusion has remained stagnant at $250,000 for a
single person, $500,000 for a married couple. It was not
indexed for inflation.
We have significantly underbuilt, as we said.
Chairman Hill. Thank you----
Mr. Sears. You probably wonder why I talked about my diving
career, because I used to get lit on fire and paid for it, as I
said. What I can tell you is that taught me, getting lit on
fire--you can never quite prepare yourself for the first time
you get lit on fire, but what it taught me is not to panic.
Athletics is a great training ground----
Chairman Hill. Thank you, sir.
Mr. Sears [continuing]. for business, and I was able to
help people solve these problems, but I have a great concern
for my children, your children, my grandchildren, who might
panic, and their inability to be able to purchase a home.
Chairman Hill. Thank you, Mr. Sears. Appreciate that and
your views.
Mr. Peter, both in Ms. Smith's testimony--she talked about
40-percent-plus cost per unit comes from, essentially, rules,
regulations, local zoning, land-use restrictions and you talked
about that Federal policies spending too much time focusing on
subsidizing demand instead of focusing on these supply
constraints. I agree, and we all understand that is kind of how
the system is built here but you talked about accelerating
local competition and local change.
Can you name who you think is doing an outstanding job of,
as you say, putting--if you have a traditional 50-foot lot
maybe doing a fourplex instead of a single-family? Talk to me
about who you think is doing a good job on that.
Mr. Peter. Yes. So we have done over 30 case studies where
we have studied these examples and Texas just recently passed a
bill, SB 15, where they are allowing in new residential
subdivisions smaller lot sizes of 3,000 square feet. So that is
number one.
Number two, another example is Seattle. So Seattle in 1994
allowed single-family, detached homes to be torn down and
replaced with townhomes on the same parcels. So, over the last
20 and 30 years, they have torn down 5,000 single-family,
detached homes and not replaced them with opulent McMansions,
but they replaced them with four, five, six townhomes in the
same parcel. As a result, because they have built more
housing----
Chairman Hill. Thank you.
Mr. Peter [continuing]. the housing has been lower-priced.
Chairman Hill. I hope all of you will respond in writing
with good examples of how that is working around the country.
Chairman Hill. With that, let me recognize the ranking
member, Ms. Waters, for 5 minutes of questioning.
Ms. Waters. Thank you. I wish I had 5 days for questions. I
tell you----
Chairman Hill. Yes.
Ms. Waters [continuing]. this is so exciting. You know, I
am hearing testimony from witnesses brought here by
Representatives on the opposite side of the aisle that I have
never heard before.
Ms. Bailey, if local governments--today's hearing will
consider my draft bill that would require local governments to
keep a public, searchable database of undeveloped land that
they own.
For far too long, communities have been left in the dark
while public land sits unused. We should be putting that land
to use. Without a clear accounting, local officials,
developers, and the public are missing key opportunities to
plan and build, and the housing advocates should not have to
waste precious time trying to track down available housing
locations that are right in front of them.
Ms. Bailey, if local governments that receive CDBG funds
maintained these land databases, what specific opportunities
could be unlocked for affordable housing production and what do
we lose when this information is scattered, outdated, or never
collected at all?
Ms. Bailey. Thank you so much for the question.
It provides the opportunity to provide workforce housing so
that we can ensure that teachers and police and firefighters
can actually live in the communities where they work.
Oftentimes, local jurisdictions have a preference for
single-family development, so we can see the development of
quadplexes, we can see the development of triplexes, and we can
see your legislation really solve the Nation's fair and
affordable housing crisis and be a key solution as part of a
broader package.
Your tremendous leadership on the Housing Crisis Response
Act--$150 billion to address the Nation's fair and affordable
housing crisis--would be complemented by that legislation, and
they should move forward together.
Ms. Waters. Thank you very much.
Now to Mr. Sears, Ms. Smith, and Ms. Bailey.
I appreciate our Senate colleagues who have introduced the
bipartisan ROAD to Housing package to begin to address our
Nation's affordable housing crisis. Of course, I urge my
Republican colleagues to help us include it in NDAA and quickly
pass it into law, but I believe Congress must do much, much
more if we are serious about solving this crisis for the
American people. For decades, HUD programs have chronically
been underfunded and forced to make do with limited resources.
When I was chair of this committee, I introduced the
Housing Crisis Response Act, along with my Ending Homelessness
Act and the Downpayment Toward Equity Act. This package
represents the single-largest, most comprehensive investment in
affordable housing in history.
So let me ask you directly. In addition to the ROAD to
Housing bill, can we address the affordable housing crisis
comprehensively without substantial injection of Federal
funding?
Mr. Sears, you first.
Mr. Sears. Ranking Member Waters, thank you very much for
the question.
We, the National Association of Realtors, support your
bill. Obviously, what it would do is help to cut red tape and
allow us to build more homes, which would open doors to home
ownership for many more people.
You know, affordability is a key issue, and the housing
supply is part of that. So we support any innovation that could
be--that comes through this bill in order to help Americans get
into home ownership.
Ms. Waters. Okay.
I guess I am back to Ms. Bailey.
According to the Bloom---well, did anyone else want to
respond to that, about funding?
Ms. Bailey. Sure, ma'am. If I could chime in here.
Ms. Waters. Yes.
Ms. Bailey. You are absolutely correct that we need a full
and comprehensive package.
If this Congress would follow your leadership--this
committee already passed meaningful legislation, originally the
Build Back Better Act, which is now the Housing Crisis Response
Act. You have put together a very comprehensive package, $150
billion, that will help prevent homelessness, that will provide
the type of support to subsidized renders who need it today and
increase the Housing Choice Voucher Program.
You have done intentional things to really solve our
Nation's fair and affordable housing crisis and everything that
you have proposed today will really help us ensure that we do
not see additional families end up in homelessness.
Ms. Waters. Thank you very much.
I only have a few minutes left, and I just want to say how
important it is for all of you to be here today. When we talk
about what is going on in this country--and we are certainly
talking about healthcare and Medicaid and all of that--housing
is the number one crisis in the country, and we need to do
something substantial about it. Thank you for being here.
Chairman Hill. The ranking member yields back.
I now recognize the gentleman from Texas, Mr. Sessions,
chair of our Oversight Committee. He is now recognized for 5
minutes.
Mr. Sessions. Mr. Chairman, thank you very much.
I really appreciate you having this hearing today. I think
both you and Ranking Member Waters agree we have a problem. So
the question is, what does this committee do to help us focus
on that problem?
As a regular part of the National Association of Realtors,
when they visit me, this is the conversation. When the
homebuilders visit me, this is part of the conversation.
I think it has gone away from the problems that we had with
supply chain to actual rules and regulations, as Mr. Sears has
talked about, is the problem. Certainly, if you look at
industry data, it says that government regulations add nearly
$94,000 to the price of a new single-family home.
Being from Waco, Texas, I will remember, a few years ago,
with cities that were struggling to add tax on top of what was
required for them to prepare for new homes--roads, bridges,
infrastructure, water pipes, and all these things.
I think that this panel has brought a country viewpoint of
this, as opposed to just my viewpoint in Texas, where we have a
huge housing problem and one that has been talked about--
certainly, Mr. Peter talked about--it is across the country.
I think we ought to focus on getting more investment money
into the pot and I do not think that is Federal money. I think
that is looking at streamlining--and I have talked to Secretary
Turner about this--streamlining the housing authorities,
instead of them holding the bulk of the money and them building
buildings and them controlling the circumstances.
I think HUD should look at the rules and regulations about
rebuilding, and what the rules are related to replacing
existing housing. I tried to do this with Secretary Fudge to no
advantage 3 years ago, when we suffered taking away current
housing to build new housing rather than adding to that
availability.
Mr. Sears, please tell us, what do you believe is the
number one thing this committee should do on a bipartisan basis
to stop the problems that we have with government regulations,
whether they be Federal Government, State, or city government?
Mr. Sears. Mr. Sessions, thank you. You nailed it on the
head. When it costs $100,000, approximately, before the shovel
gets in the dirt, that is a significant issue, and it leads to
the affordability crisis.
The way that I believe this committee and Congress can help
is by helping incentivizing localities, States, to streamline
the red tape, their zoning. If there is anything you can do
with funding, help with infrastructure costs.
One of the things--and you touched on this. Investors are a
little reticent when there is a lot of red tape. They need
certainty that projects are going to be approved and that the
shovel is going to get in the ground to produce the housing.
So anything we can do to help with those issues would be
welcomed by the National Association of Realtors and my 1.5
million Realtor members.
Mr. Sessions. In Texas, Mr. Sears--and I am sure Ms. Smith
knows this--in Texas, there is this huge pent-up demand for
housing. When interest rates that President Trump is attempting
to get the Fed to lower--when interest rates fall to a level
that they need to be, not are but should be, it is going to
create--I think could create an investment opportunity to
where, if we do our job here to support Chairman Hill, then
that means that the investment community will come in and spend
that money with streamlined opportunity for them.
I think it is off of a deal that you and the homebuilders
understand better than I, but an opportunity to control that
property, make it available today, streamline the red tape, and
get people their housing today without the Federal Government
or a housing authority getting in the way of that opportunity.
Ms. Smith, please tell me more about what you think we
ought to be doing.
Ms. Smith. Thank you for the question.
There are a lot of, sort of, proven strategies that have
worked. I was talking with a developer who is working on a
project in DC, right here where we are, last night, and DC has
put together a lot of incentives to----
Chairman Hill. Ms. Smith, I am going to ask you to respond
in writing, if I might.
Mr. Sessions. Mr. Chairman, thank you very much. I think
that the opportunity for us to see this in writing will enable
us to approach this on a bipartisan basis.
Mr. Chairman, I thank you for the time.
Chairman Hill. Thank you, Mr. Sessions.
Now the gentlewoman from New York, Ms. Velazquez, the
ranking member of our House Small Business Committee, you are
recognized for 5 minutes.
Ms. Velazquez. Thank you, Mr. Chairman.
So I heard from the other side that the Biden-era interest
rate is responsible for the--one of the roadblocks to housing
supply. Then I heard $60 billion in regulations.
I would like to add, $30 billion--and that is, the Trump
tariffs. According to Brookings, is adding $30 billion to the
cost of construction of residential homes, including
multifamily. I did not hear any of the members of the panel
mention or discuss the impact that tariffs are having on the
construction of housing.
Ms. Smith, one of the issues that multifamily property
owners in my district are currently struggling with is the
rising cost of insurance premiums, whether they be for general
liability insurance or for a specific peril.
For example, a HUD Section 236 property in my district was
recently forced to increase rents by 6 percent in part because
of these premium increases.
As insurance premiums continue to rise, more and more
property owners are questioning the financial feasibility of
participating in HUD's programs.
First, is this a problem HUD multifamily property operators
have expressed to you? Second, what steps do you think this
committee should take to reduce premiums and increase coverage
specifically for HUD-backed property owners?
Ms. Smith. We could spend a whole lot of time talking about
insurance. You are absolutely right, insurance has become so,
so expensive. Just to illustrate that, I can remember a time
not too long ago when you might spend $300 on insurance per
unit, and today it might be $1,300 per unit.
So the availability of insurance and the cost of insurance
have been extremely high. So anything that the government could
do to ensure or even subsidize the insurance on properties
would be very helpful, but it has become a very large part of
the operating-expense calculation.
Ms. Velazquez. Thank you.
Mr. Sears, can you speak to the high cost of insurance,
whether it be homeowners' insurance or insurance for a specific
peril like fire or flood, acting as a barrier to home
ownership?
Mr. Sears. Certainly, Ms. Velazquez.
We have seen over the last 5 years--me personally, I have
seen my own insurance double in cost. On the rental properties
I own, It has more than doubled. We cannot pass along those
increases to the tenants. We just cannot. So mom-and-pop
landlords are really feeling the pinch and when insurance costs
for homeowners equals or exceeds the cost of their mortgage, we
know there is a fundamental problem.
Ms. Velazquez. So, given the constraints of McCarran-
Ferguson, what steps can we here on the Federal level take to
reduce those premium costs in order to increase home ownership?
Mr. Sears. Seeing as insurance is regulated at the State
level, what I believe the Federal Government could do is offer
incentives, grants, low-interest loans for homeowners to
reinforce their homes, strengthen their homes, and harden their
homes against natural disasters. With this being done, interest
rates--I am sorry--insurance rates should decline.
Ms. Velazquez. Okay.
Well, Mr. Chairman, I have been a longtime supporter of our
State-based system of insurance, but when it comes to HUD-
backed multifamily properties, I think we need to do more here
at the Federal level to regulate the cost of insurance.
The Federal Government has a vested financial interest in
these properties and if the insurance premiums become too
costly for landlords or, worse, if insurance becomes
unavailable, we will lose our affordable housing stock. So I
think that we need to look into that. Otherwise, we are going
to be here again and again and again discussing this very same
issue.
Thank you. I yield back.
Chairman Hill. I thank the gentlewoman. She yields back.
I now recognize the gentlewoman from Missouri, Ann Wagner,
the chair of our Capital Market Subcommittee.
Ann, you are recognized for 5 minutes.
Mrs. Wagner. Thank you, Mr. Chairman.
Welcome, witnesses.
Earlier this year, the National Association of Realtors, or
NAR, released its ``Housing Affordability and Supply'' report,
which found that, while housing inventory is increasing,
middle-income buyers are still having difficulty finding
affordable homes.
This difficulty was especially pronounced for prospective
homebuyers making less than $75,000, who, according to this
report, have seen little to no benefit from rising supply.
In 2024, the St. Louis Federal Reserve reported that the
median household income in Missouri was $78,390, just over the
threshold where affordable housing becomes nearly inaccessible.
In fact, in the St. Louis metro area, NAR found that over 2,500
more affordable listings would be needed to meet demand for
households making $75,000 or less.
Mr. Sears, as former president of NAR, you are aware that
our housing supply problem is not just about building more
housing; it is about building the right kind of housing that
would give millions of Americans the opportunity to own their
own home, a slice of the American Dream.
One issue that we have heard is that capital is
increasingly flowing toward refurbishing existing housing stock
rather than new construction. What incentives could redirect
private investment toward the construction of new homes?
Mr. Sears. In the last 5 years, construction costs have
increased anywhere between 8 and 77 percent. So, what can we do
to help with that?
The other thing is what I talked about earlier: Before a
shovel goes in the ground, the red tape and regulations--
approximately $100,000 in red tape costs, and for a single-
family resident--that is about 25 percent of the cost; for
multifamily units, it is about 40 percent of the cost.
What we need to be able to do is, with the median price of
a home across country around $400,000, the typical buyer would
need six figures, $100,000, to afford that. So, based on the
statistics you are citing, that means it is not affordable.
When builders' costs are increasing--red tape causes
delays--they are going to focus more on high-end homes, where
the profit margin is greater and they can absorb those costs.
We need to incentivize them to build the starter homes and the
missing middle--the townhomes, the duplexes.
Mrs. Wagner. As I said to the extent that you can give us
some ideas that either do legislatively or otherwise to somehow
redirect private investment toward construction of new homes
that are the right kind for that middle-income buyer, it would
be great.
Again, Mr. Peter, let me ask you this. Middle-income
homebuyers often fall through the cracks, making too much to
qualify for assistance but also not making enough to compete in
a hypercompetitive housing market. What reforms could expand
attainable home ownership for middle-income buyers?
Mr. Peter. Excellent question. Small lots. The answer is
very simple: smaller lot sizes.
HUD could incentivize States by bribing them, by offering a
bounty to plat smaller lots, below 5,000 square feet, or even
lower, townhomes below 2,000 square feet.
If you have smaller lots, you are going to be--the land is
costly, but then also you are going to build commensurately
smaller homes. If you are building smaller homes, the cost goes
down.
Typically--and we found this across the whole country--if
you are building on smaller lots, the price points drop by
about 20 percent or more.
Mrs. Wagner. Thank you very, very much. I appreciate that.
We need to take that under advisement here.
For many families, home ownership remains the most reliable
path toward wealth-building and long-term financial stability;
let us just all be honest. Unfortunately, what has long been a
core tenet of the American Dream has become harder for younger
Americans to achieve, as recent data shows that the average
first-time homebuyer is now 40 years old.
Mr. Sears, what role can Federal credit and lending policy
play in helping responsible builders deliver more entry-level
homes, like we just spoke about with Mr. Peter, for first-time
buyers?
Mr. Sears. As I mentioned with my own son, this is an
issue, when we have seen the average age of a median homebuyer
up to 40.
What can we do? Can we offer programs with downpayment
assistance? Are there low-interest loans that we can give for
these first-time homebuyers? Can we add incentives for mom-and-
pop landlords, who might have some units that they would like
to sell but are afraid of paying the capital-gains tax, and
incentivize them to sell them to first-time homebuyers?
There are multiple different solutions, different ways to--
--
Mrs. Wagner. My time is expired. Thank you, Mr. Sears. Any
other ideas, please submit in writing.
Mr. Chairman, I yield back.
Chairman Hill. The gentlewoman yields back, and we
recognize--the chair recognizes the gentleman from California,
Mr. Sherman, ranking member of our Capital Market Subcommittee.
You are recognized for 5 minutes.
Mr. Sherman. Mr. Chairman, thank you for holding this
important hearing. In fact, I think housing is so important
that perhaps the name of this committee should be financial
services and housing. Housing today is built very similar to
the way that it was built 50 and 100 years ago. There is
nothing or very few things in our society for which that is
true. We face Not In My Back Yardism (NIMBYism). We need to
have higher density where there is transit, and we need to have
transit where there is density. Density without transit is a
parking--is a parking disaster, but it is especially a traffic
jam, and transit without some density is a bunch of unused
transit.
I hope that I can find one or two members here to work with
me on a bill to require insurance companies to identify what
resiliency improvements will result in lower cost insurance.
Right now, too many insurance companies, they just pick a ZIP
code, they pick a rate. They should be looking at the
individual property because it is their job not just to write a
check but to be of assistance so that we do not--to make our
properties more resilient. There are a host of small things we
can do one at a time. The Appraisal Industry Improvement Act,
the Yes in My Backyard Act, and the Supply Act so that you can
finance additional auxiliary dwelling units, and I believe, Mr.
Sears, you mentioned the importance of changing our tax laws. I
used to be an estate planning attorney. I understand well how
many of my former colleagues are telling people, ``Boomers, you
got to stay in the big house until you die or at least until
one of you dies,'' We adopted last century a $250,000 exclusion
on the sale of property, and we have not changed it since last
century. So it was either bad policy then or it is bad policy
now, because it is very different policy.
We--I want to build homes a built differently and focus on
manufactured housing. The Manufactured Housing Standards Act
would clarify that only HUD has the authority to establish
energy efficiency standards, and the Housing Supply Expansion
Act would eliminate the outdated permanent chassis requirement.
Mr. Sears, is manufactured housing a way to go to be able
to build these units more efficiently and at lower cost?
Mr. Sears. Mr. Sherman, great seeing you again. Thank you
for what you had to say because we, as the realtors, support a
lot of the bills and acts that you mentioned. As I mentioned
you talk about the modular housing. Nineteen Seventy-Four was a
long time ago, and we have seen a lot of technological advances
since then, and so I think reforming that act for these types
of housing is more efficient to build; it can be done quicker;
and it will cost less. So anything we can do to encourage that
we are for.
Mr. Sherman. Is there any purpose to requiring a fixed
chassis?
Mr. Sears. I am not an engineer. I am sorry.
Mr. Sherman. I think it is just there to be there from,
again, last century.
Tariffs on building materials is something Ms. Velazquez
brought up. I had the opportunity to confront the President
face-to-face and in public on this. He promised he would at
least consider exempting building materials, at least those
that would be used in the Palisades where we have to rebuild a
town, from tariffs on building materials. Labor is already
subject to a 14 and a half percent tariff. Now Trump wants to
add another 39 percent.
Mr. Sears, what do tariffs on building materials do to
housing availability and costs?
Mr. Sears. Representative, tariffs are a 2025 issue. We
have seen construction costs escalating almost unchecked and
uncontrolled in the last 5 years, and so the lack of supply
during the coronavirus disease (COVID) certainly has hurt and
impacted the cost of construction.
Mr. Sherman. Mr. Peter, studies indicate that 24 percent of
the costs of a single-family home, 40 percent of multifamily
home is the result of regulatory costs. What regulations are
most burdensome and add most to the cost?
Mr. Peter. I mean, for that I would have to--I would have
to direct you to the national association of real--builders--
homebuilders, who have the--who have compiled----
Chairman Hill. Thank you, Mr. Peter. I appreciate Mr.
Sherman's good question, and I hope you will respond and share
that index and the components of it with the full committee.
The chair now recognizes the gentleman from Kentucky, Mr.
Barr, who chairs our Financial Institution Subcommittee. You
are recognized for 5 minutes.
Mr. Barr. Thank you, Mr. Chairman. That is a good segue
because my first question is for Mr. Sears, and it is about
bank regulation.
Banks and credit unions play a critical role in providing
access to affordable home ownership. In the aftermath of the
2008 financial crisis, regulatory burdens like Dodd-Frank
disproportionately hammered these institutions, especially
community banks and credit unions that are often the primary
lenders for first-time homebuyers, low to middle income
families, and local developers. You talk about the American
Dream going away. We want the American Dream. We want that
American Dream for home ownership, and we need lenders to
create that American Dream.
In testimony to this committee yesterday, Federal Reserve
Vice Chair for Supervision Michelle Bowman noted that, quote,
the capital treatment of mortgages and mortgage servicing
assets has resulted in banks reducing their participation in
this important lending activity, potentially curtailing access
to mortgage credit.
Mr. Sears, given your understanding of the mortgage market
and local housing dynamics, I would like your perspective on
whether reducing the regulatory burden on financial
institutions would have a positive impact on competition in the
mortgage lending market.
Mr. Sears. Thank you, Mr. Barr. Good to see you again.
Mr. Barr. Good to see you.
Mr. Sears. Anytime regulation can be streamlined, shrunk,
or eliminated I think is a good thing for the capital markets.
We have consumers right now that are struggling to find
financing and opening it up to more credit unions, local banks,
and the large national companies as well, gives a consumer
choice, which is a good thing.
Mr. Barr. Well, thank you, and this is especially important
regarding the regulatory capital requirements and the
finalization of Basel III endgame. We are going to be watching
the regulators to make sure that they improve on the previous
version of the proposal where we saw punitive treatment of
certain mortgages that would have reduced lending and access to
mortgage credit.
Let me ask you all about, and, Mr. Peter, I will direct
this at you, shared appreciation mortgages. This is an
innovation that I think we ought to really consider. The median
down payment for first-time buyers is 10 percent, the highest
recorded level since 1989. Clearly, Americans need innovative
solutions to finance a down payment, and one solution is a
shared appreciation mortgage. Now, what is this? It is a type
of home loan where the borrower agrees to give a lender or co-
investors a portion of the future appreciation of the home's
value in lieu of a said interest rate. Using a no-payment
shared appreciation mortgage as down payment assistance can
bridge the affordability gap and empower low income or working
class borrowers to qualify for and can afford a conforming
first mortgage.
I think we should incentivize private capital providers to
invest in these shared appreciation mortgages to encourage this
down payment assistance for new homebuyers. One way to do this
is to make the returns attributed to pools of shared
appreciation mortgages tax exempt. So this would be a tax
change outside of our committee's jurisdiction, but do you
agree that such a tax exemption that would encourage co-
investing and sharing in the appreciation of mortgages is that
a solution for affordability?
Mr. Peter. Yes, I think it is certainly a very innovative
idea, and I do not--I know enough about it to be dangerous, but
I do not know all the gory details, and to the extent that the
shared--these mortgages can be used to go along with shorter
loan terms, that would be very, very beneficial to borrowers,
because then they buildup equity much faster, and they have to
stay in power to stay in their homes even when home prices
decline.
Mr. Barr. There is an innovative startup called Homium that
I have become aware of and acquainted with, and they would use
blockchain technology to actually aggregate co-investment
capital to help with this down payment assistance and also
unlock home equity in ways that are less or more consumer
friendly than, say, a reverse mortgage. So I think we ought to
explore that.
Let me finally get to the 10 year. Mortgages 30 or fixed,
they are tied to the 10 year. It is not the Fed's fund rates.
It is the 10 year. So, for my friends across the aisle who
think we need to spend more money, more HUD money, more
spending, the national debt is driving the 10 year up. If you
want to--if you want to really achieve affordability on a 30-
year fixed rate mortgage, let us send a virtuous signal to the
bond market and start living within our means. Reduce the 10
year. That is going to improve housing affordability. Not
blowing up the bureaucracy and spending more money but living
within our means. Lower the 10 year. Can someone on the panel
talk a little bit about this, and how does the Fed's interest
rate policy and a rising 10-year treasury yield impact the
availability and affordability of mortgages, especially for
first time homebuyers?
Mr. Peter. Yes. We have seen it during the pandemic when
the Fed lowered interest rates and then slammed the brakes, and
now we have higher home prices, and people are dealing with
higher mortgages. It is unsustainable and people cannot afford
housing, but ultimately, the implicit guarantee is also
providing competition to the 10-year treasury----
Chairman Hill. Thank you very much, Mr. Peter.
Mr. Barr. I yield back.
Chairman Hill. The gentleman yields back. I recognize the
gentleman from Georgia, Mr. Scott. You are recognized for 5
minutes.
Mr. Scott. Thank you, Chairman.
Ladies and gentlemen, I want you to hear from me this
morning. For more than 50 years, our Fair Housing Act has stood
as a civil rights cornerstone meant to guarantee that where you
live is not determined by the color of your skin, your
disability, your family status, or your ZIP code but, under
this rule, under what President Trump and his HUD Secretary--we
are witnessing today a disturbing shift away from enforcement,
away from any real accountability, away from the core mission
of our distinguished HUD Department.
So, Ms. Bailey, let me come to you. One of the most
troubling acts is this rollback of HUD's Affirmative Furthering
Fair Housing rule. Please explain why this is the Achilles heel
of this legislation.
Ms. Bailey. Thank you so much for the question. The
Affirmatively Further and Fair Housing Act provision of the
Fair Housing Act simply requires that every dollar, Federal
dollar, used for housing and community development is used to
further fair housing, which is inclusive and thriving
communities that all of us can live in. This is not spending
money. This key piece of the Fair Housing Act can actually
reform local exclusionary zoning laws. In fact, many of our
home builder friends are using it in court to sue localities so
that they can build more affordable units there, and I am so
grateful for the question that we just had regarding the
Federal Reserve. We knew for a long time that the Federal
Reserve could not solve our Nation's housing crisis. During the
pandemic, the Federal Reserve pumped in over $300 billion on a
monthly basis into our housing market. Those funds were pumped
in a way that was exclusionary, Black, Latino, Asian American,
Pacific Islander, Native communities could not benefit from
those funds, and as a result, we had people who could have at
that time got in 2 percent interest rate mortgages, affordable
housing and, stayed home. They were locked out. So many of the
ways that our Fair Housing Act applies extend to the Federal
Reserve and, if Congress provided oversight over those funds
and made sure they were equitably distributed, part of the
challenges that we see now today would not be the result. So it
is very important that Congress continues to provide the
oversight that it provides.
Mr. Scott. Absolutely. Ladies and gentlemen, I represent
Gwinnett County and Clayton County, two of the very many, very
prosperous, very exciting counties in this Nation, but are
highly diversified in their populations. HUD's attack on this
fair housing rule will ensure that there is nothing to stop a
local jurisdiction from banning new apartment buildings near
our schools and near our parks.
Now, this is very serious legislation, and we have to
understand we are a Nation of many different types of people,
and we need to be careful in Congress to stop this mongering
but use our legislative abilities to pull our racial
populations together. I am at the forefront of that. I
represent, as I said, everybody in my district. I have even
Republican minorities in my district. So I want us to use this
legislation not to dismantle this vital civil rights measure.
Let us use that. There is a time here, in the words of that
great Apostle Paul, ``I say to you finally, put on the whole
garment of God,'' because we have to fight now in a difficult
time. Thank you, Mr. Chairman.
Chairman Hill. Thank you, Mr. Scott.
Another gentleman from Georgia, chair recognizes the
gentleman from Georgia, Mr. Loudermilk, for 5 minutes.
Mr. Loudermilk. Thank you, Mr. Chairman, and thanks
everyone on the panel. I have been looking forward to this
discussion for quite some time, especially about how Congress
can actively remove barriers to increase our housing supply.
One of the areas I have been focused on is the cost of onerous
government regulations and preventing the Federal Government
from encroaching in the areas which the States have
traditionally and constitutionally held that primary
jurisdiction.
Now, prior to the passage of the CARES Act in 2020, each
State had different notices to vacate requirements for rental
properties. While the Federal Government--Federal moratorium on
evictions imposed in the CARES Act expired, as they were in
intended to do, some activist attorneys have argued that
section 4024C pertaining to the Federal 30-day eviction notice
requirements remain in effect primarily due to an error in
drafting.
Despite the expiration of the public health emergency on
May 11, 2023, the Biden Administration extended this temporary
provision thusly nationalizing an eviction process historically
and constitutionally governed by the State and local laws.
Continuing the temporary CARES Act notice-to-vacate provision
bypasses Congress and undermines the clear intent that
provision be temporary.
Now, I have a bill, entitled the Respect for State Housing
Laws Act, that would strike this provision in the CARES Act
that was never intended to be permanent and would return
authority to--of notice to vacate back to the States where it
had been prior to the COVID-19 pandemic.
Mr. Chairman, I would like to insert for the record a
letter from the National Association of Residential Property
Managers in strong support of my bill.
Chairman Hill. Without objection.
[The information referred to can be found in the appendix
on page XX.]
Mr. Loudermilk. Thank you, Mr. Chairman.
It is important that Congress provides clarification here.
The inability to collect rent ultimately hurts the tens of
millions of Americans who work in the industry, renters and
communities across the country.
Mr. Sears, the Iowa Supreme Court unanimously ruled earlier
this year that the CARES Act's 30-day notice provision was
temporary and expired in 2020 alongside the Federal eviction
moratorium. From the National Association of Realtors'
perspective, how has the continued uncertainty around this
expired provision affected real estate markets and property
owners?
Mr. Sears. Thank you, Mr. Loudermilk. The National
Association of Realtors supports your legislation, and my
testimony is longer than what your actual bill is, but at the
end of the day, anytime these mom-and-pop landlords, who are
already, if they are taking someone to eviction, likely are
owed money, but the Federal Government imposing an extra loss
of rent for a month onto this, it can cause irreparable harm to
these small property owners, and that is what we are seeing. I
will just mention that, through the CARES Act the eviction
moratorium was struck down by the U.S. Supreme Court.
Mr. Loudermilk. What impact do you expect H.R. 1078 would
have on providing clarity on the housing market by formally
repealing this expired penalty?
Mr. Sears. It would give the States back the right to
oversee the eviction process, which is currently the way that
it should be.
Mr. Loudermilk. Thank you.
Ms. Smith, you represent organizations that manage millions
of multifamily rental units across the country. Can you explain
how the continued existence of this expired CARES Act provision
has created operational challenges for multifamily property
managers, particularly given that local courts may still be
interpreting the provision as active?
Ms. Smith. Well, I would agree. First of all, the National
Multifamily Housing Council and NAA are very supportive of your
bill, and I agree with Mr. Sears it would remove some of the
confusion. Eviction is always an act of last resort. It is the
last thing we want to do is to move someone out of their home,
and there are so many discussions that take place before that
actually happens. So adding that additional confusion of local
laws, which are very, very clear on evictions, would really
help, would make a big difference.
Mr. Loudermilk. So, based on your answer, this bill would
help clarify.
Ms. Smith. It would absolutely help clarify.
Mr. Loudermilk. Thank you. How would restoring these State
and local governments' eviction procedures impact the supply of
rental housing going forward?
Ms. Smith. In our experience, we evict very few people. It
might even be less than 1 percent a year. So I do not believe
that would have a significant impact on supply of rental
housing.
Mr. Loudermilk. Okay. Thank you.
Mr. Chairman, I yield back.
Chairman Hill. Thank the gentleman for yielding back.
The gentleman from Massachusetts, Mr. Lynch, who is the
ranking member of our Subcommittee on Digital Assets, Financial
Technology, and Artificial Intelligence, you are recognized for
5 minutes.
Mr. Lynch. Thank you very much, Mr. Chairman.
To the ranking member, this is a really important issue,
and I think it is probably one of our best opportunities to be
bipartisan. This is affecting every one of our States and
districts, and I think that the housing issue could really be a
golden opportunity for us to work together.
I want to thank the panelists for all your testimony. I do
believe that we need all-of-the-above sort of approach here in
terms of what we support. I certainly support Mr. Sherman's
idea on manufacturing housing. I have a bill on modular
housing. I know Chairman Hill and Ranking Member Cleaver have
bills as well that I support, but I do really think that there
is a special amount of need here among first-time homebuyers.
You know, I bought my first home in 1983 for $14,000, and
my cousin Sharon told me I overpaid. To call it a fixer upper
would be generous, but now that same house I still own it. The
city just assessed it at about $900,000, and I bought it for
$14,000. It is ridiculous. So my girls do not have a shot at
trying to buy a home with that type of burden on them, and so I
really think that we need to focus on that first-time homeowner
demographic and especially with them--they have to compete now
with private equity firms and some of these real estate
investment trusts that are actually, you know, they have more
leverage than they are able to--they pay more, and they are
driving up the costs.
You know, we had a situation in this country right after
World War II where we had 16 million American servicemembers
come home. There was not enough housing, and Congress and the
White House leaned into that problem. They created the VA
housing program. They created--well, they amped up the Federal
Housing Administration. They created the GI bill. They created
the National Housing Act of 1949, expanded it in 1954. They did
a lot to make sure that people could--you know, these returning
veterans could own homes, and they also leaned into the
production of homes as well. I think that we need to do
something like that.
I know that President Trump got a lot of heat because he
suggested a 50-year mortgage. That alone will not work, but I
think he was on the right track. I think we have to look at
that mortgage product. You know, back after World War II, they
created the 30-year fixed, which worked great for a lot of
people for a long time, but that is not happening right now. We
need to try to reengineer--I wish we had a mortgage broker on
the panel, Mr. Chairman, but I think we have really got to look
at that and try to find a way to maximize the number of
subsidies that we are putting out there to help the most people
that we can.
So, Mr. Sears, good to see you as a fellow Massachusetts
resident. We will not need a translator, but could you possibly
talk about areas where we might be able to reach more people
and create a better opportunity for some of these young people,
first-time homebuyers to get into the market.
Mr. Sears. Yes. Thank you, Mr. Lynch. As you said, there is
not one silver bullet to cure this. It has to be a
comprehensive approach, and we need all of these different
techniques and avenues to go down. You know, in the
Commonwealth, we passed the Affordable Homes Act last year,
which allows 80 accessory dwelling units (ADUs) by right.
Accessory dwelling units, and this type of legislation will
help with the housing inventory. We are seeing more
multigenerational people looking to live multigenerational in
their homes, and so this is just one example, but it is only
one. We need a very comprehensive approach because it has taken
us 20 to 30 years to get here and we are not going to get out
of it overnight, but we need to start today.
Mr. Lynch. Ms. Bailey, could you----
Ms. Bailey. Yes, sir. We also need to pass the chairwoman's
Down Payment Toward Equity Act that would provide $100 billion
for first-generation homebuyers. This is money that would help
people living in rural, suburban, and urban neighborhoods be
able to beat out those all-cash investors who are coming in not
only driving up costs for homeowners but for renters, too. So
we need to do those innovative things together.
Mr. Lynch. That is great.
Mr. Chairman, I yield back. Thank you.
Chairman Hill. Thank the gentleman.
The chair recognizes the gentleman from Texas, Mr.
Williams, who is chair of the House Small Business Committee.
You are recognized for 5 minutes.
Mr. Williams of Texas. Thank you, Mr. Chair, and thank you
all for being here today.
Over the past several years, builders and multifamily
developers have faced a financing environment that is
increasingly difficult to navigate, and high interest rates and
layers of Federal requirements have made it more expensive for
lenders to extend credit, and those costs ultimately get passed
down to the builders and the consumers.
Now, when bank capital standards are set too high, lenders
are forced to pull away from housing projects that communities
urgently need. At a time when the country is facing a serious
housing supply shortage, we cannot afford policy to choke off
private capital and stall new development. So, Ms. Smith, could
you elaborate on how unnecessarily high bank capital standards
prevent the flow of capital from lenders to builders for
homebuyers?
Ms. Smith. One of the challenges that we faced after the
COVID pandemic was the reduction in lending that required so
much more equity to go into projects, so getting loans back up
to 65 percent, even 70 percent lowers actually the cost of the
capital stack, which really makes a project that much more
viable. So that would be one thing that I think is really
important is to be able to provide just a greater amount of
liquidity.
Mr. Williams of Texas. Thank you.
Mr. Peter, Federal energy mandates have introduced
significant compliance costs to the home building process,
especially for new single family builds. The cumulative effect
of these standards can be substantial, often raising the price
of homes by tens of thousands of dollars placing a steep burden
on first-time homebuyers as we talked about today, and for many
families, these added costs shut them out of the dream of home
ownership. In addition to homebuyers, builders also report that
the added complexity of these standards slows projects down,
reducing the number of homes they can build. So, Mr. Peter, can
you expand on how Federal energy efficiency mandates are
affecting the production of affordable homes?
Mr. Peter. Yes, excellent question, sir. So there are
studies out there that show that these new energy rules add
about $30,000 to the cost of building a new house, and if the
average house cost is $400,000, that is a significant increase.
On the margin, many more housing projects no longer penciled
out. So the administration is already on the ball. They have
paused the implementation of the new rules. They should just
roll it back entirely and the same appliances rules where
energy standards have increased the costs by $9,000 to build a
new home, all these things, government just needs to get out of
the way and let builders build more, and rolling back some of
these regulations is certainly the right way.
Mr. Williams of Texas. Thank you.
Mr. Sears, small and midsized builders have historically
delivered the majority of entry level homes. Yet they face
disproportionate regulatory burdens and rising compliance costs
that limit their participation in the market. So this
contributes to fewer homes again being built and less
competition. So how can Congress create an environment where
small builders and private capital can reenter the entry level
housing market?
Mr. Sears. Anytime that the Federal Government can help the
local and States in their zoning and permitting process would
be beneficial. Eliminating red tape, as I mentioned earlier, we
have the missing middle, and when the builders have the red
tape and the delays often caused by burdensome permitting
processes, they just avoid building the entry and the starter
homes, that missing middle, the duplexes, and the townhomes
that we so desperately need. So anything we can do to
incentivize the local municipalities to streamline their
permitting and zoning process I think would be beneficial.
Mr. Williams of Texas. Thank you for that, and I yield my
time back, Mr. Chair.
Chairman Hill. The gentleman yields back.
The chair recognizes the gentleman from Missouri, Mr.
Cleaver, who is the ranking member of our Housing and Insurance
Subcommittee.
Mr. Cleaver. Thank you, Mr. Chairman. Thank you for this
hearing. I think it is extremely important.
For the first time in my political career, 8 years as mayor
of Kansas City and my years here, there is no push by the
government to assure that we practice in this country fair
housing. Whistleblowers have accused HUD for halting major
investigations, and HUD's Office of Fair Housing has reduced
its staff by 70 percent, and in theology, there is a school of
thought that deals with the human condition. What is the human
condition? You know, we basically are good or basically evil. I
may be--maybe I am a little polyarchy in my theology, but I
believe that the overwhelming number of Americans are good and
decent people and want to do the right thing. The other number
20 or 25 percent--this issue of the human condition is embraced
by the monotheistic religions, all three of them: Christianity,
Judaism, and Islam all embrace this human condition. It is
disappointing, then, for me to know that on the issue of
Federal housing--of fair housing that we are just going to
abandon it.
Now, if there are those who may believe here that, well,
that is something that happened in the 1950s or 1930s, or
whatever, a couple of us were involved deeply in some issues in
California where one of the largest credit unions in the world
were practicing bold discrimination in housing loans, and but
for the fact that CNN went undercover and put--there is film on
it, audio and visual. It happens every day, and we are
abandoning it. We seemingly are abandoning it. I hate to--I do
not want to run around accusing folks. I am telling you what
the facts are. I am just interested from all four of you--I do
not have much time, but is not that a problem that we ought to
face as a Nation and you as influential Americans in the whole
housing issue?
Ms. Bailey. Thank you so much for your question, sir. Our
Nation's fair housing laws are the bedrock to making sure that
the promises of our Constitution reach everyone. By getting rid
of housing discrimination, we ensure that children can live in
communities with well-resourced and high-quality instruction.
We ensure that people can have access to clean air and clean
water. We ensure that people can live and get to work at wages
that will help them sustain their families. We ensure that
people of faith can actually practice their religion without
being harmed. So our fair housing laws are fundamental to the
promises of our Constitution, and they have allowed us to make
substantial progress. It has always had strong bipartisan
support.
It is very difficult in this moment, and my faith is of the
Christian faith, and one of our principles is that we are to
love our neighbors as we love ourselves, and when the Secretary
of Housing sat before his confirmation, he pledged he would
ensure that Dr. King's legacy, which is the Fair Housing Act,
would be fully enforced. He has since allowed HUD under his
leadership to do everything other than, and because of that, we
are seeing people who are mixed status families being kicked
out of homes. We are seeing the permission of coordinating with
ICE to have human beings removed----
Chairman Hill. Thank you. Thank you, Ms. Bailey.
Gentleman's time is expired. I thank the gentleman.
Our Conference chair on the majority side, the gentlewoman
from Michigan, Ms. McClain, you are recognized for 5 minutes.
Mrs. McClain. Thank you, Mr. Chairman, and thank you all
for being here today. Obviously, housing is extremely
important. It seems to be a bipartisan issue, which is--can I
say that out loud? Which is a good thing, right?
I want to talk specifically, Mr. Sears, to you and talk
about manufactured homes, modular homes--manufactured homes.
For me, it seems like it has changed quite a bit in the past
decade or so. Can you talk about the improvements on the
manufactured home side and how those changes are really
benefiting all of us?
Mr. Sears. Thank you, Ms. McClain. Yes, in the last 50
years, we have seen significant technological advances in
manufactured homes, and we have statistics that show that they
are quicker to build. They cost less to build. They make them
more affordable, and really what we need to do is cut the red
tape of the regulation so that we can build more of these homes
as part of an overall solution to the housing crisis and
housing supply and affordability issue we have.
Mrs. McClain. It is amazing--we had an event on the mall,
and I actually went and saw some of these manufactured homes,
and I got to tell you they were not the manufactured homes,
right, of when I was growing up. They are beautiful. So I
applaud that industry. One, manufacturing homes have changed,
right? Two, do we have a housing shortage? Would you all agree
on that? Especially low-income housing shortage, affordable
housing shortage, right? Anyone disagree with that concept?
Panel.
[Nonverbal response.]
Mrs. McClain. Awesome. Look at us. Cats and dogs living
together.
Okay. So improvements on manufactured homes, housing
shortage that we all agree, especially low-income housing
shortage. Let us talk a little bit about the regulations and
the red tape. Can you talk a little bit? Red tape and
regulations are estimated to increase the cost of a new home by
maybe 60, $70,000. Am I accurate on that assessment that before
I even put a shovel in the ground, the red tape is going to
cost me about 60 to $70,000. Am I accurate on that?
Mr. Sears. You may be accurate for your district.
Nationally, it is around $100,000, about 25 percent of the cost
for a single-family home. There are some areas where it is
more. The Commonwealth of Massachusetts, it is more. So what
can we do to streamline the process, cut the red tape, make
permitting easier? I mean, I have had rehabilitation and new
construction where we have dozens of inspectors that have to
come in, and it just takes too long. We need to be quicker.
Mrs. McClain. So the time issue as well as a cost issue. If
you are telling me it is $100,000 and we want to make sure that
we have affordable housing, those two concepts are kind of
working against each other. Anybody disagree with that?
Panel.
[Nonverbal response.]
Mrs. McClain. Okay. Great. So we are all on the same page.
We got to figure out how to get the regulation down. We have
got to speed up the permitting process, and we have to figure
out a way to make sure that we have affordable housing, and
manufactured housing may just be an answer to that.
What would be the downside of my legislation, the Modular
Housing Production Act? What that piece of legislation says is
let us qualify manufactured homes; let us stop the personal
property so it is not classified as personal property, and you
can go and get the same type of loan on a manufactured home
that you could get on a modular home. What is the downside in
doing that? Mr. Sears?
Mr. Sears. I am all in favor because, ultimately, in
modular homes, the construction is overseen by local building
inspectors, and so anything we can do to open up availability
for financing products to the American consumer is a good
thing.
Mrs. McClain. I do not say that sarcastically. I am really
truly trying to say, what is the down time? They are better.
They are quicker. They are faster; They are cheaper, and they
are beautiful. Sir?
Mr. Peter. Yes. So we need to produce more of those
manufactured houses, absolutely agree, but, if we do not
produce more housing and we promote looser lending practices,
we are going to drive up the price.
Mrs. McClain. How is it looser? I mean, you are having a
manufactured home versus a regular home that is cheaper, more
affordable, because you just--how is that looser?
Mr. Peter. Well, the loan terms are going to be extended.
So, if you are extending the loan terms, you are bringing down
the monthly payment, which often times gets capitalized at a
higher price.
Mrs. McClain. Which is a good thing to bring down monthly
payments, right? Because that affordability is kind of
important.
Mr. Peter. We need to work in concert by increasing more
supply.
Mrs. McClain. Would this not increase the supply?
Mr. Peter. If it ends up--if we end up reducing more like
the chassis, removing the chassis requirement would be a good
step in terms of getting----
Mrs. McClain. What is the downside on the lending side?
Chairman Hill. Thank you, gentlewoman.
Mrs. McClain. Thank you, sir.
Chairman Hill. The Gentlewoman's time is expired.
I now recognize the gentleman from Illinois, Dr. Foster,
who is the ranking member on the Financial Institution
Subcommittee, for 5 minutes.
Mr. Foster. Thank you, Mr. Chair.
To our witnesses. You know, on a typical night, there are
800,000 homeless people in America. On the other hand, there
are 22 million empty nesters with a lot more than 20 million
spare bedrooms. So there is no shortage of bedrooms in this
country. We are somehow not allocating all the resources we
have. So what can we do to encourage empty nesters to rent out
that spare bedroom, not necessarily to a homeless person, but
just, say, a hard-working single mom who can be a trustworthy
person that you would be happy to have in your home and thereby
free up a low-cost rental property that might be appropriate
for curing homelessness.
I think one of you mentioned some sort of Federal tax
benefit as a possible solution. You know, if you are willing to
rent out that spare bedroom, you are doing something socially
useful, and maybe you should get a tax break from the income
from that. Was it you that you mentioned it, Mr. Peter?
Mr. Peter. Yes, I mentioned it in my written testimony.
There are about 32 million spare bedrooms in this country, and
if we allow 10 percent of those, we would have created a lot of
additional housing. I personally--I lived with an empty nester
couple when I first moved to DC, and I can attest to this, this
is a viable option.
Mr. Foster. Yes. So just even a small preference in the
Federal Tax Code for that kind of income might be enough. You
do not need to get every empty nester to do their property. If
we got 120th of them, that is enough to cure homelessness.
Mr. Sears, you mentioned mortgage lock-in as a big problem.
There is a proven solution to that. You know, in Denmark, for
more than 200 years, the Danish mortgage origination system has
prevented interest rate lock-in and mortgages, and it does that
by transferring the interest rate risk from the homeowner to
the bond market, and there was a serious consideration of that
following the financial crisis as one of the only feasible
proven ways that we could have actually have replaced Fannie
and Freddie with some safer system for the taxpayer in terms of
bailout. Is that something that has been looked at recently? I
saw an article in Business Insider talking about the genius of
the Danish system. Is that something that is getting a serious
look these days?
Mr. Sears. I am sorry, Mr. Foster, I cannot speak to that.
Mr. Foster. If you could--all of you, actually, for the
record, just go have a look. There is a Wikipedia article on
it. I know there was a lot of effort put into that, a lot
written, and it was one of the only feasible ways of replacing
Fannie and Freddie in ways that did not get us right back to
the same point where you had a taxpayer-funded bailout
necessary.
Ms. Bailey. If I may, sir, one of the things that we have
seen is that our 30-year fixed rate mortgage has really
expanded home ownership in our Nation. It is the hallmark of
opportunity for millions of families. Now, we did not do it as
well as we could have, and we left behind a lot of people. Now
we need to be very intentional to make sure those consumers for
whom the health of the housing system will depend on can have
access to that very affordable product. It allows for people to
know what their monthly payment will be without having any risk
of unforeseen costs associated----
Mr. Foster. I agree completely. I mean, the 30-year
mortgage, and actually it was preserved under proposals to
switch over to the Danish system. Have a look at it. It was a
good idea 15 years ago when we looked at it, and it is still a
good idea.
Mr. Peter, you repeatedly mentioned smaller lot sizes as a
key to progress on this. So, first off, how much of the
additional $100,000, or whatever, is just lot size, minimum lot
size requirements?
Mr. Peter. Yes. I mean, it is, in Austin, for example, we
have just studied this. In 2024 they put in place a new bill
which allows you to put two or three homes in the same--on the
same parcel. Now, it used to be that a home would cost a
million dollars to build new, but anecdotally we are hearing
now if they are putting two or three homes in the same parcel;
they can sell each of those homes for $500,000.
Mr. Foster. That is right, and one way to encourage this is
with the land value tax, which I presume you are familiar with.
You know, this is very successful in countries that have
implemented this. You transfer a lot, most of the tax load to
the unimproved value of the land the property is on. So, if you
do what they did in Austin or Seattle, then you take what used
to be occupied by a big mansion and put six townhouses on it,
you do not pay more taxes, because the tax is on the unimproved
value of the land and so there are things we can do in the
Federal Tax Code to encourage that sort of behavior at the
State and local level.
If you looked at how States are changing their laws to
evade the State and Local Taxes (SALT)--that whole issue there,
we could structure the Federal Tax Code to encourage a land
value based tax and do a whole lot of good to encourage but not
mandate the smaller lot sizes that you have identified. I now
have negative 2 seconds.
Chairman Hill. The gentleman's time is expired.
The gentleman from Ohio, Mr. Davidson, who chairs our
National Security Subcommittee, you are recognized for 5
minutes.
Mr. Davidson. Thank you, Chairman.
Thanks to our witnesses for being here today for your
testimony and for a critical issue. When we talk about
affordability, housing is top of mind for families everywhere
in our country, and when you talk about confronting the
affordability crisis, I think it is one of the things that
everyone is serious about from the most basic local government
to Federal Government to President of the United States. We are
talking about affordability.
When I hear some of my colleagues talk about, ``Well, the
solution to affordability is more subsidies for more people,''
my mind just wants to break. I am, like, does not compute. Do
you understand why we have inflation? Clearly people struggle
with this cause-and-effect relationship. We have $7 trillion
worth of Federal spending, roughly. We have $5 trillion that
comes out with revenue, and we put back in $7 trillion. So, if
you think about it as something like a 10 gallon jug and you
take 5 gallons of fluid out and you dump 7 gallons in, you
change the level. You inherently inflated it. So it is not the
house that you have lived in for the past 15 years massively
got more valuable if you did not do any improvements in it.
Fundamentally, what happened is the unit of measure, the
dollar, got worthless. Our money is worth far less, and it is
worth far less if you measure it in most commodities. It is
getting hurt.
Where does the inflation hit the hardest? It hits the
hardest in the things we subsidize the most. We have done the
most subsidies for anything probably in healthcare. Look how
unaffordable healthcare is. Maybe next would be education, and
look at that. Federal Government took over lending, and now
with no equity, no skin in the game, you get as much student
debt as you can amass, regardless of what your degree is.
Frankly, barely consideration what your GPA is. So we load
these kids up with debt, and then say, ``Well, let us go help
them set up to buy a house,'' and they cannot afford it. They
do not have any equity. It is all going to student loans.
So let us subsidize that and pretend that they have equity.
Who is on the hook for it? The taxpayers. It was a terrible
plan. You have to have equity in a loan. You have to do real
underwriting, and you want the private sector to do that.
I think that is one of the reasons I like Mike Lawler and
Joyce Beatty working on H.R. 5913. This lets banks do more
lending that is capped at 15 percent right now. The Office of
the Comptroller of the Currency (OCC) and the Federal Reserve
can look at it and say, if you want to do more public welfare
lending, community good, you could if you have a safe and sound
bank, because you are taking some of the risk. You are not just
transferring it on to taxpayers. This is why I think you have
commonsense regulation like the no chassis bill that we have
talked about a lot.
What I do like, when I talk with my homebuilders, they--I
ask them, ``Why do you build what you build,'' and it is not
because we need to maximize the number of bedrooms utilized in
America. They build houses that people want to buy. You know,
there was a time when Ford just cranked out black model Ts,
right? Because they could make them faster and that met the
market for a point, but people wanted to buy other things. They
wanted colors. They wanted features and they are choosing to
buy much more robust homes and, for people that have means,
there is not a shortage at the high-end luxury market, right?
At the low end, it is, like, well, how are we going to address
it? So I am concerned that we have colleagues that their
solution is that the government is going to tell you what you
are going to build and how you are going to do it.
I was a little relieved when I hear some of my Democratic
colleagues say, ``We do not want to enforce it; we just want to
incentivize it.'' And so, while I do not like the income tax
because it is a massive invasion of privacy and it is used for
coercion and control, it does motivate behavior. I think one of
the useful things we do with the Tax Code is exempt capital
gains, particularly for single-family homes when it is your
primary resident. That is a commonsense thing. We have to go to
Ways and Means to fix that, but I hope they get it fixed soon.
It should either eliminate it if it is your primary residence
or massively increase it and index it to inflation.
I think redevelopment of existing property is one of the
biggest things. So historic and new market tax credits, I think
that is a big win that we got this year. We made those
permanent, and there are a lot of things that we do but I am
concerned as we look at reprivatizing the Government-Sponsored
Enterprises (GSEs) that we look at the administration, and I
would just say, look, if the government is going to continue to
own the risk, why would the government not own the cash-flow?
But, if you are going to privatize the cash-flow and let the
profit flow out, why are you going to socialize the risk? I do
not think there is a massive demand for more risk in the
market. So I would caution my decisionmakers there. I yield.
Chairman Hill. The gentleman yields back.
Also from the great State of Ohio, the chair recognizes the
gentlewoman from Ohio, Ms. Beatty, who is our ranking member on
the National Security Subcommittee, for 5 minutes.
Mrs. Beatty. Thank you, Mr. Chairman, and thank you ranking
member, and thank you to all the witnesses here today.
Certainly, you have had a lot to digest, and you have heard a
lot.
I am going to repeat what my ranking member said, that we
have certainly heard a lot about bipartisanship, all the great
things that we could do and some things, Mr. Chairman, that
were very inspiring from you that we can do. Words like ``new
steps,'' ``new ways,'' the fundamental being ``housing
fundamental to the American Dream,'' and all of that sounds
great, but it is going to take us to do some of the things or
undo some of the things, Ms. Bailey, that you said that this
administration is doing. Let me thank you for being blatantly
honest of painting the real picture for what so many of those
Americans are seeing, and certainly Black Americans and Brown
Americans and single women and rural Americans are seeing,
because this administration has been blind to them. I say this
with facts, not just words.
If we look at the great State of Ohio from where I am from,
and I agree with some of the things that my colleague who just
spoke about what we have to do to increase housing. Will it
take money? Absolutely. Will it take other partnerships? Yes.
The latest Gap Report shows that Ohio faces a shortage of some
264,083 affordable rental homes for extremely low income.
Now, some of my colleagues want to go straight to home
ownership. Well, some of our districts we can tell you the
dream is to put a roof over your head, because they cannot
afford the mortgage. They cannot walk into a bank. So let us
get in the real world. If we are going to fix affordable
housing, yes, it is great to talk about homebuilders and to
talk about all of those corporate giants, but the last time I
checked, there are people who are in public housing, and yet
this administration is doing away with some parts of Section 8
and public housing. This administration has fired HUD staffing
at an unbelievable unprecedented rate of those folks who are
actually doing the work to help us with no rhyme or reason.
In order to afford a fair market rent, two bedroom
apartments in the Midwest in Columbus, Ohio, the capital, a
household must earn at least $27 dollars an hour. As a matter
of fact, $27.79 an hour, and we know that is not in existence
for those who are living in poverty above or below by a few
percentages and the administration has done absolutely nothing
to improve these statistics or house more American families.
Now, let me just say this: While I know there is not a rule
or law that allows--that mandates the HUD Secretary to come
before us, we are almost at the end of the year, and we have
not had Secretary Turner come to testify. I do applaud my
Republican colleagues who have said we should change that and
have them come as we beat the you know what out of Secretary
Fudge, who had already sent us videos and a plan.
Now, I have been on this committee with housing since the
inception of my being in Congress. I spent 20 years with HUD as
a housing consultant. Not one response. Not one call from this
Secretary. So I am just saying we have all kinds of problems
within this administration that we need to deal with.
Let me now go to ask the question, Ms. Bailey. When I am
back in my district, one of the primary concerns that I am
hearing is directly from my constituents about the cost of
housing, and so many of my colleagues on both sides of the
aisle have addressed various legislative solutions today that
would make minor technical changes to our housing policy
framework without allocating any additional funds to tackling
this nationwide crises. Can you tell me, in your opinion, as we
look at solving the affordable housing crisis in America, can
we do it without increasing resources? Can we do it with
gutting the staff?
Ms. Bailey. Absolutely not. Absolutely not. In fact, we are
going to push more families into homelessness. You said it.
There is not a town in this Nation where a person making
minimum wage can afford a two-bedroom apartment.
Mrs. Beatty. Thank you. I know my time is up. Can I ask the
other members to send in writing to me what they think about
gutting the staff and not having enough money, because it is in
alignment with their testimony that was very favorable.
Chairman Hill. Thank you very much.
Mrs. Beatty. Thank you.
Chairman Hill. The gentlewoman's time has expired, and the
gentleman from Tennessee, Mr. Rose, is recognized for 5
minutes.
Mr. Rose. Thank you, Chairman Hill, and thanks to Ranking
Member Waters for holding the important hearing and thank you
to our witnesses for taking time to be with us today.
Last week, I was proud to introduce H.R. 6293, the Housing
Supply Expansion Act of 2025, along with my colleagues Housing
and Insurance Subcommittee Chair Mike Flood, Subcommittee
Ranking Member Emanuel Cleaver, Subcommittee Vice Chair Monica
DeLaCruz, and Congressman Lou Correa, and Congressman Scott
Peters. My legislation will remove a Federal chassis
requirement that has served to unnecessarily raise the price of
manufactured housing.
Since 1974, Federal law has required that manufactured
homes include a permanently installed chassis. This has
significantly reduced the ability of young and low-income
families to buy their own homes. Removing the permanent chassis
requirement from manufactured homes will lower construction
costs, unlock modern design flexibility, and open far more
locations for quality affordable housing. I want to thank the
committee for attaching H.R. 6293 to today's hearing.
Mr. Chairman, I ask unanimous consent to enter into the
record a letter from the Manufactured Housing Institute
supporting the Housing Supply Expansion Act.
Chairman Hill. Without objection.
[The information referred to can be found in the appendix
on page XX.]
Mr. Rose. Mr. Sears, your written testimony states that
H.R. 6293, the Housing Supply Expansion Act, would modernize
the Federal definition of manufactured housing to include
modular and prefabricated units not built on a permanent
chassis opening financing opportunities for innovative
construction methods. Could you expand on how H.R. 6293 would
open new financing opportunities?
Mr. Sears. Absolutely. Thank you very much, Mr. Rose. As I
stated earlier, by updating old and outdated laws, we can
certainly open up new housing opportunities for Americans, and
by eliminating the chassis requirement of the permanent chassis
requirement, as I stated earlier, prefab manufactured homes are
cheaper; they are quicker to build, and so anything we can do
to get more of these types of homes on the market would be
better for American consumers.
Mr. Rose. Could you elaborate, though, on financing in
particular and how this might impact financing opportunities?
Mr. Sears. Yes. So there is a prohibition on the financing
of the modular homes, as Ms. McClain was talking about. So how
can we modernize those rules and regulations to be able to
allow for more financing products to be available for these
types of homes, and that is what we need to do, change the
existing rules.
Mr. Rose. Thank you.
Mr. Peter, your prepared testimony recommends adding and
clarifying language on temporary chassis to the Housing Supply
Expansion Act. However, the bill already expands the definition
of a manufactured home to include those built with or without a
permanent chassis, which I believe encompasses homes using a
temporary chassis for transport since such a chassis would not
qualify as permanent. While I remain open to technical
refinements, I am really having a hard time seeing how the
Housing Center's proposed language would enhance the bill given
that its current text already permits manufactured homes with
temporary chassis. Could you elaborate or explain, with respect
to your testimony, explain why the Housing Center believes
additional clarifying language might be necessary?
Mr. Peter. Yes, a very simple answer, sir. We were
referring to the bill in the Senate, not to your particular
bill.
Mr. Rose. Okay.
Mr. Peter. So I have now--I have heard your bill. It
already deals with a lot of these issues. Let me just say, from
the studies that I have seen, or estimates that I have seen,
removing the chassis requirement could save between $5,000 to
$15,000. So that is a good chunk of money for a typical first-
time homebuyer.
Mr. Rose. Thank you. Thanks for clarifying.
Mr. Peter, how can Federal policy better align with local
initiatives to expand housing supply without imposing new
mandates or a one-size-fits-all regulatory environment?
Mr. Peter. Yes, that is also an excellent question.
So I think, at the Federal level, the best levers we have
is to pay States for outcomes directly. So, if they plat
smaller lots and a home is being built on that smaller lot,
then you receive a bounty from the Federal Government that the
State can spend to their liking.
What we have seen in our case studies that we have done: If
the government gets out of the way, the private sector is going
to build more housing. We have done 30 case studies. This would
be a way of allowing builders--giving the builders greater
access to smaller lots, where they can build housing at lower
price points which are going to be attainable to first-time
homebuyers.
Mr. Rose. Thank you. I completely agree with that.
Mr. Chairman, my time has expired. I yield back.
Chairman Hill. Thank you, Mr. Rose.
I now recognize the gentleman from California, the ranking
member on our Task Force on Monetary Policy.
Mr. Vargas, you are recognized for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chairman. I appreciate
the opportunity. I also want to thank the ranking member and
all of the witnesses here today.
Yesterday, we did have a hearing, actually, for the
Monetary Task Force, and I got to listen to my colleagues talk
about the debt, which is a big deal. Obviously, it is. I agree
with that.
But what they--and they preached about it, but what they
did not say is they all voted for it last time. They all voted
to raise it by $5 trillion in the ``Big Ugly Bill.'' After it
passed, they applauded and now there is amnesia, and somehow
they forgot that they are the ones that created all of that
debt. It is pretty interesting.
Today, we get to hear that $7 trillion is coming in and--we
are spending $7 trillion, but only $5 trillion is coming in.
Well, yes, you voted for that. You voted for that. Why are you
telling us? You voted for that.
Anyway, I hate to bring that up, but, boy, you keep hearing
this, and there is some amnesia around here.
Now, about the housing.
Mr. Sears, I wanted to ask you more about diving; you were
so excited about that but, instead, I do want to ask you about
home sizes. Back in the 1920s, what was the average home size?
Mr. Sears. That is a great question, Mr. Vargas. I do not
have the answer.
Mr. Vargas. About 1,048 square feet, according to AI.
Today, the average house is 2,600 square feet. It has grown
dramatically.
Also, the lot size, I agree with you completely on that. I
mean, in San Diego, they are looking at this finally. They have
5,000-square-foot lot requirements, and you do not need that,
especially near areas where you have transit. So I think that
is a really good idea.
Again, I think the smaller lot sizes and smaller homes, I
think, are something that is important.
However, in parts of San Diego, what they did before was
this: They took a single-family home, they scraped it, and they
put in what they called a ``Huffman Six-Pack,'' and that is the
ugliest thing you could possibly build in the cheapest way.
They scraped the front of it, they made parking where the front
yard was, and it became six units.
That is why everyone is afraid of density, because that is
what they remember. They did this for a number of years until
the city stopped it.
What can we do so that does not happen, so you do have
some--at least some beauty in these homes? Because that is what
people did not like, how ugly these damn buildings were.
Mr. Sears, what can you do?
Mr. Sears. Yes, so we can talk about smart growth and
density. You talk about housing near transit centers. That is
very important for us, especially in the metropolitan areas. I
am with Mr. Peter. Personally, I sold a lot of homes on 5,000-
square-foot lots.
So density is important, but smart growth is as well. How
do we do this so that it can maintain the fabric of the
neighborhood without destroying it?
Mr. Vargas. The other issue is this: We have all been
talking about this red tape, $100,000. I was looking it up in
AI. That also includes roads, sewers, parks in that--the
infrastructure.
In California, you have to pay for all that because, for
those of us that have owned a home for a long time, we do not
pay that much in taxes. I mean, I bought a home in 1993. I paid
$176,000. I pay less than $3,000 a year in tax for that home.
When a new home comes in, it has to pay for all the sewer,
it has to pay for all the roads and the parks and everything
else, and that really increases the cost dramatically.
At least, AI is saying that what you guys are considering
red tape is infrastructure.
Mr. Peter, go ahead, sir.
Mr. Peter. Yes, I mean, I agree with you, and--but, in
California, the problem is that you have distorted the market
through Prop 13. Of course, yes, new housing that gets built is
going to be assessed at much higher rates and Prop 13 and
other--in California, other impediments to building new housing
has also led to a collapse in building.
Mr. Vargas. But that is the case in many States where they
are--I am sorry.
Go ahead, Ms. Bailey. I will give you some time.
Ms. Bailey. One other mechanism that is included is
building for weather-related impacts, which are increasing.
Those costs are also part of making sure we have structures
that can sustain the hardship of the weather-related impacts.
Mr. Vargas. No, absolutely. I was talking about the codes
here. The code, of course, if you are in places like California
or certainly in Florida or even in Kentucky or Kansas now
because of hail, other things like that--so I agree.
My time is about up, and I appreciate, again, the
opportunity. I do think that the things that we are talking
about are important, and we have to figure out how to do this
together and quit talking about this spending when they are the
ones doing it too.
Thanks.
Chairman Hill. The gentleman's time has expired.
The gentleman from South Carolina, Mr. Timmons, you are
recognized for 5 minutes.
Mr. Timmons. Thank you, Mr. Chairman.
I want to thank the witnesses for being here today.
Over the past decade, housing affordability has become one
of the most urgent challenges facing American families. The
Nation has not built enough homes to meet demand and rising
costs, combined with a complex web of Federal, State, and local
regulations, have made it increasingly difficult for both
builders and families.
As I continue to meet with Realtors, builders, and housing
providers, I hear a consistent concern: a patchwork of zoning
rules, permitting requirements, and development restrictions
and they vary widely from one jurisdiction to another. This
regulatory maze slows construction, increases costs, and limits
the supply of attainable homes.
Without a more consistent and predictable framework, we
risk deepening an already-severe shortage and placing even more
families out of reach of home ownership or affordable rental
options.
Mr. Sears, Realtors see these challenges on the ground
every day. Regulations at every level of government now add an
estimated $93,000, which is nearly one-quarter of the total
price of a new single-family home.
From your perspective, how does this patchwork of local and
State regulations affect housing affordability and access for
first-time buyers and for members of the workforce?
Mr. Sears. Thank you, Mr. Timmons. There is a lot to unpack
there but let us start with the patchwork of regulations.
What we have seen is, there are builders who want to build
and, because of the disparity in or continuity in these, they
will walk away from projects, because they do not have the
time, the money, the resources in order to go through the
extensive permitting process that happens.
So--but we are--you know, the National Association of
Realtors, we support the HOME Reform Act, which would cut the
red tape and strengthen the public-private partnerships and
that is something I think is very important and vital for us.
So anything we can do to streamline the process, to
incentivize builders, especially the small and medium-size
builders who can help us with entry-level and the missing
middle homes, we need to do everything we can to help them and
cutting red tape is certainly a good start.
Mr. Timmons. In my time as a small business owner, it is
actually worse than just the patchwork framework. I think some
bureaucrats abuse their authority, and they try to find reasons
to not do a project that they think might not be appropriate
but is perfectly legal.
Is that something you have experienced?
Mr. Sears. One hundred percent.
Mr. Timmons. That has been very frustrating in my time.
One follow up question. If Federal incentives or standards
are necessary, what specific actions would most effectively
encourage States and localities to streamline their processes
and expand the supply of housing?
Mr. Sears. Well, I think part of it--and we were talking
about it with Mr. Vargas--help with infrastructure costs, if
the Federal Government were to be able to incentivize and help
with that. Offering block grants in different communities, that
could certainly help with buyers.
When it comes to building, it is how do we incentivize the
local communities to streamline things. I know there are some
examples from around the country. We actually worked with the
American Planning Association (APA) and the League of Cities.
We have a ``Housing Accelerator'' guidebook with nearly four
dozen different success stories from around the country on how
we can incentivize and streamline the processes and so, happy
to supply that to you in writing.
Mr. Timmons. Thank you for that.
If good policies have the potential of positively impacting
housing supply, I want to point out that bad policies do the
opposite and in last 4 years, we saw trillions and trillions of
dollars in spending that caused inflation to go up. They tried
to run away from that, but we have unnecessary spending related
to COVID, and that caused interest rates to go up.
I recently moved. I was in a wonderful home that I grew out
of; I needed to get a new house. I had a 2.3-percent interest
rate. Selling my 2.3-percent interest rate was one of the most
painful things ever. You know what my interest rate is now?
6.8. You know what is even funnier? I have a 5-year adjustable-
rate mortgage (ARM), because the cost of me locking in a 30-
year note was going to be 8.5.
Again, we can facilitate positive outcomes from Congress,
but we can also cause negative outcomes.
Ms. Smith, Bozzuto operates in many different regions, each
with its own zoning codes, fee structures, and approval
processes. What specific reforms in permitting, zoning, or
Federal financing programs would most directly shorten
timelines for producing new affordable housing?
Ms. Smith. Thank you.
Well, certainly anything you could do to fast-track the
approval process of permitting--you know, actually getting
projects shovel-ready and in the ground. It can take up to 2
years to get a project in title today. So that adds a
tremendous amount of cost just between the time you are
planning it and the time you are building it. So cutting
through some of that red tape would make a big difference.
One of the things that we really believe is a great
opportunity for building more multifamily housing is
modernizing the 221(d)(4) program. That is an excellent
program. We have used it at Bozzuto repeatedly over the years.
The problem with the program today is it just takes too long;
it is too administratively burdensome----
Mr. Timmons. Thank you for that. I have run out of time.
Mr. Chairman, I yield back. Thank you.
Mr. Haridopolos [presiding]. He yields back.
Mr. Green, you have a unanimous consent request.
Mr. Green. I do, Mr. Chairman.
I would like to ask that I, with unanimous consent,
indicate in the record that I will be introducing a statement
such that I am supporting H.R. 4069, the Downpayment Toward
Equity Act of 2025; the Ending Homelessness Act of 2025--that
would be H.R. 4872; and finally, H.R. 4223, the Housing Crisis
Response Act of 2023, all of which have been introduced by Hon.
Maxine Waters.
I yield back. Thank you.
Mr. Haridopolos. Without objection, that is adopted.
Mr. Haridopolos. Next we go to the gentleman from Illinois,
Mr. Casten.
You are recognized for 5 minutes.
Mr. Casten. Thank you very much.
I appreciate everybody being here today. It is an important
issue.
It strikes me that we are having basically two of the three
necessary conversations. If we want to lower the cost of
housing, we can either increase supply, we can reduce the input
costs, or we can lower demand. I do not think any of us are
advocating for policies that would lower demand, but at least
in theory that is another way to cause housing costs to go
down.
On the supply side, I just make the observation that, if
your goal was to destroy the labor force of the construction
industry, you should adopt Trump's immigration policies--or if
your goal was to destroy the labor force for agriculture or
hospitality. It is going to take a long time to fix that.
I want to focus for now on the--at least initially, on the
input costs. Would any of you argue that raising the price of
bathroom vanities lowers the cost of a house?
Obviously, the President imposed tariffs on bathroom
vanities and kitchen cabinets because--I do not know why.
I guess I would like to start with you, Ms. Smith, because
you are the one that has the most direct construction
experience, with Bozzuto, if I am following.
Ms. Smith. Uh-huh.
Mr. Casten. I am wondering if you have been able to look--
all of these tariffs, what impact are those tariffs
specifically having on your input costs for new construction?
Ms. Smith. Well, it is an excellent question and one we
have been trying to answer ourselves.
The subs have, up until now, been sort of including their
understanding of what the tariffs are going to be in their
pricing, but it has been such a moving target that they are a
little uncomfortable with those kinds of commitments.
There have been very few starts, and so we have not really
seen how it is going to be priced in. Once we see demand really
pick up, we expect to see construction costs go up as a result
of the tariffs, but no one really knows how it is going to
shake out right now because----
Mr. Casten. Okay.
Ms. Smith [continuing]. it has been sort of moving around.
Mr. Casten. Because the National Association of Home
Builders--and this was back in April, so I do not know if this
is still current. They had surveyed their members, and I think
they said about a $10,000 price per home but that was April. I
think there have been more tariffs since then.
The Bureau of Labor Statistics' (BLS) data--which, of
course, since BLS is not releasing data as much as they are
supposed to anymore--in September, they were saying a 3.5-
percent increase just because of tariffs.
I am curious if that feels right from your experience as a
practitioner or if you just do not know.
Ms. Smith. Well, costs are going up about 3 percent right
now, but costs went up significantly over the past 5 years.
Just by example, we would spend about $195,000 a unit on hard
costs for a new apartment 5 years ago. Today, that is $240,000.
Mr. Casten. Yes, and--yes, obviously. I do think there is
a--you know, we had global inflation during COVID that hurt
everybody. Tariffs, by definition, are only affecting domestic
inflation----
Ms. Smith. Absolutely.
Mr. Casten [continuing]. right?
Ms. Smith. We think----
Mr. Casten. So that is a choice, to have tariff-driven
domestic inflation.
Ms. Smith [continuing]. we expect costs to go up.
Mr. Casten. I do also just--I hope that all of us can--and
this may sound dumb, but I hope all my colleagues will go home
tonight and reread ``The Three Little Pigs.'' Because some of
this conversation is we can lower costs if only we did not have
so many building codes, if only we did not have to build
climate-resilient homes, if only we did not put efficiency
codes in so that people could save money on energy. It is true,
if you build a house out of straw, it is cheaper than building
a house out of brick but there are big, bad wolves out there
that we have to protect against.
My last question is for you, Mr. Peter, as our resident
economist here. Oh, do not shake your head. Come on.
Mr. Barr had, I think appropriately, raised the point that
the 30-year mortgage tracks the 10-year Treasury. I think a
number of us on this committee have been concerned about the
growing spread between the overnight Fed funds rate and the 10-
year Treasury. It is one thing that the 10-year Treasury is
high; it is something else that we have this increasingly
inverting yield curve.
Yes, we have long-term structural debt problems. Do you
know when the yield curve started inverting?
Mr. Peter. You would have to tell me.
Mr. Casten. Well, it was essentially the start of the Trump
Administration. That was not the start of the structural debt.
Mike Konczal has famously described this as the ``moron risk
premium,'' because when you have so many companies who are now
being told that contract law does not apply in the United
States the way it used to--``You had a permit, but I am going
to pull it away because,'' I do not know, ``you had a minority
CEO''--that is pulling investment. So we are seeing this
premium that is in there.
I am out of time, but I guess I would just ask all of you
to continue to fight for the rule of law, because the U.S. has
an advantage, as a country, so long as we attract the best and
brightest to our shores----
Mr. Haridopolos. The gentleman's time has expired.
Mr. Casten [continuing]. and because they know that we are
going to follow the law.
Mr. Haridopolos. The gentleman from Wisconsin, Mr. Steil,
chairman of the Subcommittee on Digital Assets, Financial
Technology, and AI, is now recognized for 5 minutes.
Mr. Steil. Thank you, Mr. Chairman.
Not easy right now. Costs of housing are up. People are
struggling. How do you pay for this? Where are we at, and where
do we need to go?
If we look back just at the median home, the median home
has increased significantly for families and the cost structure
for families is a huge challenge. So, if we look back a
generation ago, in 1985, the share of households spending more
than 30 percent of their income on housing was 28 percent. Now
it is 37 percent, and we have an undersupply of housing of
roughly 6 million homes.
Mr. Sears, if I can start with you. There are a number of,
kind of bullet shots that we can take at this to chip away at
the challenge we face. There is no one silver bullet, there is
no one thing we are going to do where housing prices are
immediately going to become affordable but in your testimony,
you have some great nuggets in there--and, in particular, lot
sizes. Could you comment on what that would do and how local
leaders could engage to bring down the cost of housing?
Mr. Sears. Thank you, Mr. Steil.
As Mr. Peter has talked about, lot sizes certainly have an
impact and they allow for density and one of the things is, the
denser we have for housing construction, the more units that
come on the market. That does impact pricing and affordability.
Mr. Steil. You also talk about the shot clock, where people
go in, you want to get approval, and you find yourself gummed
up in all sorts of red tape. How would that impact housing
costs?
Mr. Sears. Yes. By streamlining the red tape, the
permitting process--you know, on average, we are looking at
about $100,000 of costs before a shovel goes in the ground for
a typical single-family home. So, if we can speed that up,
there is a time value to money, which would allow for more
affordable housing to be produced.
Mr. Steil. Could you do some pre-approval--Ms. Bynum, and I
have looked at pattern books, ways that cities could be
proactive to do this even on the front end--to further
accelerate the timeline?
Mr. Sears. Yes, anything that could be done in advance
would be beneficial for housing production.
Mr. Steil. So why would you not do that then? Why would
municipalities not be doing that in advance today?
Mr. Sears. NIMBYism, not in my backyard. As one of your
colleagues talked about, bureaucrats getting in the way of
projects that they might not particularly agree with even
though they are legal to do.
Mr. Steil. Let me shift gears. One of the solutions that we
have heard talked about by some of my colleagues on the left
is, why do you not just come in and control the costs? Rent
controls in particular. We saw this with the mayoral race in
New York City. That, a-ha, you can just come in, set a price,
the government can dictate the price, and things will solve
themselves.
Mr. Sears, you have examined and studied this. What happens
when municipalities put in rent controls?
Mr. Sears. In the early 2000s, I got my MBA at Western New
England University, and, in fact, my economics professor was a
tenant of mine at the time. He was a visiting professor. He
took one session, one class, to talk about how rent controls
flawed economics.
I think, universally, economists agree that rent control is
flawed. Instead, what it does is it makes people stay put.
Housing inventory shrinks. You have investors that will flee
from those localities that implement rent control because of--
--
Mr. Steil. It dramatically reduces investment in those
communities that have rent controls, right?
Mr. Sears. Yes.
Mr. Steil. What are the long-term ramifications of that?
Mr. Sears. Higher prices.
Mr. Steil. So, by putting in these rent controls, what we
really see is higher prices and lower-quality housing. Is that
right?
Mr. Sears. Yes, sir.
Mr. Steil. All right.
Let me shift in the allotted time that I have left and come
to you, Mr. Peter, if I can. Can you walk us through the
Carpenter Index? I think this is a really helpful framework to
understand the lay of the land and the challenges that we face
in housing.
Mr. Peter. Yes. So the Carpenter Index is one of the
metrics that we track affordability at the national level, and
particularly we do it for the largest 100 metros.
The Carpenter Index asks a simple question: The carpenter,
they build housing, but can they actually afford to live in an
entry-level home?
Back in 2012, they found that the affordability was there
in 74 metros out of the largest 100 metros, it was affordable
for an average carpenter household. Today, that number has
shrunk to about 21, 22 metros. So it has been deteriorating
massively.
We lay the fault squarely at the foot of the Federal
Reserve. By mid-2020, we were warning them that the housing
market was overheating, and they ignored our calls. They
maintained that the inflation was transitory. Of course, they
had to slam the brakes in 2022, and at that point it was too
late. The home prices were higher; now interest rates are
higher.
But, at the same time, the Carpenter Index also shows that
if we can build smaller lot sizes, housing is going to be
affordable for----
Mr. Steil. I am going to cut you off, because we are going
to run out of time, but I appreciate all of you being here and
your testimony. A huge challenge.
I yield back.
Mr. Flood [presiding]. The gentleman yields back.
The gentlewoman from Massachusetts, Ms. Pressley, is
recognized for 5 minutes.
Ms. Pressley. Thank you to our witnesses for joining us
today.
Two-point-five million--Two-point-five million children.
That is how many children are currently being raised in grand
families or kinship households in the United States. In my home
State, that which I share with Mr. Sears, over 100,000 children
are raised in grandfamily or kinship households.
Now, these are the children of servicemembers and veterans
that are living with a grandparent while their parent is
deployed. These are the children whose parents have been
impacted by the opioid epidemic and are struggling with
substance use disorder. These are children who, were it not for
their grandparents' intervention, perhaps they and their
siblings would be separated or living in foster care. These are
the children who are living with grandma while their parents
are getting back on their feet after losing a job.
That is exactly why Representative Jim McGovern and I have
introduced the Grandfamily Housing Act to provide resources to
those households to help with schoolwork, after-school care,
and home repairs. This affords us a chance to support those
grandfamilies, our elders that are living on fixed incomes, who
are struggling to take care of a child after they have already
raised their children.
Ms. Bailey, some people are unaware of this family model,
which has really quadrupled in the last decade. As the co-chair
of the Task Force on Aging and Families, I am well aware, but
do you mind just educating the public on why this is, in fact,
an issue deserving of our attention? Can you discuss the unique
types of challenges that elders face when trying to raise young
children in senior residences?
Ms. Bailey. Thank you so much for the question. It is very
important and thank you for your legislation.
Grandparents living at home oftentimes need home
modifications for safety so that they can remain there and
maintain their families and help to keep their families whole.
Without your legislation and full enforcement of our Fair
Housing Act to make sure we are doing things to ensure that
they are not being discriminated against, they are not able to
stay in those homes. Then that means that we have family
instability, which is not the outcome that we desire. We
actually want to make sure we keep families together and that
we empower them.
They also, in many ways, support people that might not be
biologically family and I think that is something that we
really have to talk about. They are very generous, taking in
neighbors. So they are having to hold whole communities----
Ms. Pressley. Whole communities.
Ms. Bailey [continuing]. together.
Ms. Pressley. Excellent. Thank you for that.
Ms. Bailey, across our country, more and more elderly
people are becoming homeless. So we are talking about the role
that they play in keeping families whole and providing
stability to the community and to children, but it is also
essential to their own stability. What we are seeing is a
growing gray wave, where our elderly are representing the
highest rising rate of homeless.
Could you speak to these challenges and what are you seeing
and getting in terms of keeping elderly folks in housing they
can afford to live in?
Ms. Bailey. I think the administration's most recent
actions on Continuum of Care really, really should be alarming
because, as you stated, many older Americans are increasingly
becoming homeless. Many people are being left without any
support and what we see is that the recent actions could add to
those numbers.
So we already have about 700,000-plus people in
homelessness every day and the recent way that they have put
out a proposal to redesign the program would only leave funding
for about 30 percent.
Ms. Pressley. Okay.
Ms. Bailey. And the notice of funding opportunity literally
cut the program's funding in half.
Ms. Pressley. Thank you.
Ms. Bailey. So we can actually grow more homelessness by
almost an additional 200,000 families just with those changes.
Ms. Pressley. My goodness. Deeply consequential--and
preventable.
Ms. Bailey. Yes, ma'am.
Ms. Pressley. Thank you.
Recently, I joined Ranking Members Waters in urging the
Department of Housing and Urban Development to avoid a gap in
funding the Continuum of Care programs. In Boston, grantees
rely on these funds to provide lifesaving housing assistance.
I am calling on the administration to treat housing like
the essential priority that it is. It is why I have worked with
my colleagues to introduce bills like the Innovation Fund Act
to improve housing supply, the Eviction Helpline Act to create
a national support hotline, and the Appraisal Modernization
Act, which would allow homeowners to seek a second appraisal
when they suspect their home's value is underrepresented.
These little-to no-cost bills help people remain housed and
allow them to build wealth and maintain their homes, pass their
homes down to their children, or move into new homes as their
families expand.
I yield back.
Mr. Flood. The gentlewoman yields back.
The gentleman from Pennsylvania, Mr. Meuser, who is the
chair of the Subcommittee on Oversight and Investigations, is
now recognized for 5 minutes.
Mr. Meuser. Thank you, Mr. Chairman.
Thank you all for being here.
So we are really trying to find solutions, not trying to
come up with make-believe culpability.
The fact is that the housing shortage began back in 2008 in
the so-called Great Recession.
Mr. Sears, you mentioned that there is a $100,000 cost
before the shovel hits the dirt. Okay, that is not a tariff
issue, right?
Lumber, by the way, as you well know, 3 years ago, during a
different administration, was at $1,500. Today, it is at $545.
Last year, it was at $550. So it has come down, to an extent.
So, yes, most homes are built with lumber.
Inflation rose from 2021 to 2024 by 20 percent
cumulatively. Cumulatively, over the last 10 months, with
President Trump in office, inflation has gone up 2.4 percent.
Okay?
So let us just get all that straight.
Interest rates were very, very high: went up quickly. That
had a lot to do with people having a shock value of not buying
homes and with the rapid inflation that took place, incomes did
not keep up. So the idea of buying a home was very, very
difficult.
The fact is that we are short about 4.5 million homes and
we are building about 1.4 million a year. So we need answers,
not finger-pointing.
So, Mr. Sears, from your perspective, here is just one
thing I want to ask you, representing Realtors on the ground.
When an American sells their home, $250,000 qualifies for
capital gains, $500,000 for couples--in profit, that is. The
rest is considered income. So 30 percent as opposed to, in
capital gains, 33 percent.
Should we work on that? Should that be corrected? Would
that help?
Mr. Sears. I would encourage this committee and all of
Congress to support the More Homes on the Market Act. That
would take a first stab at the antiquated capital-gains
exclusion from 1997 and raise it to $500,000 and $1 million for
a married couple.
There is a proposal out there to eliminate taxes on home
equity on your primary residence. We would support any of that
but if we could get the More Homes on the Market Act approved,
we would be very happy with that start.
Mr. Meuser. Good. I agree, and I look forward to supporting
that.
Ms. Smith, rent control, I know that has been discussed
plenty already, but housing--I heard housing quality. What
lessons should we learn from what has occurred in New York, for
instance?
Ms. Smith. You could look right at Montgomery County,
Maryland, right here in this area, that enacted rent control a
year ago, and there is absolutely no investor interest at all
in that community. That had been a very robust department, a
market with very positive results, but the investor community
has hopped across the bridge over to Virginia.
Mr. Meuser. Okay. Thanks.
Yes, while we were sitting here, I texted the Secretary,
Scott Turner. When he was in his previous role, we worked on
opportunity zones together. So I said, hey, why do we not try
talking about some housing area, arena, opportunity zones? So
creating that type of potential private-sector incentive.
Mr. Sears, back to you. It is nearly impossible,
homebuilders have told us, to deliver a home under $250,000.
Permitting, financing rules have big impacts here on limiting
affordable starter homes. Thoughts on that?
Mr. Sears. Yes. Anytime there is red tape, delays in
construction, difficult permitting that cause delays in this,
there is a time value to money. So the builders are
unfortunately fleeing away from starter homes and the missing
middle homes, and they are going for the higher-end homes,
where the profit margins are a little larger, but they can
absorb these additional costs.
I mean, listen, here is the thing: Housing represents
nearly 20 percent of Gross Domestic Product (GDP). Every single
transaction, residential transaction, that occurs generates
approximately $90,000 of economic activity in every community
across the country. So anything we can do to streamline it to
get people into affordable homes will only be good for the
economy.
Mr. Meuser. Yes. I agree. I agree. Great multiplier effect,
and very, very meaningful to quality of life and everything
else.
You look online, and there are right-leaning proposals--
well, we do not have to look online; we are Members of
Congress. Everybody has different ideas and all, but this is
important. It is something that we are really focusing on and
we need to come up with. You have left-leaning proposals, you
have centrist proposals--well, I am out of time.
I just look forward to hearing more of your ideas on what
we can do to help solve this contemporary problem.
I yield back, Mr. Chairman.
Mr. Flood. The gentleman yields back.
The gentlewoman from Georgia, Ms. Williams, is now
recognized for 5 minutes.
Ms. Williams of Georgia. Thank you, Mr. Chairman, and thank
you, Ranking Member Waters, for holding this hearing today
addressing the housing crisis that is impacting the entire
country, y'all.
Thank you to all of our witnesses today for coming to
testify to provide your perspective on solutions because that
is what the American people want when addressing this housing
crisis.
I know that we have had discussions in our Housing
Subcommittee where we have had members mention their
perspectives and their solutions to address housing
affordability and the housing supply. While I am happy that
most of my colleagues have talked about proposals to help build
more housing, both for urban and rural communities, and
creating more resources to make home ownership more
affordable--I agree, as evidenced by legislation that I have
introduced and co-led--I also think a crucial piece of the
puzzle is ensuring that constituents have the tools to ensure
that they can maintain and hold onto homes that are part of
their family's legacy, which builds generational wealth.
And that is why I have introduced bipartisan legislation,
the Heirs Estate Inheritance Resolution and Succession (HEIRS)
Act, to keep homes and families for generations to come and
build that generational wealth.
While I represent the Fighting Fifth District of Georgia,
centered in Atlanta, which is a very urban area, y'all, I grew
up in rural Alabama and so rural housing is important to me
personally.
The home that I grew up in the big city of Smiths Station,
Alabama, did not have indoor plumbing or running water. I am
hopeful that we will continue to have conversations around the
Whole-Home Repairs Act that I am co-leading with Mr. Downing. I
hope that legislation can be discussed and adopted.
I also understand the need to tackle the housing crisis on
multiple fronts.
Ms. Bailey, what have you found are some of the best
practices for designing mortgage programs that work for rural
communities that also tackle the racial wealth gap and
homeownership gap?
Ms. Bailey. Thank you so much.
I think your legislation, the HEIRS Act, is really critical
for making sure we can preserve homeownership opportunities in
rural communities.
I think we need to make sure we are also utilizing special-
purpose credit programs. This is something that the Federal
Housing Finance Agency removed liquidity for from the GSEs, and
the Consumer Financial Protection Bureau (CFPB) just issued a
proposal that would curb the use of special-purpose credit
programs, despite them providing access to nearly 60,000
borrowers with $82 million in savings, particularly for people
who live in the South.
What people do not realize is that people in the South have
lower credit profiles than people across the Nation. What
special-purpose credit programs allow lenders in those regions
to do is to remove those unnecessary and arbitrary barriers and
make sure they can create and design programs to well-serve
those creditworthy consumers.
So making sure we put forward the HEIRS Property Act that
you have led and really is critical to helping preserve Black
wealth, but also advancing special-purpose credit programs, it
is extremely important. These programs have been adopted by
lenders throughout the Nation. They have made a huge impact,
trillions of dollars in impact.
So we need to make sure we are providing the oversight over
the CFPB and the Federal Housing Finance Agency to make sure
these critical programs can continue.
Ms. Williams of Georgia. Thank you, Ms. Bailey.
Mortgage lenders serving residents living in rural
communities and majority-Black areas know that some homes are
not even eligible for traditional mortgage financing, so these
programs are extremely important.
Many families in the Black community also face challenges
with estate planning, leading to situations where property is
inherited informally as heirs' property, as we have discussed.
So that is why I am still hopeful, Mr. Chairman, that this
legislation will be brought before the committee so that we can
move it forward, because it is truly bipartisan.
I also understand, Ms. Bailey, that transformation of
heirs' property into formal ownership can contribute to long-
term wealth accumulation and financial security for
marginalized communities and so I hope that we can continue to
gain support from all of the people here, the experts here,
because that is something that I have found that we all agree
on.
Mr. Sears, recently, I introduced the Whole-Home Repairs
Act with my colleague Representative Troy Downing, which would
establish a pilot program to empower homeowners to make
critical repairs, ensuring that homes are safe, efficient, and
remain livable.
Can you explain why access to lower-cost financing for home
repairs is essential for not only homeowner safety and
stability but also to preserve affordable housing in our
communities and prevent displacement?
Mr. Sears. Ms. Williams, I am happy to say that the
National Association of Realtors supports your legislation.
Ms. Williams of Georgia. Thank you.
Mr. Sears. Here is the reality: If we do not assist these
people to be able to maintain their home, we could lose another
precious housing unit on the market.
So anything we can do to incentivize them to rehabilitate,
to fix up their home, to make it stronger and can handle storms
and natural disasters, the better off the entire community will
be, and the homeowner.
Ms. Williams of Georgia. I agree, Mr. Sears.
My time is up. I have more questions for all of our
witnesses that I will submit for the record.
Thank you so much.
Mr. Flood. The gentlewoman yields.
The gentleman from Wisconsin, Mr. Fitzgerald, is now
recognized for 5 minutes.
Mr. Fitzgerald. Thank you, Chairman.
Thanks to the panel. Thank you for being here today. I know
it is a long morning and early afternoon, I guess, so--and I
apologize if some of the questions have some redundancy, but
one of the biggest barriers to improving affordability is the
sheer lack of developmental lots. That is something I see in
the district all the time.
I have draft legislation to create a no-interest,
revolving, mezzanine loan fund to help responsible developers
overcome the up-front capital constraints that keep lot
development out of reach, especially for projects with lot
costs under $100,000.
Mr. Sears, I know we have talked about this in the past,
but can you just--how would increasing the supply of just
buildable lots through this type of, like, targeted and
repayable financing impact the entry-level home prices?
Mr. Sears. Simple economics, supply and demand. The more
supply we have, the more of an impact it will have on the
affordability.
So, if we can designate these lots and get them designated
to be buildable and then get the builders in there, that will
help with the missing homes that we are looking for, whether it
is the entry-level or the missing middle.
Mr. Fitzgerald. It is very evident that the underground
portion of any new subdivision just adds astronomical costs to
the overall development.
Have you guys seen any strategies on municipalities working
with developers or, kind of, any new ideas out there when it
comes to just developing lots in general?
Mr. Sears. Well, as I mentioned earlier, the coalition that
we had for the ``Housing Accelerator'' playbook, where we have
over four dozen examples of the way that municipalities have
worked with builders and other governmental agencies in order
to streamline the process.
I do not know for sure if we have an example about the
infrastructure issue in there, but anything that can be done to
reduce the cost of infrastructure or to assist in that would be
greatly appreciated and will help with construction of more
units.
Mr. Fitzgerald. Oh, very good.
I have been working on legislation to release GSE
conservatorships, and the goal of a bill that I have right now
is simply to protect taxpayers--codify the strong reforms that
we have already had administratively, but take away the
incentives to stray from their charter--by making Fannie and
Freddie utilities and allow the GSEs to operate under the
reforms.
So your members work directly, I know, with families to
become homeowners. This legislation aims to build on the
reforms already in place by moving Fannie and Freddie into
utility-style entities. It also is preserving the limited and
paid-for government backstop through the Preferred Stock
Purchase Agreements (PSPAs).
How could this kind of utility model strengthen stability
in the secondary mortgage market and ultimately help more
families access affordable home ownership?
Mr. Sears. Yes, I know that them coming out of
conservatorship has been something we have talked about for a
long time, but we would fully support the utility-type model.
With that said, what we would want to make sure is that the
30-year fixed-rate mortgage remains a bedrock of the financing
that is available. We would also want to make sure that there
is the government guarantee.
Finally, if there is any revenue that is generated from
this, we would ask that we make sure that money is geared
toward housing and used for public-private partnerships
because, from what I understand, anytime there are these types
of partnerships, the private sector will put in 10 times the
amount of money as the Federal Government. So we could be
talking about trillions of dollars of influx into the housing
economy.
Mr. Fitzgerald. Just one more, kind of, tail question would
be: From your vantage point, what are the most burdensome
regulatory barriers that are actively preventing builders from
actually moving forward?
I know they work with Realtors, kind of, in the marketing
of some of these new developments but what still is, kind of,
the hardcore thing that really needs to be repealed for this
stuff to move forward?
Mr. Sears. A universal one across the country that scares
builders and investors is rent control.
Mr. Fitzgerald. Absolutely.
Thank you so much.
Mr. Sears. Thank you.
Mr. Fitzgerald. I yield back.
Mr. Flood. The gentleman yields back.
The gentlewoman from Michigan, Ms. Tlaib, is now recognized
for 5 minutes.
Ms. Tlaib. Thank you so much, Chairman.
We all have been talking about boosting our housing supply,
but we know it is of little value to someone who cannot get a
mortgage because of their skin color or cannot rent an
apartment because they have a disability. I know people want to
pretend it is not happening anymore, but it is.
The administration is deliberately undermining the
enforcement of our fair housing laws. You know, this is
incredibly important because we know that settlements against
banks have been done in closed doors, from folks giving higher
interest rates to folks coming in if they have an accent.
Was that not Wells Fargo, Ms. Bailey, that got sued for
that, lost? They settled out of court because they did not want
the public to know.
In May, ProPublica reported that the administration was
halting their fair housing investigations, allowing hotlines to
go unmonitored, preventing staff travel to identify witnesses,
and ending compliance reviews to ensure housing developers'
practices and policies are illegal.
In September, The New York Times reported that employees
from the HUD's Office of Fair Housing, quote, said that ``Trump
political appointees had made it nearly impossible for them to
do their jobs.'' A week later, the administration fired two HUD
whistleblowers who spoke out about the administration's gutting
of fair housing enforcement capacity.
We cannot sit here and act like this is not happening.
Ms. Bailey, is the Fair Housing Act being enforced right
now?
Ms. Bailey. No, ma'am.
Can I just say, it is not being enforced at a time when
complaints of housing discrimination that are led by people
with disabilities are up. So we are at near-record levels of
complaints about housing discrimination, and complaints based
on disability continue to lead. Complaints based on national
origin are also on a significant rise.
Ms. Tlaib. Yes, I was going to ask you about trends right
now, and I heard that was one of them.
Now I want to talk about CFPB, because I think that is also
really important. We know that the CFPB recent proposed rule on
Regulation B of the Equal Credit Opportunity Act was important.
Ms. Bailey, can you talk about some of the proposed changes
and what did the proposed rule basically allow banks to redline
again?
Ms. Bailey. Yes, ma'am. Thank you so much for this
question, because this is one where I think every woman in our
country should be alarmed.
The Equal Credit Opportunity Act made it possible for women
to get access to credit without needing a male cosigner. It is
baby, in terms of the years of enforcement.
Ms. Tlaib. I just want people to know: We could not get
loans without a man signing the loan with us. Just remember
that.
I know, Ms. Smith. I cringe too.
Go ahead, Ms. Bailey.
Ms. Bailey. So, for 50 years, we have had this legislation
that has made credit more accessible, and it has allowed us to
use fair lending practices that simply made lending fairer. It
removed obstacles and made lenders help them to choose the
less-discriminatory alternative and what they have since been
able to do is design programs that are really profitable.
Ms. Tlaib. That is literally my next question. I would----
Mr. Sears. Ms. Tlaib----
Ms. Tlaib. Yes?
Mr. Sears [continuing]. could I just say for the record
that what we are seeing statistically is that the largest
growth sector for buyers here in the United States are single
women. In fact, single women are three times more likely to buy
a home than single men.
So we are going in the right direction. I would just like
to say that.
Ms. Tlaib. Okay.
Well, Ms. Bailey, because you noted the Black-White
homeownership gap. I mean, Michigan lost more Black home
ownership during the last recession than any State in our
Union, but it is higher now, the lack of Black home ownership
is higher now, than before the passage of the Fair Housing Act
and that just makes--is so unsettling, to hear that.
So simply reducing what they call ``roadblocks'' and
supporting more of what they have been doing will not cut it. I
wish my colleagues would understand that, even though they
think everybody is alone--it is actually still happening
through the banks and through these institutions and that is
why we have to create laws to push back against it.
Ms. Bailey. We were making tremendous progress.
Ms. Tlaib. Yes. Yes.
Ms. Bailey. We increased Black home ownership for the first
time since the Great Recession of 2008. It grew from 2019
through 2024. The Black homeownership rate grew 14.29 percent.
That was incredible work that a whole group of us came
together--this committee's leadership, leadership at the
Federal Housing Finance Agency under Director Thompson,
leadership at HUD under Secretary Marcia Fudge.
So we can do things that are going to give people fair
opportunities, and they may ultimately benefit everyone. What
we know for sure is that discrimination distorts and if we
solve for discrimination targeted at Black communities alone,
our entire economy will grow by $5 trillion over a 5-year
period.
Ms. Tlaib. Yes. I know, for many of our families, it really
does create a lot of economic stability to be able to own our
own home.
Thank you. I yield.
Mr. Flood. The gentlewoman yields back.
The gentleman from Michigan, Mr. Huizenga, who is the vice
chair of the entire full committee, is now recognized for 5
minutes.
Mr. Huizenga. Thank you, Mr. Chairman and there is a lot to
unpack.
I actually have some personal involvement in the industry.
When I graduated with my oh-so-employable political science
degree--pause for chuckles from other political science
majors--I went into real estate full-time. My family has been
involved in construction for a very long time. I have done a
number of single-family housing developments. Mostly recently,
our family did a duplex/triplex/multifamily development--24
units, small but I have a lot of personal stories surrounding
some of those barriers that exist.
Before I go into that, I do feel like I need to address a
couple of the points that were made by my colleague from
Michigan. Mr. Sears, you made one of those, and I believe Ms.
Bailey actually buttressed that, which is heading in the right
direction.
I know when I got my Realtor's license in the early 1990s,
I was taught something very important: You do not look at
color. You do not look at national origin. There is one
standard, and it is green. Either people can afford it or they
cannot afford it.
We have seen government policies both make it harder and,
frankly, way too easy to get loans that people should not have
gotten. I am not saying that they should not have gotten a
loan, but that they got a loan that they could not afford and
that has caused a significant part of that.
When my colleague is talking about the dip in home
ownership in Michigan, which was across all races, that was
part of the reason we had people that had ARMs that could not
afford them. We have had to step in to tighten that up and that
pains me, as someone who literally sold houses for a living and
still develops housing and still is involved in construction at
a level.
Ms. Smith, I am going to start with you. In your written
testimony, you noted that regulatory burdens have been a major
contributor to the slowdown in new housing production.
I had that. I have had where a township came in and said,
``Oh, I am sorry, we know that this is not legal, but we are
going to double-assess your property because it is on a
corner.''
Ms. Smith. Uh-huh.
Mr. Huizenga. ``Oh, and you want to fight us? Do you know
how much that is going to cost in court? So, tell you what. Why
do you not just give us some extra money, and we will go
away.''
You want to know where those additional costs went? Right
into the cost of the lots.
Ms. Smith. That is correct.
Mr. Huizenga. Not to mention, ``Oh, we think the sight
lines are not good. So we would like you to spend tens of
thousands of dollars to take down a road, a hill, so it is not
as steep, so we have better sight lines.'' When I
inconveniently pointed out that maybe that was the county road
commission, the answer was, ``Yes, but we think you ought to do
it.''
Ms. Smith. Uh-huh.
Mr. Huizenga. All right?
Not to the mention when we are talking our values of
insulation and all of the other requirements that have been put
in place. There are some structural issues that have caused
decline in home ownership that have to be addressed.
So I just wanted to point that out that I appreciated your
take on this.
I only have a minute and 30 left, and I have to go through
this very quickly.
I want to hit on one thing. When Secretary Fudge testified
before our committee last Congress, I pressed her on a local
housing project in Benton Harbor, Michigan, called Harbor
Towers. Although it did get some immediate press and media
attention, almost 2 years later, at the start of the
multimillion-dollar project to rehab it, it continues to be
stalled. We are working with this administration now to try to
make that unstuck, but I can tell you firsthand that this
housing complex is in dire need of immediate renovations.
It should not take an act of Congress to have Federal or
any housing projects move forward, but what can Congress do to
tackle some of these barriers at the Federal level?
Ms. Smith. I think one of the things it can do is to make
sure that there are incentives at the local level because so
many of the regulations that you are talking about are done at
local permitting departments and that sort of thing, and it can
really vary depending on where you are.
So having, like, real incentives to be able to fast-track
projects and be able to get them built quickly without a lot of
onerous requirements would make a big difference.
We have also found that tax abatements are incredibly
impactful, particularly when we are looking at, like,
conversions from office buildings to residential, et cetera.
Mr. Huizenga. My time is expiring, and, Mr. Peter, I am
going to have to go to you about the increase in private
capital coming into this. I will take those as written.
I appreciate what you are doing. We have to tackle this
issue as a Nation.
Thank you. I yield back.
Mr. Flood. The gentleman yields back.
The gentleman from New York, Mr. Torres, is now recognized
for 5 minutes.
Mr. Torres. Thank you, Mr. Chair.
The single greatest challenge confronting our country is
the affordability crisis, a crisis so severe that it has become
the death sentence for the American Dream.
If you were born in 1940, you had a 90-percent chance of
out-earning your parents but for Americans born since 1980,
that fighting chance at the American Dream has collapsed to
less than 50 percent. The American Dream is dying of cost
disease, and the leading cause of death is the cost of housing.
For proof, look no further than America's largest city, New
York, which has become dangerously unaffordable for working
families. From 2005 to 2024, the population of New Yorkers ages
5 and under fell by one-third. From 2010 to 2020, 20 percent of
Black children and teenagers disappeared from the New York City
census count.
America is experiencing a reverse migration. In the early
20th century, African Americans fled the South for the North in
order to escape Jim Crow. Now, in the 21st century, African
Americans are fleeing the North in order to escape the
affordability crisis.
The scale of the need for affordable housing in America,
and especially in New York, cannot be overstated. When the New
York City Housing Authority reopened the Section 8 waiting list
in June 2024 for the first time in 15 years, a staggering
600,000 people rushed to apply.
In the Bronx, the East Clarke Place Senior Residence
received a staggering 26,000 applications for just 84 units, a
ratio of 300 to 1. When 300 families are left desperately
chasing after a single unit, that is not a housing market; that
is a humanitarian crisis, pure and simple.
Mr. Sears, what is the National Association of Realtors'
latest estimate of the gap between housing supply and housing
demand?
Mr. Sears. Mr. Torres, the last 3 years, the National
Association of Realtors reports that on average of around 4
million units have sold. The typical average year is 5.3
million. So just in the last 3 years there have been almost 5
million--I am sorry--almost 4 million units that have not been
on the market for consumers to buy.
Mr. Torres. So over 4 to 5 million units in the aggregate.
Of course, when we speak about affordable housing, the question
that my constituents often ask is, affordable for whom? Most of
the affordable housing that we create is often unaffordable to
the poorest families in America. The National Low-Income
Housing Coalition estimates a housing gap of over 7 million
units for the lowest-income families.
So, even though the United States has a deficit of more
than 7 million deeply affordable rental homes, Federal spending
on expanding the housing supply amounts to a mere fraction of a
percent of the Federal budget--a mere fraction.
Ms. Bailey, do you think that housing should only receive a
fraction of a percent of the Federal budget?
Ms. Bailey. No, not at all. It is only getting less than 2
percent. Housing is a fundamental right. As we heard, it is
accounting for nearly 20 percent of our Nation's GDP.
Instability in the housing market means instability in the
economy.
If you would permit me----
Mr. Torres. Sure.
Ms. Bailey [continuing]. there was a statement made earlier
that people only see green. Our lending experiences and our
housing experiences show that discrimination complaints are at
record highs. People see people for who they are, how they show
up, and they choose to treat them differently oftentimes based
on their immutable characteristics but also, to your point,
their source of income.
Mr. Torres. I also think history flatly contradicts the
notion that the free market was sufficient to abolish Jim Crow,
but--you know. That is why we needed the Voting Rights Act and
the Civil Rights Act.
But given the----
Ms. Bailey. The Fair Housing Act and the Equal Credit
Opportunity Act----
Mr. Torres. Exactly right.
Ms. Bailey [continuing]. and the Home Disclosure Mortgage--
you know, we could go on.
Mr. Torres. All of which are under assault.
Given the decades of disinvestment from affordable housing,
do you think Congress has been part of the solution or part of
the problem?
Ms. Bailey. So Congress did something brilliant during the
CARES Act and the American Rescue Plan. Congress put in an
infrastructure--this committee, under the leadership of then-
Chairwoman Waters and then when she was ranking member, put
together an infrastructure that allowed us to maintain people
at home.
During the COVID crisis, that funding was so critical that
we maintain renters. It is so important because, as we know,
most renters have little savings. So, if we do things like go
in today and take back those CARES Act provisions that limit
the ability to evict families, we are putting more people at
jeopardy of homelessness. We are ultimately going to pay for
that.
We did right by veterans, and now we need to take those
same lessons and apply those to our lowest-income renters.
Mr. Torres. I just want to end quickly. Look, I am all for
regulatory reform, but we need regulatory reform in addition to
reinvestment, not in the place of reinvestment. Let us not
create a false choice where one needs not exist.
Mr. Flood [presiding]. The gentleman's time is expired.
Mr. Torres. I yield back.
Mr. Flood. The gentleman yields back. The gentlewoman from
California, Mrs. Kim, is now recognized for 5 minutes.
Mrs. Kim. Thank you, Chairman and Ranking Member, for
hosting this hearing, and I want to thank all of you for
joining us. We are almost done.
California's housing market is one of the worst in the
Nation, and as a Member who represents California, it saddens
me to say that, just last month, California earned an F rating
for housing affordability. You know, since I got here as a
Member, I have fought relentlessly for housing affordability at
the Federal level, but there is only so much that we can do
when Sacramento and Gavin Newsom are driving so many failed
policies.
Earlier this year, as you know, when we were working on One
Big Beautiful Bill, I secured four times increase in the SALT
deductions to $40,000 to make home ownership in California more
attainable.
Mr. Sears, as you know, I represent Orange, San Bernadino,
and Riverside Counties. In my area, a family needs to make
$367,000 to afford a medium-priced single-family home, and I
want you to please discuss what the effects of increasing the
SALT deduction to $40,000 means for housing affordability for
constituents like mine.
Mr. Sears. Thank you, Ms. Kim. Good to see you again.
Mrs. Kim. Good to see you.
Mr. Sears. Yes, the increase in SALT from $10,000 to
$40,000 is very important, as well as securing the mortgage
interest deduction in the bill passed this year. These are very
real costs, and I always find it ironic that citizens would
have to pay taxes on taxes they have already paid. So anything
that can be done to increase that. In 2017, when the Tax Cut
and Jobs Act was put into place and the $10,000 limit was
there, there was no indexing for inflation. Again,
unfortunately, I do not see an indexing for inflation now.
We do know, based on historical numbers, the cost of
housing and housing ownership is going to go up. I would
encourage the Congress to look at any tax measures like this to
bring up to date, to put indexing in along with the capital
gains exclusion that was set in 1997. Thank you.
Mrs. Kim. Thank you very much. You know, as tax filing
season begins, I hope that Californians remember to utilize
this key deduction to attain their dreams of home ownership and
keep more of their hard-earned dollars in their pockets.
During the recent California fires, there are short-term
rentals. They play critical role in providing emergency housing
for displaced residents, fire responders, and relief workers.
So a question to you, Ms. Smith, how can Congress better
support and scale partnerships between State agencies, local
governments, in short-term rental platforms to ensure that
flexible housing options remain available during natural
disasters?
Ms. Smith. Yes, it is a very good question, Representative
Kim. We, after the wildfires, we housed so many people in our
Santa Monica communities, and Santa Monica had a 12-month lease
requirement, and so we had to actually work around that to be
able to have people sign leases and letting them know that they
could break their lease so that they could have any lease term
that they needed in addition to lowering any type of deposit or
application fees or that sort of thing. One thing Congress
could do would be to work with local jurisdictions,
particularly on their lease length requirements, so, when there
is a natural disaster or something like that, that would--that
could be overridden so you could have shorter lease lengths and
working with the short-term providers on streamlining access to
housing so that they could get into housing very, very quickly.
I think there are a lot of incentives that would be very, very
impactful.
Mrs. Kim. Another incentive that I co-led with my colleague
Representative Lawler is the Community Investment and
Prosperity Act. This bill would increase the public welfare
investment cap on banks from 15 percent to 20 percent. That
would enable further investments into the LITC, low-income tax
credit.
Mrs. Smith, again, to you, how would the passage of the
Community Investment and Prosperity Act help address the
shortage of affordable housing units that our country faces?
Ms. Smith. I cannot speak directly to the act, but we have
done a fair amount of low-income LITC work over the years, and
one of the things that is very--it is a fantastic program. It
has probably been one of the most effective programs in
producing affordable housing, but one of the challenges is
lining up all of the capital sources, because it all has----
Mr. Flood. The gentlewoman's time has expired. The
gentlewoman's time has expired.
Mrs. Kim. Thank you very much.
Mr. Flood. The gentlewoman yields back. The gentlewoman
from Texas, Ms. Garcia, is now recognized for 5 minutes.
Ms. Garcia. Thank you, Mr. Chairman, and thank you to all
the witnesses today, and I apologize I had to step out for a
few minutes. I hope that some of the areas that I am going to
cover are not going to be redundant, but I know my first words
will not be redundant. Mi casa, su casa, a simple phrase that
is used in my community to simply be proud of their home and
make it a welcoming home. It simply says ``my house is your
house.'' In reality, we are currently facing a severe shortage
of affordable homes, made worse by wages that have not kept up
with skyrocketing rents.
Mr. Sears, you put it another way. You said the American
Dream is slipping away. Our job, of course, is to make sure
that we ensure that dream for everyone. So I could not agree
more. Earlier this year, the Housing Subcommittee heard
directly from the National Association of Home Builders on the
impact that this administration's mass deportations and the
very fear of deportations have on housing construction. Mr.
Sears, you and I both agree the construction workforce is
stretched thin. The construction trades agree, especially when
61 percent of plasterers and 61 percent of drywalling and
ceiling installers in the workforce are immigrants. A recent
survey found that 92 percent of construction firms cannot find
enough workers.
As a district that has the distinction of having the most
construction workers in the country, I am very concerned about
this. So, Mr. Sears, do you think that this fear of deportation
is an obstacle and a barrier to the supply chain, and should we
not in housing also consider that?
Mr. Sears. Here is the reality, Ms. Garcia. The average age
of an American tradesperson is--they are in their 50s. We have
not done a good job of developing the young people to get into
the trade. So we need to do that, and what the--what we are all
for is making sure that the skilled tradespeople that we need--
--
Ms. Garcia. I did not ask about the trades. I am asking you
specifically about the fear of deportation, work sites that do
not have--that the workers there because they are afraid of
coming to work. I know about work training. I have done this
work for a lot for a long time.
Mr. Sears. I am not in a position to speak about
deportation. I am sorry, Ms. Garcia.
Ms. Garcia. So you have not read that people are being
raided at work sites?
Mr. Sears. What I would encourage the administration to do
is to allow skilled workers to be able to legally work here in
the country, whatever that takes. If the Congress can do
something, I would encourage them to do that.
Ms. Garcia. Well, I am intrigued, because all of you all
have been talking all morning, and you all have not faced up to
the worker shortage, and if 91 percent of the workers are
immigrants, it seems to me that it is an obstacle and an issue
that we also need to address at some level here in this
committee. I am on the subcommittee, as you know, on Housing
and Insurance and you--we really should not dance around it.
The reality is, if you do not have the builders, then you are
not going to have the homes.
Mr. Sears. One hundred percent.
Ms. Garcia. Well, you do agree with that. Good. Sir, do you
think that we should be looking at that?
Mr. Sears. In order to keep skilled workers in the country?
Absolutely.
Ms. Garcia. No. In order to make sure that we can build
homes.
Mr. Sears. We need to build more homes, yes. How do we do
that? We need the workforce. So any workforce that we have or
can encourage to be here, we need to do that.
Ms. Garcia. All right. Well, let me move on to another one
that you all seem to be dancing around is this whole tariff
issue, because we also had--I specifically asked the
homebuilders this question too. Tax Policy Center found that
tariffs would add roughly $30 billion, $30 billion to the cost
of investment in rent additional structures or about $8,000 to
$10,000 per home because, as we know, the white lumber that is
used for framing most homes comes from Canada, and Canada, I
believe, had the 10 percent and then plus another 20, 25
percent. I think Mr. Sherman went through a lot of this. Ms.
Smith, since you represented multifamily housing, how are
tariffs impacting your bottom line?
Ms. Smith. Well, we are trying to figure that out. I did
want to make a comment about the immigration because not only
do we need people to build homes but we also need people to
take care of homes. So, in the multifamily environment, we have
teams of maintenance workers who are keeping up these
communities and making sure that people's homes are well cared
for, and it is very dependent particularly on legal immigrant
labor.
Ms. Garcia. All right. So let us get back to your bottom
line. Tariffs have impacted the----
Ms. Smith. We believe that they will have a significant
impact, but like I said, the subs are having a hard time----
Ms. Garcia. Do you agree that it is going to be between
$8,000 and $10,000 per home?
Ms. Smith. We do not know. We do not know because they
move--they are moving around so much we do not really know.
Ms. Garcia. Mr. Chairman, I would ask for more detail in
that response from the witness.
Mr. Flood. Without objection.
Ms. Garcia. Thank you. I yield back.
Mr. Flood. The gentlewoman yields back.
I now recognize myself for 5 minutes. We have heard a lot
from our witnesses today about different policy ideas and
regulatory barriers that hold back the development of more
housing. I think at the core of many of these ideas is one
basic fact: We need to build more housing. I mean, it is
simple. There are many factors that have led to our current
environment where housing supplies failed to keep up with
demand. While some of those factors are beyond the remit of
Congress, there is a universal--there is a universe of Federal
barriers to housing supply that we are working on addressing in
this committee. I want to spend my time today focusing
specifically on one of those Federal barriers that I feel is
worth some attention: Build America, Buy America, or BABA.
These requirements were enacted as part of the Infrastructure
Investment and Jobs Act signed by President Biden in 2021. The
statute states that BABA applies to infrastructure, but a
decision by the previous administration has applied Buy America
requirements to Federal housing projects in addition to hard
infrastructure projects. Sadly, that decision has had
disastrous effects.
While a hard and fast BABA requirement may make sense when
building a bridge made of steel and concrete, it makes less
sense when you think about all the different components that go
into building a home. Fundamentally, this policy betrays a
basic reality of Federal housing programs. If we are aiming to
take finite Federal resources and use them to build housing, we
need to be able to scale those dollars as efficiently as
possible to make it work. In other words, in order to build
more affordable housing, we must use Federal resources to build
housing affordably.
I recently asked affordable housing groups to bring my
office anecdotes demonstrating the effects of BABA on projects,
and I would like to take a moment to share some of those
stories. One developer in the southwestern United States had
this to say about BABA costs, and I quote, For a 60-unit
affordable housing development, we estimate these soft costs
could be in upwards of $250,000. For example, each project will
now need to hire a BABA consultant to manage the waivers. That
is 50 to $100,000 a project. General contractors will need to
increase their administrative time on projects to manage
compliance, another $100,000, and architects and designers will
have additional administrative time, another $50,000.
We heard the following about a project in Massachusetts
related to BABA costs, and I quote: The BABA materials cost
increase is estimated to be $193,000, a 17.7 percent increase
or greater than one-fifth of the home HUD award that triggered
the BABA requirement.
We heard this about a project in Wisconsin: For a 45-unit
project with a construction budget of around $8.5 million, the
BABA impact was estimated at over $400,000. The home award that
would trigger BABA requirements was around $700,000. So more
than half of the Federal home partnership program money would
be used to pay for BABA compliance.
We heard this about a project in California. Quote: On one
project in central California, 80 units, BABA requirements
resulted in an increase of approximately $1.3 million, and we
heard this about a project in Montana. Quote, A project to
provide homes to families experiencing homelessness lost the
opportunity to use $360,000 of a $1.3 million housing trust
fund grant that expired on September 30, 2025. The contractor
was unable to find products made in the U.S. to complete the
utility work in time because U.S. products were on back order.
I have more of these. I could go on and on and on, but the
reality is that, however well-intentioned it may be, BABA is
driving up the cost of projects, wasting Federal dollars that
could be going to building more housing. In some cases, it is
even killing projects entirely.
With the little time I have, Mr. Sears, Ms. Smith, Mr.
Peter, can you briefly please share with us your opinion on the
costs associated with the Build American, Buy America
requirements for affordable housing projects. Mr. Sears.
Mr. Sears. Thank you, Mr. Flood. While the BABA rules were
well-intended and I think meant for a larger infrastructure,
the reality is, is that, when builders get stuck waiting for
waivers or searching for substitutes or having to pay higher
prices, the impact goes right down to the end consumer.
Mr. Flood. Thank you very much.
Ms. Smith.
Ms. Smith. Yes. We have been talking to our subs, and we
think that the increased premium would be somewhere around 4 to
5 percent.
Mr. Flood. Thank you.
Mr. Peter.
Mr. Peter. Yes, I agree. I mean, all the levels of
government just need to get out of the way, and you highlighted
a great example there.
Mr. Flood. Well, I appreciate everybody being here. I
appreciate my colleagues on both sides of the aisle. While we
may have disagreements on policy, this committee is functioning
the way I had hoped Congress would work before I got here. So,
with that, I yield back.
The gentleman from California, Mr. Liccardo, is now
recognized for 5 minutes.
Mr. Liccardo. Thank you, Mr. Chair. I want to thank the
chair, both the subcommittee chair as well as the full
committee chair, for their collaboration. We do not hear that
word very often in this Congress, and I think, in this
committee, there is some collaboration, and I really want to
thank them for their leadership as well as the Ranking Member
Waters and Ranking Member Cleaver for their very strong
leadership.
In particular, we are taking this housing crisis like it is
a crisis. Perhaps not all the ideas and solutions I would
prefer are on the table. I understand that is how it works when
you are not in the majority, but I appreciate the fact that we
are actually seeing legislation that will be soon coming to
markup. I am very eager to see that happen and hopefully very
soon also to the floor, and I want to thank in particular Chair
Flood for reaching out even to a rookie like me or very early
on to say we are interested in all our committee's ideas. So, I
appreciate that effort.
Obviously, I come from--I know we all probably come from a
place that is affected by the housing crisis. I am from Silicon
Valley. We consider ourselves sort of the ground zero of it,
and there are many fingers to be pointed in different
directions. We can all talk about supply and the urgency of
more supply, and I will agree with everything everybody says
about more supply.
I am still of the viewpoint that I have not seen an
economist who thinks that, if we do everything right on supply,
we are going to see rents fall by more than 10 or 15 percent
over half a decade and we are still going to have 13 million
households that are extremely low income that are never going
to be able to afford market rate rents. So we have to do
something about things like vouchers, which are badly
underserving right now our country. I think only one out of
every four families that actually qualifies gets a voucher.
Yes, we do need some demand-side solutions as well,
unfortunately, because the market is just not going to fix it
all, and no matter how well we fix the market or allow the
market to operate.
I do really want to thank and appreciate the fact that and
thank leadership for the fact that we have several bills that I
have been leading or co-leading that are in consideration.
There are other additional bills I am hoping we can discuss in
the future, including the Unlock Act, H.R. 5150, that Chair
Flood and I introduced to better utilize existing Federal
resources for housing construction, which really resulted from
local response to a request for information (RFI) that the
chair and Ranking Member Cleaver issued, and a city in my own
community, city of Mountain View, responded and identified some
challenges they have, barriers to CDBG, and we are trying to
fix those. I appreciate the process they started, and I want to
make sure we finish it. That is responding to local needs.
Coming soon, there is going to be a bill under draft now to
incentivize conversions of office and commercial space to
housing, and I look forward to working with my committee
colleagues to make that happen, and I really want to
appreciate, first, Ms. Smith, your company is my landlord. So I
am hoping that you will let your colleagues and accounts
receivable know that the check is in the mail.
I want to appreciate, Mr. Sears, realtors have been very
supportive of a couple bills that Chairman Flood and I have
worked on, H.R. 4810 and 4660, both to streamline reviews for
affordable projects, federally assisted affordable projects. We
appreciate that. I wanted to ask if you could go back to your
colleagues over at the realtors and take a look at H.R.--I am
sorry--H.R. 4568, the Supply Act. You might have guessed I
introduced it with Congressman Garbarino, another bipartisan
bill, and this is to expand FHA mortgage insurance to finance
second lien loans for accessory dwelling units--comes from my
experience as a former mayor of a large city in San Jose with a
million folks, and we have a housing crisis, and we thought one
solution might be to try to make it easier for homeowners to be
able to get permits and build ADUs or granny flats, as they are
often known, and what we discovered when we went to the private
sector, and lots of prefabricated companies came forward with
20 different models. We put those models on our website, and we
allowed homeowners to be able to get their permits in a day by
going online because we streamlined in advance all the
permitting and approvals so folks could get them. We saw a huge
increase in permits that went from 15 a year to about 900 a
year. We thought we are really on to something, and we were
patting ourselves on the back, and then we discovered only
about half of them got built because homeowners could not get
financing, especially if they were modest income. They did not
have enough equity.
We know that Fannie Mae and Freddie Mac get in this game,
we could see a real opportunity and explosion that could enable
many homeowners to become home providers, and I know that is
something that the realtors might care about, and so I very
much appreciate the realtors' engagement on this.
Mr. Sears. Yes, sir.
Mr. Liccardo. Thank you.
Mr. Flood. The gentleman yields back.
The gentleman from New York, Mr. Lawler, is now recognized
for 5 minutes.
Mr. Lawler. Thank you, Mr. Chairman.
Housing affordability is a serious crisis in our Nation
right now and gets to the heart of the affordability concerns
being felt by most Americans. For many, it is the most
difficult time to purchase a home in a generation, and at the
heart of this crisis is supply. We are probably over 8 million
units underbuilt nationwide at the moment, and this is despite
massive Federal spending to support housing. Over $1.2 trillion
spent on programs run by HUD since 2000. It is going to take a
serious reevaluation and reform of our Federal involvement in
housing to actually focus on the substantive issue, which is
supply. This has been a key priority of mine, and I am proud to
have several bills that are attached to this hearing.
In focusing on unleashing construction to meet our needs,
we need to be ensuring that we are taking a comprehensive
review of housing policy and spending, hearing from the
Secretary and looking not just at the critical programs that
support low-income housing, but at middle class housing and
workforce housing as well, housing for the elderly, housing for
the Intellectual and Developmental Disabilities (IDD)
community, housing in all communities across our country which
have unique needs.
At this time of years--at a time in which we have seen
raised rates, sustained affordability concerns in the ongoing
battle to finish bringing down inflation, middle-income buyers
face a unique challenge causing them to fall through the
cracks: not poor enough for assistance, not wealthy enough to
compete. I would echo Ms. Wagner's sentiment from earlier in
the hearing that we need to pursue reforms that could expand
attainable home ownership for middle-income buyers.
Mr. Peter, expanding beyond your earlier answer on
minimizing lot sizes, how can we ensure we are incentivizing
the financing and construction of starter homes?
Mr. Peter. Thank you for the question, sir. The short
answer is, if we have smaller lots, the builders are going to
build. That is what we are finding across the country, and we
do not necessarily need Federal programs. In California, we
just heard about it. ADUs came out of nowhere, and the people
find the financing. The same in Seattle, where, back in the
1990s, zoning law was changed, and the private sectors filled a
vacuum by providing financing for the builders.
Mr. Lawler. How can Federal reporting or data collection
help identify where regulatory barriers exist without implying
that Washington should dictate how towns and counties plan
their neighborhoods? New York is a home rule State. I support
home rule. I support local control of zoning, but how do we
take the data and actually utilize it in a constructive way?
Mr. Peter. Yes. So, from our case studies, we have
distilled the lesson, what we call the housing abundance
success sequence. It is very simple. You need to allow by right
zoning; so take the discretion away. The second is you need to
allow smaller lot sizes, and the third one is you need to allow
faster permitting and keep it short and simple regulations.
Once you make it complex and complicated, only the people--only
the builders with large staff can navigate it. If you keep it
short and simple, then small builders that may be lawn care
professionals today might see the opportunity to get into the
game and build housing. So we do not need a lot more research
on this. We already know what works.
Mr. Lawler. I appreciate that. One other measure that has
had a disastrous impact in New York, for instance, that
disincentivizes investment in housing and contributes to
greater housing scarcity is rent control and the concept of
freezing the rent, which seemingly is all the rage in New York
City right now. We have seen, in New York City, for instance,
50,000 vacant units as a result of New York's rent control laws
that were passed in 2019.
Mr. Sears, as we prepare for the Mamdani regime to take
over New York City, can you speak to the impact rent control
policies have on housing supply and affordability?
Mr. Sears. It has a dramatic impact. Rent control units
less frequently come on the market, which excludes people from
moving into them. It also scares away potential investors and
builders who would want to build in the community but not
knowing if they will be able to get a return on investment,
they will look elsewhere to build.
Mr. Lawler. I appreciate that. Mr. Sears, in the 3-seconds
I have left, did you appreciate the increase in SALT?
Mr. Sears. Thank you, Mr. Lawler.
Mr. Lawler. I yield back.
Mr. Flood. The gentleman yields back.
The gentleman from Texas, Mr. Gonzalez, is now recognized
for 5 minutes.
Mr. Gonzalez. Thank you, Mr. Chairman, and thank you for
the committee, for our witnesses to be here today on such an
important topic. I know we are talking about a lot of
interesting and important policies that impact the housing
shortage in America, but there seems to be an apprehension
about talking about a root issue, which is the labor shortage,
which is impacting the construction of new housing in this
country. I think we cannot fix a problem if we do not admit we
have a problem. Thirty percent of construction workers in
America are immigrant labor. In Texas, it is 40 percent. Just
recently I met with homebuilders in my district that showed me
videos of job sites that looked like ghost towns, and we cannot
fix this problem if we do not address it. I know, Mr. Sears,
you talked about workforce training, and certainly that is
something that we need to address in this country. It is a
long-term solution, right? It is not something we are going to
fix today. What are we doing today to talk about the labor
shortage? We cannot build homes without people, hard-working
people, which are immigrants. They are building America. It is
not American labor force born and raised in America that is
building this country. It is labor that is coming from other
countries that are doing the hardest work in this country and
building homes, and affordable housing as part of it.
Ms. Smith, are your members talking to you about this, and
what are we doing?
Ms. Smith. Yes, they certainly are, and I am experiencing
it in my own company because it is not only just the immigrant
labor that is used to build apartment communities, but, again,
those that maintain them, our contractors that paint our
apartments, that clean our buildings, that sort of thing. So it
really does impact our ability to be able to provide the kind
of experience that we want for our communities. So it is a very
big challenge that we face right now.
Mr. Gonzalez. Yes. Also on affordability, I was told, after
these ICE raids recently in the country that the square footage
for framing in my district almost doubled because of the labor
shortage. So that is putting a real squeeze on housing. Mr.
Sears, we should not be shy about it. We should be honest and
forthcoming and just tell people we have a labor shortage, and
I do not know if they are documented or undocumented, but they
are doing the work, and they are building our country. We have
to admit it. We cannot be hiding from the issue because we
cannot resolve it if we do----
Ms. Smith. It will also increase costs.
Mr. Gonzalez [continuing]. and it is okay, right?
Mr. Sears. Thank you, because we do support immigration
reform. We support having people come in to increase our
workforce and including work visas. I mean, we need them.
Mr. Gonzalez. We need more work visas, and we have been
fighting for them for a long time but the ICE raids that are
happening right now are having a direct economic impact on
construction in this country, and we cannot hide from it. We
have to admit we have this problem or we cannot solve it,
right? Thank you.
Mr. Sears, thank you for joining us today, by the way. In
the Rio Grande Valley, the district that I represent, the
average home price is $200,000, which on paper looks far more
affordable than many places in the country, but in this part of
the district, people's medium income is $55,000. That means
most families may never have a savings to buy a home with cash
and, because these mortgages tend to be smaller, many lenders
will not offer them since they are less profitable under the
current market conditions. So, even in areas where housing is
relatively affordable, too many working families are
effectively iced out of home ownership from every angle. Mr.
Sears, what steps can Congress take to help financial
institutions incentivize them to offer smaller dollar mortgages
in communities like mine and to keep them from shutting out of
this market?
Mr. Sears. The affordability crisis is everywhere across
the country, and in markets that might seem more affordable,
there is still sticker shock for your constituents, for
example. So what we can do is open it up for community banks,
smaller local banks or regional banks, and to incentivize them
to make these loans. I will just say I have not heard a
mortgage officer say, no, they do not want to do a loan because
it is too small, because the bank will still make money, but it
is a matter of how do they get access to that credit?
Ms. Bailey. If I may, sir, I need to share that the
liquidity programs in the equitable housing finance programs of
Fannie Mae and Freddie Mac actually included support for small
dollar mortgages. Unfortunately, the Federal Housing Finance
Agency Director has taken away those equitable housing finance
goals. So this is why your oversight is so critical because we
actually had a mechanism for doing it and then the chairwoman
has a bill where she is recommending that HUD actually conducts
a study for how we can create more liquidity within the FHA
program for small dollar mortgages, because there are
affordable homes throughout our Nation. To your point, without
having access to safe and responsible financing, people are not
able to access----
Mr. Gonzalez. Thank you, and for the record, I am
sponsoring a bill called the Save the American Workforce Act. I
encourage you all to look at it. It will--it addresses----
Mr. Flood. The gentleman's time has expired.
Mr. Gonzalez [continuing]. undocumented workers who are
here that have not had any legal trouble. Thank you.
Mr. Flood. The gentleman yields back.
The gentleman from Indiana, Mr. Stutzman, is now recognized
for 5 minutes.
Mr. Stutzman. Thank you, Mr. Chairman, and thank you all
for being here.
I am happy to say that Indiana is one of the most
affordable States for home ownership in the country, but the
dream of owning a home is still far off for a lot of Hoosiers,
especially today, because, during the Biden Administration, the
median price of a home in Indiana increased by nearly $100,000.
Ms. Smith, I would like to start with you. During the Biden
Administration, inflation increased the cost of construction
materials, labor, and now insurance. It is clear that a big
reason for our housing problem is a lack of supply. How have
increased costs impacted the ability of developers to build new
housing?
Ms. Smith. Well, I think we are seeing it in the fact that
our starts are down 35 percent. Just to give you some context,
you would need about a 6 percent return on costs to get a
project financed today with a, say, a pension fund or an
insurance company. With the costs where they are and the land
and the regulations, the soft costs, we just cannot get there,
and so it is really just--it is a return-on-cost issue today.
Mr. Stutzman. Economics is playing a key role in this. To
follow up on Mr. Lawler, while we are discussing new
development, pointing out that the newly elected mayor of New
York City and other far-left mayors in this country have
endorsed things like rent control.
Mr. Peter, I would like to ask you, do you think rent
control or rent stabilization policies encourage development?
Mr. Peter. No, they discourage development, and there is
pretty robust economic literature, and that is one of the
reasons where economists generally do not agree on anything
except that, on rent control. They agree that it is uniformly
bad, and there have been plenty of examples from
internationally where rent control was implemented that shows
that it had not the desired effect. In fact, in Argentina, The
Wall Street Journal just wrote about this recently, once they
repealed rent control, actually, more units came online because
people were sitting on them not renting them because they could
not make the costs work, and now they were returning them to
the market.
Mr. Stutzman. Sure. Thank you. In addition to increased
costs, it seems that government roadblocks are exacerbating
this issue. That is why, in August, I introduced my
Streamlining Rural Housing Act alongside Senator Moran, and so
I am pleased to have bipartisan support along with our
conference chair Ms. McClain as well as Ms. Pettersen and Mr.
Scott. My bill would require HUD and USDA to develop a joint
environmental review and inspection process for rural housing
projects, cutting red tape and making affordable rural housing
easier to build. This is not only necessary--a necessary
solution but an important step toward making it easier to build
new homes.
Mr. Sears, I would ask, I am honored to have the realtors
supporting this bill and others like this, but can you discuss
a little bit how the overlapping rules and regulations across
Federal agencies make it more difficult to construct new
housing?
Mr. Sears. I am very happy to say we support the bill as
well. Anytime there are duplicative efforts, it takes longer,
and it costs more. Streamline it. Have one review, and that
will make things quicker, more affordable.
Mr. Stutzman. I know one thing coming from a business
background, it is not that I am--would be frustrated with a
regulation. It is often the speed of getting to a conclusion
and getting that permit so you can move forward, and I think
that is where this is really a key piece to letting the economy
move quicker. Still having the same regulatory outcome, but
just much quicker. I want to follow up to that. How do we
target reforms like my bill, improve--how do these reforms
improve the environmental review process while still
maintaining the necessary environmental protections?
Mr. Sears. Yes. I mean, as you said, we need to make sure
that the protections stay in place, but having it streamline
one inspection process, that is very important. That way, we
make sure that we have the safety that is needed for the
eventual occupants of the properties.
Mr. Stutzman. Yes. Anybody else want to comment on the idea
of streamlining the regulations?
That is fine. I know that zoning laws are set at the State
and local levels and the Federal Government has no business in
micromanaging State and local officials, but I do think it is
important to emphasize that housing affordability is not an
issue that can be solely fixed at the Federal level and that we
need buy in and smart policy from our State and local partners
to help spur growth.
Mr. Peter, I am pleased to see you mentioned zoning in your
testimony today. What are some places that have overtly
restrictive zoning laws? Can you mention anything quickly?
Mr. Peter. I mean, in most of the country, that is the
problem. If you ask me the other places that have less
restrictive zoning laws, for example, Houston has done a great
job. Back in the 1990s and the 2000s, they have rolled back
minimum lot size requirements, and they had a big increase in
home construction.
Mr. Stutzman. Thank you.
Mr. Flood. The gentleman yields back.
The gentleman from New York, Mr. Meeks, who is the ranking
member of the House Foreign Affairs Committee, is now
recognized for 5 minutes.
Mr. Meeks. Thank you. I am thrilled that the chairman has
convened this hearing giving us all an opportunity to discuss
the housing affordability and supply issues as well as our--as
well as share our proposals to address this crisis. This
includes my bipartisan bill that I recently reintroduced with
Congressman Sessions, known as the Mortgage Insurance Freedom
Act. The Mortgage Insurance Freedom Act is a straightforward
and commonsense fix that will make a real difference for
families across the country. It would end the FHA's lifetime
mortgage insurance requirement and return to the system that
existed before the financial crisis.
Under this bill, FHA loans would operate like those in the
conventional market. Once a borrower has built enough equity,
they would no longer be required to pay monthly mortgage
insurance installments, immediately cutting their monthly
expenses. So, also right now, the FHA borrowers who are often
first-time homebuyers and young families, must continue paying
mortgage insurance for the entire life of their loan, even
after they have gained substantial equity. This policy has
created or was created during the financial crises, when the
mutual mortgage insurance fund was under significant strain.
That is no longer the case.
According to last year's FHA annual report to Congress, the
Mutual Mortgage Insurance (MMI) Fund is now more than five
times above its required capital ratio. Conventional borrowers
are not subject to a lifetime insurance requirement. Once they
build sufficient equity, their mortgage insurance ends. My bill
ensures that the FHA borrowers receive the same fair and
reasonable treatment and are not burdened by unnecessary
monthly costs long after they have demonstrated financial
strength. In today's economy, that relief matters. Ending
lifetime mortgage insurance means more money for groceries,
childcare, college savings, and everyday expenses. It helps
families build equity faster and strengthens their long-term
financial stability.
This bill is endorsed by the Mortgage Bankers Association,
the National Urban League, and the Broker Action Coalition,
among others. These organizations understand the housing market
and recognize that this reform will help families keep more of
their hard-earned dollars. This legislation delivers greater
fairness, boosts affordability, and accelerates wealth building
for American families. By allowing mortgage insurance to end
once borrowers build equity, we give FHA families the same
pathway to financial stability that conventional homeowners
already enjoy. So I look forward to talking to you and
welcoming my colleagues to move this bill forward as we go
forward.
I want to switch gears. I am just looking at my time at
another important issue that I would like to discuss, because,
back in March of this year, FHA Director Bill Pulte released a
directive eliminating the GSE's participation in special
purpose credit programs. These programs provide the down
payment help, closing costs assistance, and other support that
many first-time buyers and families in underserved communities
rely on to get their foot in the door of home ownership. I
immediately led a letter along with my colleagues to the
Director urging him to reverse that decision.
For far too long, structural disparities in our housing and
lending markets have kept too many low-income families like my
parents and Rio residents and other historically marginalized
communities, on the outside looking in. Every single day, it
seems to me that the Trump Administration finds a way, a new
way, to make life harder and more affordable for regular and
average everyday Americans, from cutting off these credit
programs to pulling back on the CDFI fund to attempting to shut
down the CFPB. Their actions are making it harder for families
to get ahead and pushing people further behind.
Ms. Bailey, what are you hearing from lenders, housing
counselors, and community groups on the matter of losing
special purpose credit programs, and how does it impact
families to get ahead and have the opportunity to home
ownership?
Ms. Bailey. Particularly for people who live in the South,
where people have historically lower credit profiles than
people in the rest of the Nation, there is deep concern that
there will not be credit liquidity there. The GSEs have not
always done a great job of ensuring for liquidity in every
community at all times, including in the South. So special
purpose credit programs in that region have really lifted
credit opportunities for everyone and for people of color, who
have a history of underservice, and it is important to note
that these are the people that the health of the housing system
depends on. So, if they are not able to get access to fairly
priced loans, the system will fail.
Mr. Meeks. Thank you. I yield back.
Mr. Flood. The gentleman yields back.
The gentlewoman from Texas, Ms. De La Cruz, is now
recognized for 5 minutes.
Ms. De La Cruz. Thank you, Chairman. I appreciate you and
you holding this meeting today and thank you to all of the
witnesses for being here.
Where I live, which is in deep South Texas, affordability,
and specifically housing affordability, is at the top of their
mind especially for young families and young adults that are
getting to that age of beginning their life in a new family.
Affordability is something that we must tackle and
unfortunately, consumers looking to buy or rent are being hurt
by all angles, and the primary driver to housing costs have
been the decades of underdevelopment that has left us short 5
million housing units.
That being said, I am sure all of our witnesses would agree
that the FHA multifamily insurance programs play a critical
role in incentivizing housing construction nationwide. I have
introduced the H.R. 6132, the Housing Affordability Act, to
update FHA's multifamily insurance program for the first time
in over 20 years. That is quite a bit of time. A lot has
changed since then. And this is to ensure that they more
accurately capture the true costs of construction.
So, Mr. Sears and Ms. Smith, I am proud to say that the
organizations that you represent are supporting this
legislation, and I would like you to explain how changes like
these can leverage and incentivize private investment to expand
the housing supplies. Mr. Sears, I will start with you first.
Mr. Sears. Ms. De La Cruz, thank you very much, and, yes,
the National Association of Realtors does support this effort.
We see--have talked about too many rules and laws that have
gone unchanged, and so 22 years is a long time. What we see is
these outdated limits block the potential of financing for
these projects, and when financing is blocked, that is going to
prohibit the construction that is so desperately needed. So
updating this, unlocking the private investment, would be key
to helping to solve the housing crisis.
Ms. De La Cruz. Thank you so much.
Ms. Smith, would you agree with this?
Ms. Smith. Absolutely. Like I mentioned earlier, the 221D4
program is really an excellent one for multifamily because
costs have gone up so much over the 20 years, as you
represented, we need to extend the loan limits. So, today,
there are so many projects that are just--that cost so much
more to build than would fit into the program today. So we
think that, in addition to really expediting the process and
really shortening the waiting period, will make a big
difference in the use of this program, but we are very
supportive of it.
Ms. De La Cruz. Thank you.
Mr. Peter, to change topics, many people might be surprised
to learn that most government housing programs focus primarily
on stimulating demand while ignoring the supply constraints
that we have. What role can government programs play in better
incentivizing supply of new housing construction rather than
just focusing on demand?
Mr. Peter. Yes. So government is very good at stimulating
demand. It is very poor at bringing forth new supply and demand
is relatively easy. All you have to do is lower underwriting
standards, add down payment assistance, or lower interest
rates, for example but if you do that against a limited supply,
economics 101 tells you that you are going to end up driving
prices higher, and that is bad for first-time homebuyers.
The supply side, there are certain levers that the Federal
Government has. For example, you could free up Federal land,
especially out in the western third that could, over 10 years,
create 1 million single-family starter homes, and that is
certainly a very potent option, smaller lot sizes as talked
about before. There is a whole slew of things that the Federal
Government can do.
Ms. De La Cruz. Thank you so much.
Very quickly, in my short period of time, Mr. Sears, I will
come back to you, another important cost driver for consumers
and developers is the ability to access affordable lending.
From your perspective, what are the key drivers in today's
market that are increasing the consumers cost to borrow?
Mr. Sears. Right off the top of my head, interest rates.
That is one of the most significant. Also, insurance costs.
That is part of the cost to own, and part of the borrowing cost
has been significant as well.
Ms. De La Cruz. Thank you.
With that, Mr. Chairman, I ask, by unanimous consent, that
this support letter for H.R. 6132, cosigned by over a dozen
housing groups, be entered into the record. Thank you.
Mr. Flood. Without objection.
[The information referred to can be found in the appendix
of page XX.]
Ms. De La Cruz. Thank you. I yield back.
Mr. Flood. The Gentlewoman yields back.
The gentlewoman from Oregon, Ms. Bynum, is now recognized
for 5 minutes.
Ms. Bynum. Thank you, Mr. Chair.
Thank you to all the witnesses for your testimony, and
thank you to, Chairman Hill and Ranking Member Waters, for
convening this important hearing, and, to Mr. Flood, for
presiding.
In my home State of Oregon and across the country, we are
struggling with a lack of housing supply, as has been
mentioned, which of course has created a housing crisis. In a
recent study of housing affordability and home building, led by
the National Association of Realtors, Oregon earned an F
ranking, ranking 45th out of the 50 States. I am really
competitive, and I do not like that. It is estimated that
Oregon will likely need to build over 140,000 single-family
homes by 2030 in order to meet demand. Moreover, delays caused
by complex and restrictive permitting processes and other
regulatory burdens have resulted in a nationwide housing
shortage of nearly 5 million homes.
In communities across the country, local governments are
investing in a process called pattern zoning, in which
architects and local governments develop pattern books full of
preapproved standardized plans and designs. So, recently, I
introduced H.R. 5907, the Accelerating Home Building Act, with
my colleague Congressman Steil. H.R. 5907 would establish a
grant program within HUD to fund the creation of these pattern
books, speeding up the permitting and home-building process and
lowering the costs for homebuyers.
It is clear that we need to be using every tool in our
disposal to tackle the housing affordability crisis, and this
bill is an example of how the Federal Government can cut red
tape and provide local communities with the resources they need
to get more housing built faster.
So my question is for Mr. Sears. The housing market is
facing historically low inventory, especially for starter
homes. How would a significant increase in the predictable
supply of missing middle housing facilitated by H.R. 5907, the
Accelerating Home Building Act, impact our market dynamics and
create new opportunities for first time homebuyers?
Mr. Sears. Ms. Bynum, thank you, I could not agree with
your statement more about what we need to do. As a
practitioner, I have seen how long it takes for housing
projects to get approved, to get the permits, and we need to
take advantage of any lever that can be pulled to unleash some
of the housing inventory that is needed, especially that
missing middle that you are talking about. We do support your
bill, yes.
Ms. Bynum. Okay. Well, I just have to be honest and humble
here for a moment. I have a 24-year-old daughter and a 21-year-
old son, and I am trying to get them off the payroll. Like, we
are really working. You know, they are still in school, but
when you think about it, what do our 21 and 24-year-olds have
to look forward to? It used to be 38 was the average first time
homebuyer age, and maybe it has pushed up to 41ish, something
like that.
Mr. Sears. Yes. The current median age is 40, and we have
seen it increase. It had been between 27 and 30 for a very long
time. So we are--an entire generation is missing this
opportunity to work toward intergenerational wealth and home
ownership.
Ms. Bynum. So parents and grandparents out there are
looking to us to make sure that we can get these kids off
payroll and get them launched, right?
I think the other question that I have is realtors are
seeing the direct relationship between housing supply and
median crisis. How important is the bill's goal of accelerating
the time to market for new units? How important is that goal in
stabilizing and lowering the housing costs for Americans?
Mr. Sears. There is a time value to money. So the faster
that units can get on the market, the less they will cost to
build. The less they cost to build, the more affordable they
will be. I hate to say it, but very simple economics.
Ms. Bynum. Thank you. All right. So thank you to all of the
witnesses for your expertise and time, and I will leave the
last 40 seconds if you want to share your story about getting
them off payroll or any other interactions that you have had
with young people or their parents in the community. Mr. Peter?
Mr. Peter. Oh, I am just a proud parent of a 1-year-old.
Ms. Bynum. Well, we better solve this problem now, right?
Mr. Peter. I hope, by 20 years, we are going to have this
problem under control, but it is probably going to take years
until we get there.
Ms. Bailey. I would say HUD's Affirmatively Furthering Fair
Housing rule could really go a long way in making sure we are
doing everything to create inclusionary zoning, so having
oversight and community hearings, because jurisdictions are
actually seeking the guidance. They want to give them the
guidance.
Ms. Bynum. Thank you. I yield back.
Mr. Flood. The gentlewoman yields back.
The gentleman from Iowa, Mr. Nunn, is now recognized for 5
minutes.
Mr. Nunn. I want to begin by thanking both the panel and
the chairman for holding what I think is a very important
hearing on housing. It is one of the most vibrant things that
we talk about in a rural community like Iowa, and it is
something that impacts this entire Nation coast to coast.
The challenge here is that everyone who has been doing this
right, saving up, trying to buy that first home, or maybe
transitioning from their last home to their final home, is
having a harder and harder time doing this with interest rates
up, with housing stock down. Currently, in the State of Iowa,
nearly 40 percent of our renters are spending a third or more
of their take-home salary just to be able to afford the rent
while still trying to save on the side.
Look, folks in Iowa and across the Midwest, they are not
asking for a handout. They are asking for a fair opportunity to
become homebuyers and buy into the American Dream. Today I want
to discuss five proposals that we have come up with to help
particularly in rural communities like Iowa.
One, expanding access to inventory through accessory
dwellings, this is the so-called mother-in-lawsuite, but giving
people the opportunity to be able to stay on their own property
and build a facility.
Two, increasing loan amounts for critical home repair
programs that keep inventory vibrant.
Three, updating USDA's outdated technology process, which
today still requires a mountain of paperwork just to be able to
get in that first home.
Four, auditing the rural housing program and five, ensuring
better reporting.
I think, in tandem, we are able to bring these together in
a really meaningful way, because we have to face the reality
that, candidly, there are just not enough homes on the market
right now for a first-time homebuyer to be able to get into it.
I fully support the efforts to increase the housing supply,
but we must also effectively ensure that U.S. Department of
Agriculture's rural housing tools are modern and effective. In
Iowa, these commonsense reforms can help, and I think it
becomes a model for the entire Nation.
Now, Ms. Sears, I want to begin by saying we have several
multigeneration farm families that need flexible housing
options. One of the things we have highlighted here is what is
called the ADU, or mother-in-lawsuite, and you can see it can
be something that is an external building, or it can be for, as
was noted earlier, a kid who just wants to live over the garage
with a little bit of modification or providing another housing
unit in an area that has already been platted for it.
ADUs are cheaper. They are quicker to build, and they are
solutions that can immediately provide a solution for our
housing stock necessity. My legislation clarifies the accessory
dwelling units qualify for USDA loan guarantees. I would like
to ask, do you think this would help address Iowa's housing
shortage and increase the housing supply?
Mr. Sears. Yes, Mr. Nunn. Very good seeing you again, but I
need to let you know it would increase the supply across the
country, not just Iowa. My home State of Massachusetts last
year passed the Affordable Cares Act, which made ADUs by right,
so people could put that in, but the financing is an issue, as
some of your colleagues have talked about. So we strongly
support your legislation to expand the opportunity for your
constituents but also everyone across America to take advantage
of these loan products when it comes to ADUs.
Mr. Nunn. Thank you, Mr. Sears, and thanks for what you are
doing on this.
I would like to just ask the panel, by a show of hands, has
anyone worked with rural housing before or had the opportunity?
I would not discredit you for this because the challenge is we
do not talk about it enough. I think we talk about great things
that HUD does, but I also like to talk about the important role
that USDA plays in this. Rural housing really has not been
discussed, and whether you are living in Ringgold County, Adams
County in Iowa or across America, there is--every community
that has an opportunity to succeed here. The current system,
candidly, is broken and needs a fix.
Ms. Smith, one of the things I would like to say thank you
very much for our effort on our rural housing bill, the support
that you have given to this, and the bipartisan effort that we
have worked with Mr. Cleaver on. This is not only endorsed by
the Iowa Habitat for Humanity; it also is something that a lot
of Iowans can take advantage of and Americans. Critical repairs
would be increased by 100 percent. So this means repairs that
would go to a septic system, a roof, electrical, all in order
to improve the housing stock, means that we get to identify a
home that might be on the brink of dilapidation now is on the
market for development. We are not destroying rural America by
asking a new builder to come in. We can keep what is already
there.
To put all this in perspective, fixing a septic tank today
in Iowa costs about $20,000 on a home that is worth $149,000.
By being able to increase something we have not seen happen for
over 20 years can start with this legislation. Do you think
that these type of critical repairs are something that are in
need of update, and would it improve the housing stock for
America across the board? Ms. Smith.
Ms. Smith. I would certainly hope so, yes.
Mr. Nunn. Here is what I want to do going forward. Right
now, I also want to address the issue of bureaucracy. Right
now, in Iowa, it takes about 12 months to get through the USDA
process. We can update the system to make it digital, cleaner,
more efficient, and get families into homes faster. Together,
Mr. Chair, this is important legislation that America needs. I
look forward to working with this committee in a bipartisan way
to make it happen. Thank you. I yield my time.
Mr. Flood. The gentleman yields back.
At this time, I move for unanimous consent to enter the
following statements into the record: a statement from the
International Code Council, dated December 2, 2025; statement
from the American Property Casualty Insurance Association,
dated December 3, 2025; and a coalition statement from the
National Taxpayers Union and other Conservative advocacy
organizations, dated December 2, 2025.
[The information referred to can be found in the appendix
on pages XX]
Mr. Flood. With that, the committee will stand at recess
for 5 minutes, and we will reconvene at 2:14 p.m.
[Recess.]
Mr. Flood. The committee will come to order.
I appreciate our witnesses staying with us and doing such a
good job today.
The gentleman from Montana, Mr. Downing, is now recognized
for 5 minutes.
Mr. Downing. Well, thank you, Mr. Chair.
Thank you to the witnesses.
Montana has certainly not been immune from skyrocketing
housing costs that are really pricing out more and more of my
constituents. In fact, Montana, since 2018, has seen a 90-
percent increase in the median home value, which is--you know,
``Congratulations, here is your new property tax bill.'' It has
been a struggle.
One of the things that I have heard from constituents of
mine that are developing affordable housing is that a huge
driver of costs is HUD's application of the Build America, Buy
American, or BABA Act, on federally backed housing projects
from the 2021 Infrastructure Investment and Jobs Act.
I appreciate the comments that Chairman Flood made on this
issue, but I am going to go a little deeper here.
I am going to start with Ms. Smith.
Can you please elaborate how BABA, while well-intentioned,
makes housing less affordable?
Ms. Smith. I mentioned earlier that we have not actually
had to build a project using BABA, but we have been talking to
a lot of our contractors about what they anticipate the
additional costs will be, and they are saying anything from,
like, 4 to 6 percent.
So that is just going to add more cost to building
affordable housing, which is already very expensive. I think it
is important to note that it is more expensive to build an
affordable housing unit today than it is to build a luxury
market-rate unit today.
Mr. Downing. Appreciate that.
Do you believe that the BABA provision was intended to
apply to housing projects or only to hard infrastructure?
Ms. Smith. I am sorry, but I really cannot--I really do not
know.
Mr. Downing. Okay. Appreciate that.
Should Congress rescind this provision for federally backed
housing projects?
Ms. Smith. I think that Congress should rescind anything
that is adding cost to building more affordable housing.
Mr. Downing. Thank you.
Ms. Smith. Unnecessary cost.
Mr. Downing. Thank you.
Mr. Sears, part of solving the housing affordability crisis
is ensuring that homeowners are able to stay in their current
homes rather than move and compete with first-time homebuyers.
According to the Montana Department of Commerce, over
230,000 homes were built before 1980, and only 40 percent of
existing homes are in good or better condition in Montana.
Can you please discuss how repairing and renovating the
existing stock of homes is also an important part of the
equation?
Mr. Sears. Thank you very much.
It is very essential for us to maintain our existing
housing stock. The last thing that we would like to see happen,
as I said to Ms. Williams when she brought this legislation up,
was that--we need to keep people in their homes. So, if there
are any grants, low-interest loans that can be given so that
necessary repairs are made, strengthen the property against
natural disaster, we are in full support of that.
Mr. Downing. Do you see any disparities between urban,
suburban, and rural areas in terms of aging housing or homes in
disrepair?
Mr. Sears. No, sir. It is equal opportunity when it comes
to older homes and especially as the population ages, they
might not be in a position to be able to make the necessary
repairs.
Mr. Downing. What can Congress do to help with this issue?
Mr. Sears. Well, this legislation, the Whole-Home Repair
Act, is certainly a step in the right direction.
I know in the past there have been block grants that have
been made for local municipalities to be able to assist lower-
income folks with maintaining their property. So any of those
types of grants or access to low-interest loans would be great.
Mr. Downing. Well, thank you. Thank you for your comments.
I want to end my remarks by talking about communities that
are often left out of these discussions--namely, Tribes.
Montana is home to seven federally recognized Indian
reservations, and Indian Country faces many unique challenges
that make housing affordability some of the worst in the
Nation. In fact, Native Americans in Montana experience 12-
percent lower home ownership compared to the rest of the State.
The primary law governing Federal support for Indian
housing is the Native American Housing Assistance and Self-
Determination Act of 1996, and this authorizes the Indian
Housing Block Grant, among other critical programs.
Authorization for these programs expired over a decade ago, and
the law has not been updated since 2008.
This is simply unacceptable. I look forward to working with
my colleagues to finally get these programs reauthorized and
modernized.
I just want to thank you all for being here today and
participating in this. This is an incredibly important topic,
not just to us on this committee but to our constituents, to
this country. So I appreciate you being here.
On that, Mr. Chair, I yield back.
Mr. Flood. The gentleman yields back.
The gentleman from North Carolina, Mr. Moore, is now
recognized--when he walks in the door.
Mr. Moore is the former longtime speaker of the North
Carolina House of Representatives. He joins us today as a
member of the House Financial Services Committee.
Mr. Moore, you are recognized.
Mr. Moore. Before my time starts, Mr. Chairman, I will say
that down here at the bottom it is pretty tight quarters.
Mr. Flood. Turn your microphone on, Mr. Moore.
Mr. Moore. Well, thank you, Mr. Chairman.
I just want to, first of all, thank our witnesses for being
here.
I represent the 14th District of North Carolina. Our State
is actually one of the fastest-growing States in the country,
and the region that I represent is one of the fastest-growing
regions in the State. Families are moving in, businesses are
expanding, really because at the State level we have lowered
taxes, we have cut red tape.
What we have also seen is, a lot of the pain with growth
and prosperity are the limits in terms of housing--I mean, a
lot of problems that have been talked about today and the
housing supply simply has not kept up. As a result, housing
costs have just climbed far beyond anything that a lot of
working families can reasonably afford.
It is not regional. You all have testified already to how
this is a national problem, probably because, I mean, the last
4 years--I will try not to be too political here, but the last
4 years were probably just out of control in terms of what
happened with inflation but the problems that we have are
longer and systemic and so forth. So I think my understanding
is, right now, nationwide, there is a shortage of as many as,
what, 5.5 million homes.
I will start with Mr. Peter.
You have written extensively about the constraints created
by zoning restrictions and land-use policies. In a nutshell,
what tools do you think could encourage localities to modernize
the outdated zoning frameworks?
Mr. Peter. Yes, that is an excellent question.
So, at the local level, it boils down to just getting out
of the way. There are certain jurisdictions that are always
going to be against building more housing, but in those
instances the State preemption can play a role in overcoming
some of these concerns.
We are seeing lots of movement from Washington, Oregon,
California, Montana, Texas that have all moved in that
direction.
Mr. Moore. I will tell you, before I came here, I was a
State legislator for 22 years. I was also an attorney and
handled a lot of land-use and a lot of real estate work for
folks. At one time, you used to have either commercial or
residential, R4, R5 breakdowns.
Now, it seems like I have noticed more and more folks want
to do all these UDOs, unified development ordinance. They want
to do a, kind of special variance for this development or that
development. I cannot help but imagine that is passing along
significant costs that end up being borne on the taxpayer.
Anybody wants to--or, excuse me, on the homebuyer.
Anybody want to comment on that?
Mr. Peter. I can make another point about this. From a city
perspective, if you allow a little bit greater density--we call
it ``light-touch density''--you are going to be able to broaden
your tax base.
In the jurisdictions that we studied, in some of them, they
were able--because they have a broader tax base, they have more
taxable value, they were able to lower the tax rate for the
citizens. So that has resulted in positive externalities.
Mr. Moore. In addition to zoning, I think my understanding
is a lot of, like, permitting delays, zoning issues,
environmental reviews, and outdated Federal requirements add
cost and also years to projects and, of course, adding time
adds cost.
Ms. Smith, I will ask you this question. Multifamily
developers face multiple layers of environmental review at the
Federal, the State, and at the local levels. How do these
overlapping requirements impact the timing and the financial
feasibility of large, multifamily projects?
Ms. Smith. They obviously add tremendous cost. We had
talked about that 40.6 percent of the cost of a multifamily
dwelling unit is tied up in soft costs or regulations.
It also moves--it sort of moves development around too. I
was going to mention that your State of North Carolina is
getting a lot of attention from developers from this region
because it is easier, it is faster, it is just a better
development process. As a result, North Carolina is getting a
lot more housing--high-quality rental housing.
Mr. Moore. Yes.
Mr. Sears, a question for you. I hear Realtors often say
that it is nearly impossible today to deliver a home for under
$250,000, which blows my mind. What are the most common
regulatory or permitting obstacles that prevent builders from
meeting that price point?
Mr. Sears. Regulatory. It is the patchwork of zoning across
municipalities and localities. Not knowing that they are going
to have a streamlined process. Sometimes inspectors get in the
way. There is a myriad of reasons why it can be more difficult
to build and there is a time value to money. So anything that
can be cutoff from the length of time before the shovel gets in
the ground and then the final occupant moves in will make
things more affordable.
Mr. Moore. Thank you.
I had other questions. My time is nearly over. I do think
it is important, and I appreciate these witnesses here today
and my colleagues, frankly, on both sides of the aisle who
acknowledge that affordability is a huge issue and that we need
to find more ways to make home ownership the reality for more
and more Americans. I appreciate the work.
Mr. Chairman, I appreciate your work, because I know this
is something you and your subcommittee are working on very
hard. So thank you on that. Count me as an ally in this whole
process.
With that, I yield back.
Mr. Flood. The gentleman yields back.
The gentleman from New York, Mr. Garbarino, who is also the
chairman of the full House Homeland Security Committee, is now
recognized for 5 minutes.
Mr. Garbarino. Thank you, Mr. Chairman and thank you to all
the witnesses for being here today.
Access to housing is an increasing issue across the United
States, especially in areas like where I am from on Long
Island.
I was excited to see the SUPPLY Act, the bill I co-lead
with my colleague Rep. Liccardo, attached to this hearing. This
bill expands Federal Housing Administration mortgage insurance
to finance certain second-lien loans for accessory dwelling
units, also known as backyard cottages, granny flats, or in-
lawsuites. This will provide government-backed, flexible
financing options to help homeowners of modest means overcome
what is often the last hurdle to breaking ground on an ADU.
Mr. Peter, how would ensuring second liens for ADU
construction help homeowners who want to add housing units but
face financing barriers?
Mr. Peter. Yes, for some homeowners, financing is certainly
a hurdle but in other examples, in California, which has passed
ADU laws, they were able to overcome--they were able to find
financing without Federal guarantees or Federal lending
programs.
So my concern with ADU financing through a Federal program
is that it may encourage lower-income homeowners to take on
more than they can--to bite off more than they can chew. It is
one thing to be a homeowner, but to be a homeowner and a
landlord can be somewhat dangerous to make the payments. Your
renter may not pay, but you are stuck with the cost. So there
are certain cost concerns to be considered.
Mr. Garbarino. Absolutely. I mean, I actually have an
accessory dwelling unit, accessory apartment at my house and
there were initial costs. You know, you have to separate, get
the--there are permit fees, there are construction fees to get
that done, to actually get the house built but I will tell you,
having that extra--having that tenant there, as someone who is
never home, is a nice--helps me have peace of mind. It also has
income when they pay, and he always does pay but, again, it is
something that definitely helps, especially with taxes keep
going up.
So I do understand there are concerns about initial costs,
but I think the financing, definitely, here--and government-
backed financing--will help them with that initial cost. Yes,
there are always bad actors. Tenants sometimes do not pay. I
think in most of the cases, to address someone who cannot
afford a full mortgage, having this access for someone who
needs to live in an apartment is great for them but also for
someone who is struggling to pay their mortgage, having an
accessory apartment, that extra income could also be helpful.
So I think that will address--that could address the
challenging shortage in a way that does not require a lot of
investment but from your perspective, does this legislation
complement existing HUD and FHA programs?
Yes, Mr. Peter?
Mr. Peter. Yes, there is another option that HUD and FHA,
in particular, could do that we have not talked about. So the
mortgage insurance premium is another way where HUD could crowd
in more starter homes.
By rejiggering the mortgage insurance premium toward homes
that are under, let us say, 1,800 square feet and lowering the
premiums on these new constructions, HUD and FHA could play a
role in getting more starter homes built.
Mr. Garbarino. Thank you.
I was also excited to see my bill, the National Flood
Insurance Program (NFIP) Extension Act, included in this
hearing. Flooding has long been the most significant cause of
property damage from natural disasters in the United States,
and homeowners rely on the National Flood Insurance Program to
protect their homes.
In districts like mine, many homeowners are required to
purchase flood insurance to obtain a mortgage. However, since
2017, Congress has only extended the NFIP on a short-term
basis, leading to lapses in the program, including a recent 43-
day lapse during the government shutdown this year.
Mr. Sears, what did the lapse mean for people trying to
purchase a home during that time?
Mr. Sears. Thank you, Mr. Garbarino.
The lapse created uncertainty in the market, especially
when the banks requiring the mortgagee to obtain flood
insurance. Some of them were slow to realize that restriction
had been lifted temporarily but even if the consumer closed,
that would expose them to the potential liability without
insurance coverage.
So we support your effort to extend the NFIP until
September 30, because since 2017, as you said, there have been
34 short-term extensions, and that just causes too much
uncertainty.
Mr. Garbarino. Uncertainty and also extra cost to the
homeowner if there is a lapse, with delay of closing and other
things like that, which a lot of these homeowners--that extra
cost they just cannot afford.
I thank you for your answer.
I thank you again, all, for being here.
I yield back.
Mr. Flood. The gentleman yields back.
I would like to thank all of our witnesses for their
testimony today.
Without objection, all members will have 5 legislative days
to submit additional written questions for the witnesses to the
chair.
The questions will then be forwarded to the witnesses for
your response. Witnesses, please respond no later than January
8, 2026.
[The information referred to can be found in the appendix.]
Mr. Flood. This hearing is adjourned.
[Whereupon, at 2:30 p.m., the committee was adjourned.]
APPENDIX
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