As they jockey for control of Congress in a tight midterm race, both Democrats and Republicans have made promises they'll focus on housing.
As they jockey for control of Congress in a tight midterm race, Democrats and Republicans have each made promises that their party will focus on housing affordability.
Both parties have spent the year pushing messages about affordability, especially in housing. Homeowners are being hammered with higher insurance and property tax rates. Higher interest rates have frozen the housing market. And young people are overwhelmingly concerned about whether they'll ever own a home at all. With many close races, control of Congress could hinge on these concerns.
Then there's the issue of how to implement laws Congress has already passed. The bipartisan 21st Century Road to Housing Act promises reforms in dozens of provisions aimed at cutting red tape and encouraging the construction of more homes. Congress will oversee the rollout of those new programs while also working with the final two years of the Trump administration—and the market will be looking to Washington for clarity.
Jeff Holzmann, COO of Dallas-based real estate firm RREAF, tells Realtor.com® the industry needs clear rules to make long-term investment decisions. Broad rules such as the new ban on institutional investors in the housing market require clarity or else they might not achieve the affordability Congress intended with the bill.
"From my operator's perspective, the bigger question is whether these regulations will continue to encourage private capital to invest in building new homes and improving existing ones, as that's what drives our business," Holzmann says. "If that pans out, I believe it can make a real difference in affordability over time."
What Republicans Want
Over the course of the year, many Republicans have said they want to see reforms to the housing finance system. These rules, they've said, have discouraged banks and financial institutions from infusing money into the housing market.
House Financial Services Committee Chair Rep. French Hill (R-AR) told the U.S. Chamber of Commerce in September that he wanted to see reforms to the BASEL III framework, aimed to encourage more banks to finance mortgages and construction loans.
"That should take steps to encourage the large banks to participate in the secondary market for housing," Hill said. "I think Dodd-Frank went too far on this point. Essentially, by the capital standards for a construction loan, pushed a lot of the biggest banks out of that business. It also limited mortgage servicing rights by the large financial institutions. Both of those things, at the margin, raise the cost of liquidity for housing."
Rep. Mike Flood (R-NE), who chairs the Housing and Insurance Subcommittee, said in July he wants to see single-family homebuilding exempted from the prevailing wage requirements in the Davis-Bacon and Related Acts.
GOP Rep. Mike Flood of Nebraska, who chairs the Housing and Insurance Subcommittee, at Punchbowl News Summit Panel Discussion on Housing (Tristan Navera for Realtor.com) Flood and Hill have both said they want to exempt homebuilding materials from the Build America Buy America Act. That adds sourcing requirements to many building materials that drive up their costs.
At the same time, Republicans have also backed the Trump administration's shift of the U.S. Department of Housing and Urban Development away from "housing first" homelessness programs. HUD has repeatedly criticized what Secretary Scott Turner calls a "homeless industrial complex." In alternate, HUD has pursued programs that emphasize treatment and recovery. But it's clashed with states and service providers and pursued "diversity equity and inclusion" programs as well.
What Democrats Want
Democrats have called for additional spending to help bolster a variety of housing programs, especially those regarding tenant and homeowner protections.
Earlier this year, Senate Minority Leader Chuck Schumer (D-NY) said Democrats would pursue laws cracking down on junk fees and on predatory companies abusing tenants and using price-fixing algorithms.
A number of Democrat-led bills this year have also proposed expanding funding for Section 8 vouchers, rent relief, programs to help curtail evictions, and expansion of the Low-Income Tax Credit, which produces about 40,000 to 50,000 units a year of affordable housing.
Rep. Emanuel Cleaver (D-MO), ranking member of the Banking subcommittee, told the Chamber of Commerce in September that both parties must be focused on effective compromise.
"We're woefully lacking in legislation that can move through both the House and the Senate and get to the president's desk," he said.
Democrats are also likely to resume efforts for stricter data center regulation. They sank a Republican-led bill that encouraged utilities to shield ratepayers from data center costs in favor of a proposal with more stringent enforcement powers for the Federal Energy Regulatory Commission.
The party will also have to contend with a wave of Democratic Socialist candidates elected at the local and state level. Those candidates have shown different levels of support for policies like rent control and "housing for all."
What's bipartisan?
The 43-member bipartisan Build America Caucus put out a 95-page primer for issues it would pursue regardless of who is in control of either chamber next year.
Its housing agenda includes fast-tracking residential construction in areas where cities have "outdated" zoning constraints in place. It also wants to see programs that encourage housing near transit and under-used federal land, as well as modernization of building code standards.
“The problem isn't a lack of good ideas; it's the bureaucratic red tape slowing projects down for years," Rep. Sharice Davids (D-KS) said in a statement with the primer.
Democrats and Republicans in Congress have found common ground in some parts of the housing debate. For instance, the More Homes on the Market Act, which would double the capital gains tax exclusion, has attracted over 170 co-sponsors in the House and Senate.
Both parties have pitched changes to the capital gains tax scheme using different methods, but none advanced this year.
Democrats and Republicans have also routinely put forth a few bills aimed at promoting housing innovations and designs. For instance, last week, Reps. Maggie Goodlander (D-NH) and Jefferson Shreve (R-IN) put forth a bill that would encourage pre-reviewed, permit-ready home designs. They said in a joint statement they hope it would mean faster approvals.
"I’m working with Republicans and Democrats to clear away every rule that makes it slower and more expensive to build a home in New Hampshire," Goodlander said.