Tag: Affordable Housing

Solutions to Tackle the Affordable Housing Crisis

Posted on by Abigail Grenadier

While recent rate cuts from the Federal Reserve are providing relief for both CRE and housing markets, the affordability crisis remains at the forefront of policy debates in Washington.

Roundtable Housing Priorities

  • Sustained recovery and resolution of the affordability crisis will require continued policy reform, increased housing supply, and greater collaboration between public and private sectors. (Roundtable Weekly, Sept. 27)
  • The Roundtable continues to advocate for housing policies that:
  • Streamline Permitting and Zoning: Simplify permitting and zoning processes to reduce delays in housing projects.
  • Promote Modular Construction: Encourage modular construction to accelerate the production of new housing supply.
  • Strengthen Public-Private Partnerships: Foster collaboration between public and private sectors to support innovative construction methods.
  • Expand Housing Incentives: Advocate for expanding the low-income housing tax credit (LIHTC), improving the real estate-related clean energy tax provisions in the Inflation Reduction Act, and introducing new incentives for the conversion of obsolete commercial buildings into affordable housing. (Roundtable Weekly, Oct. 4)
  • Housing policy has become a central issue in the 2024 presidential campaigns as well. (Associated Press, Aug. 27)
  • Vice President Kamala Harris has proposed $25,000 in down payment assistance for first-time buyers and expanding federal funds to streamline local zoning laws and build 3 million homes.
  • Former President Donald Trump countered with plans to reduce housing demand by restricting illegal immigration and opening federal land for housing development while opposing policies that promote urban densification, arguing they harm suburban property values.

Alternative Housing Solutions

  • Property Conversions: The conversion of underutilized and often vacant buildings offers a tremendous opportunity to improve the built environment and uplift a surrounding locality.
  • Modular Housing: A recent survey from The Amherst Group shows that Americans are warming up to modular housing as an alternative solution to the ongoing housing supply shortage. Nearly 90% of respondents find modular homes appealing, and four out of five (81%) would consider living in one themselves.
  • With 71% of respondents interested in seeing more alternative housing types in their neighborhoods, modular homes could play a key role in expanding housing supply. (News Release, Oct. 8)
  • Roundtable member and Amherst Chairman, CEO and CIO Sean Dobson emphasized the potential of modular housing:  “While the offsite construction process has been around for decades, it has yet to be adopted as a mainstream way to generate high-quality housing supply at scale. As a result, homebuilding remains overdue for disruption and innovation. Amid ongoing supply constraints in the U.S., we think modular construction is an important part of the solution.” (News Release, Oct. 8)

The Roundtable encourages policymakers to support federal incentives for affordable housing and zoning reforms to streamline housing development. These measures can help ensure that high-quality, affordable options, such as modular homes, are available to meet rising demand.

The Push for Office-to-Residential Conversions

Posted on by Abigail Grenadier

Cities across the U.S. are increasingly embracing office-to-residential conversions as part of the solution to address persistent housing shortages and high office vacancy rates driven by remote work policies. Many local governments in key metro areas have accelerated incentive programs and made major progress, bringing thousands of new homes into the development pipeline with more to come.

Challenges and Incentives

  • Property conversions can be a cost-effective means to re-purpose certain CRE assets to provide new, affordable housing supply, revive struggling city centers and small businesses, restore local revenue sources, and reduce energy consumption. While costs can vary depending on the building and other project factors, at least one recent property conversion is estimated to cost 40% less than a wholly new apartment building. (Morning Brew, Sept. 24)
  • Office-to-residential conversions present a path to revitalizing downtown areas, but regulatory and financial hurdles must be addressed to unlock their full potential. (ULI, Sept. 27)
  • Various cities are actively pursuing policies to incentivize these conversions through zoning changes and tax incentives:
  • New York City proposed a $400 million initiative to support the conversion of older office buildings into residential units. The “City of Yes for Housing Opportunity” plan aims to create 500,000 new homes over the next decade by legalizing zoning conversions for buildings constructed before 1990 in areas where residential use is allowed, and expands the types of housing commercial buildings can be converted into.
  • Washington, D.C. has implemented the Housing in Downtown program, designed to catalyze new residential development through a 20-year tax abatement for commercial-to-residential conversions, with expectations to deliver 6.7 million square feet of residential use. (BisNow, Sept. 19)
  • Minneapolis took steps last week to simplify its office-to-residential conversion process by passing an ordinance that streamlines the review process, reduces project timelines, and pauses certain affordability requirements for five years. (CBS, Sept. 24)
  • San Francisco has seen limited success despite efforts to incentivize conversions. Only two projects totaling 165 units are underway, prompting Mayor London Breed and Supervisor Matt Dorsey to propose eliminating impact fees and affordable housing requirements for downtown conversions in key areas. (GlobeSt., Oct. 1)
  • California faced a setback this week when Governor Gavin Newsom vetoed a bill aimed at expediting the conversion of vacant office buildings into residential or mixed-use spaces. The legislation would have mandated by-right approval for adaptive reuse projects, streamlining the review process by bypassing environmental reviews and local zoning approvals. (GlobeSt., Oct. 1)
  • This week on the Walker Webcast, Dr. Peter Linneman (Leading Economist, Professor Emeritus, The Wharton School of Business) predicted there will be a push for back-to-office policies after the November elections, regardless who gains control of the White House. (Walker Webcast, Oct. 2)

Climate Risks and Opportunities

Workers on sustainable energy project on rooftop of building
  • Office-to-residential conversions are recognized universally as having positive climate impacts because they reduce “embodied” emissions in concrete, glass, and other construction materials relative to new projects built from the ground up. (Arup, Dec. 2023; Urban Green, Dec. 2023; NAIOP (April 2023)).
  • Expanding the use of clean energy tax credits, as proposed in the IRA, could further incentivize conversion projects, helping to reduce long-term operating costs and improve building resilience.
  • With tax policy debates at the forefront in Washington, The Roundtable submitted recommendations to Congressional tax leaders this week (see Tax story above), urging enhancements to the Inflation Reduction Act’s clean energy tax provisions in any future legislation. (Letter, Oct. 2)
  • The recommendations included expanding energy-efficient tax credits to cover low-emissions building equipment and allowing developers to transfer the 45L and 179D credits, which would help reduce housing costs and boost energy efficiency.
  • The Roundtable has also encouraged federal agencies to make key improvements to their existing low-interest loan programs to better support property conversions that support high-density, transit-oriented housing. (Roundtable Weekly, April 19)
  • A recent Morningstar report highlighted the growing importance of ESG considerations in real estate investment, with 67% of global asset owners acknowledging that ESG factors have become more material over the past five years. (CREFC, Oct. 1)

The Roundtable will continue to advocate for support at the federal level, such as the bipartisan Revitalizing Downtowns and Main Streets Act (H.R.9002) introduced in July, to create market-based tax incentives for office-to-residential conversions. These projects offer a promising but complex solution to both the commercial real estate market’s transformation and the housing shortage. With proper support, they could reshape and rebuild cities across the country.

Impact of Rate Cuts on CRE and Housing Markets

Posted on by Abigail Grenadier

The Federal Reserve’s recent decision to cut rates renewed optimism in the commercial real estate market, following a prolonged period of high interest rates and economic headwinds. This monetary easing is seen as critical to the CRE sector’s path to recovery—reducing financing costs and helping stabilize property valuations.

Industry Insights

  • These predicted rate cuts, alongside lower bond yields, are expected to boost commercial real estate investment activity and asset values. (CBRE, Sept. 18)
  • Roundtable member Willy Walker (CEO, Walker & Dunlop) appeared on CNBC’s Squawk Box, to discuss the importance of removing barriers such as zoning restrictions to increase housing supply. “It’s going to be a very healthy market for commercial real estate as rates start to come down.” (Watch)
  • Roundtable member David O’Reilly (CEO, Howard Hughes Holdings) discussed the resurgence of new construction in the housing market on Fox Business, anticipating that home prices will stabilize in response to interest rates cuts, influencing both demand and affordability. He also highlighted the effects of prolonged high rates on pricing and market trends. “As long as those rates continue to trend lower… demand picks up, more sales occur, prices will remain steady as home builders continue to deliver more supply to meet that demand.” (Watch)

Housing Affordability at the Forefront

  • The Senate Budget Committee, chaired by Sen. Sheldon Whitehouse (D-RI), held a hearing this Wednesday, Sept. 25, on housing unaffordability. The hearing focused on the need for significant policy reform to boost housing supply, remove regulatory barriers to new construction, and deregulate land use and zoning. (Watch Hearing)
  • Chair Whitehouse introduced the Affordable Housing Construction Act, which aims to tackle the housing crisis by expanding the Low-Income Housing Tax Credit (LIHTC) program, loosening financing requirements, and ensuring affordability for 50 years— an increase from the previous 30-year mark. (Sen. Whitehouse News Release)
  • The bill also pushes for more sustainable, energy-efficient, and accessible housing.

Rate cuts from the Fed are providing relief for both CRE and housing markets, but sustained recovery and resolution of the affordability crisis will require continued policy reform, increased housing supply, and greater collaboration between public and private sectors.

Real Estate Coalition Opposes Federal Rent Control Proposal

Posted on by Abigail Grenadier

On Monday, a coalition of national real estate associations, including The Real Estate Roundtable, wrote to President Biden expressing strong opposition to recently proposed nationwide rent control measures. (Letter)

Key Points

  • Last week, the White House announced a nationwide rent control plan that aims to cap rent increases at 5%. Owners of rental housing would only be able to take advantage of depreciation write-offs if they limit annual rent increases to no more than 5%, effectively trading depreciation deductions for price controls. (Roundtable Weekly, July 19)
  • Negative impacts of rent control: Rent control consistently leads to instability in the housing market and reduced supply, undermining efforts to foster a healthy and equitable housing environment.
  • Economic consensus: Economists across the political spectrum widely agree that rent control is a discredited policy. Jason Furman, the former Obama administration’s top White House economist, asserts that rent control would worsen housing supply issues instead of solving them.
  • Disincentive for investment: Rent control discourages necessary housing investments, particularly in areas with limited affordable options. It disproportionately benefits higher-income renters, impeding access for lower-income households.

Coalition Recommendations

  • Increase housing subsidies: Instead of imposing rent control, the coalition urges the administration to increase subsidies for those in need and to work with housing providers on solutions that expand the affordable housing supply.
  • Support proven solutions: The coalition advocates for enhancing federal programs such as the Low-Income Housing Tax Credit (LIHTC) and Section 8, which have been effective in creating and preserving affordable housing units.

Industry Testimony

  • On Wednesday, the House Financial Services Committee Subcommittee on Housing and Insurance held a hearing, “Housing Solutions: Cutting Through Government Red Tape” to discuss the nation’s housing affordability crisis and burdensome federal government reviews and permitting processes.
  • NMHC Chair Schloemer stated in his testimony, “Decades of research shows that rent regulation devastates rental housing quality and harms affordability. The Biden administration proposal to cap rents will not add a single new unit of housing, and, in fact worsens housing availability and quality.”
  • Hastening the permit approval process must be a critical part of any policy legislation aimed at increasing the supply of affordable housing. (NYT, July 8)

The Roundtable and the coalition will continue to educate policymakers about and push back against flawed rent control policies while advocating for bipartisan solutions to boost supply and affordability.

White House Calls on Congress to Enact Federal Rent Price Control Measure, Eliminate Depreciation Write-Offs to Help Reduce Housing Costs

Posted on by Abigail Grenadier

This week, the White House unveiled a nationwide rent price control plan that calls on Congress to “pass legislation giving . . . landlords a choice to either cap rent increases on existing units at 5% or risk losing current valuable federal tax breaks.” (White House Fact Sheet)

While the package is focused on imposing flawed rent price control policies and eliminating long-standing depreciation write-offs, it also includes policies to help build more housing. (WSJ, July 16)

Housing Proposals

  • Under President Biden’s plan, beginning this year and for the next two years, owners of rental housing would only be able to take advantage of faster depreciation write-offs if they limit annual rent increases to no more than 5%, effectively trading depreciation deductions for rent price controls.
  • This would apply to landlords with over 50 units in their portfolio, covering more than 20 million units nationwide—nearly half the U.S. rental market. It would include an exception for new construction and substantial renovation or rehabilitation. (White House Fact Sheet)
  • While intended to make renting more affordable, these proposals would impede the production of much-needed housing, particularly for affordable units. (Bloomberg, July 17)
  • The Biden-Harris Housing Plan also includes initiatives to:
    • Call on all federal agencies to assess surplus federal land that can be repurposed to build more affordable housing;
    • Rehabilitate distressed housing, build more affordable housing, and revitalize neighborhoods; and
    • Authorize $325 million in Choice Neighborhoods grants under the U.S. Department of Housing and Urban Development (HUD) to build new deeply-affordable homes and spur economic development in communities across the country.
  • The proposal would require congressional action to become law.

FHFA Proposed Tenant Protections

  • This is the first time tenant protections will be a standard component of Enterprise multifamily financing.   
  • These protections apply to future loans acquired by the Enterprises and would include:
    • Requiring 30-day notice before rent increases;
    • Requiring 30-day notice on lease expiration; and
    • Providing a 5-day grace period before imposing late fees on rental payments.

Industry & Roundtable Response

(L-R): Heidi Sommer (POLITICO), Jeffrey DeBoer (The Real Estate Roundtable), and Shannon McGahn (National Association of Realtors)
  • This week at the Republican National Convention, our National Real Estate Organizations (NREO) partnered with POLITICO to host a series of discussions on the elections, affordable housing, revitalizing cities, the commercial real estate industry, and proactive policy solutions. (Watch here)
  • The Roundtable’s President & CEO Jeffrey DeBoer was a featured speaker alongside Shannon McGahn (National Association of Realtors), joining Heidi Sommer (POLITICO) for a discussion on affordable housing, upcoming tax priorities, interest rates, and the economy.
  • DeBoer stated in response to the administration’s recent rent cap proposal, “Rent control is fundamentally flawed and historically ineffective. Wage and price controls, even during wartime, have consistently failed to deliver the intended results. Implementing such measures now will only exacerbate the root cause of America’s housing problem by discouraging new housing development and reducing investment in existing housing.”

The Roundtable is developing comments on the proposed plans and will continue work to enact measures that will help spur the expansion of America’s affordable housing infrastructure.

Property Conversions Legislation Introduced

Posted on by Abigail Grenadier

On Thursday, House Ways and Means Committee Members Mike Carey (R-OH) and Jimmy Gomez (D-CA) introduced the bipartisan Revitalizing Downtowns and Main Streets Act (H.R.9002), which would create a market-based tax incentive for converting older commercial buildings to residential use.

Revitalizing Downtowns and Main Streets Act

  • The bill is a positive step forward in the effort to modernize U.S. real estate, create new and affordable housing, and strengthen cities and neighborhoods that continue to suffer from the aftereffects of the pandemic and changing business needs. 
  • “Between high housing costs and the rise of remote work, formerly prosperous neighborhoods across the country are struggling,” said Rep. Carey (R-OH). “The solution is right in front of us. But even though vacant commercial and office space is sitting unused, converting these properties into housing is so expensive it is often uneconomical. This bill will allow communities to meet their residents’ need for affordable, abundant housing and allow American downtowns and main streets to thrive.” (Rep. Carey Press Release)
  • The bill would create a new and temporary 20% tax credit for qualified property conversion expenditures, modeled after the historic rehabilitation credit. (RER’S One-Page Summary)
  • The total credit authority would be limited to $15 billion, allocated by state housing finance agencies based on feasibility and impact.
  • Larger credits would be available for projects in rural areas, low-income census tracts, and economically distressed areas.
  • The credit could be stacked with other federal tax benefits, including LIHTC, the rehabilitation credit, and Opportunity Zone benefits. 

Roundtable Advocacy

  • The Real Estate Roundtable has supported similar versions of conversion legislation, such as the Revitalizing Downtowns Act (S. 2511, H.R. 4759), introduced by Sen. Debbie Stabenow (D-MI) and Rep. Jimmy Gomez (D-CA). The Roundtable has also worked closely with the White House on administrative actions designed to provide low-cost financing for conversion projects. (Roundtable Weekly, April 19)
  • “The Revitalizing Downtowns and Main Streets Act is a proactive, market-based policy measure that aims to breathe new life into underutilized commercial properties, create jobs, generate local property tax revenue, and help reinvigorate our nation’s cities and suburbs,” said Jeffrey D. DeBoer, President and CEO of The Real Estate Roundtable. “We commend the leadership of the bill sponsors for their vision and urge support for this critical bipartisan legislation.”
  • The bill addresses and incorporates most of the recommendations a Roundtable-led coalition had collectively made to the Revitalizing Downtowns Act in comment letters submitted in October 2022 and June 2024.  
  • Since then, many states and localities have taken bold action to support property conversion efforts.
  • Both letters are the product of a property conversions working group created by The Roundtable’s Tax Policy Advisory Committee (TPAC). The working group has reviewed and considered the challenges and impediments confronting potential property conversion activities. (Roundtable Weekly, June 28)

The Roundtable’s Tax Policy Advisory Committee will continue working with policymakers to advance tax policies that encourage and facilitate property conversion efforts.

Real Estate Coalition Urges House Members to Support Bipartisan CRE Conversions Bill

Posted on by Abigail Grenadier

A Roundtable-led coalition of 17 national real estate organizations wrote to members of the House of Representatives voicing their support for the introduction of the Revitalizing Downtowns and Main Streets Act, which would create a market-based tax incentive for converting older commercial buildings to residential use.  (Coalition letter)

 Revitalizing Downtowns and Main Streets Act

  • The House Ways and Means Committee Members Mike Carey (R-OH) and Jimmy Gomez (D-CA) will introduce the Revitalizing Downtowns and Main Streets Act in the coming weeks.
  • If enacted, the bill would be a step forward in the effort to modernize U.S. real estate, create new and affordable housing, and strengthen cities and neighborhoods that continue to suffer from the aftereffects of the pandemic and changing business needs. 
  • Currently, only 2% of vacant offices are undergoing the conversion process (CBRE). However, 15% of office buildings are suitable for residential conversion. (White House, Oct. 2023)
  • The bill would create a new and temporary 20% tax credit for qualified property conversion expenditures, modeled after the historic rehabilitation credit.
  • The total credit authority would be limited to $15 billion, allocated by state housing finance agencies based on feasibility and impact.
  • Larger credits would be available for projects in rural areas, low-income census tracts, and economically distressed areas.

Roundtable Advocacy

The Roundtable’s Tax Policy Advisory Committee Meeting
  • The Real Estate Roundtable has supported similar versions of conversion legislation, such as the Revitalizing Downtowns Act (S. 2511, H.R. 4759), introduced by Sen. Debbie Stabenow (D-MI) and Rep. Jimmy Gomez (D-CA) to encourage the conversion of older buildings into new uses.
  • The new bill addresses and incorporates most of the recommendations the coalition made collectively to the Revitalizing Downtowns Act in the October 2022 letter.  (June 2024 letter  | October 2022 letter)
  • Since then, many states and localities have taken bold action to support property conversion efforts.
  • Both letters are the product of a property conversions working group created by The Roundtable’s Tax Policy Advisory Committee (TPAC). The working group has reviewed and considered the challenges and impediments confronting potential property conversion activities. 

The Roundtable’s Tax Policy Advisory Committee will continue to respond to legislative proposals affecting potential property conversion activities.

Housing Coalition Calls on Lawmakers to Address Rising Insurance Costs

Posted on by Abigail Grenadier

On Monday, The Roundtable as part of a broad housing coalition wrote to policymakers offering solutions to address rising insurance premiums across the nation’s housing market and its significant impact on all stakeholders throughout the commercial real estate industry. (Letter)

Coalition Policy Solutions

  • The lack of affordability and availability of insurance options has both short- and long-term implications for the real estate industry’s ability to address the housing crisis.
  • The letter suggests several measures to mitigate these issues, including regulatory reforms, public-private partnerships, and innovative insurance products tailored toward affordable housing projects.
    • Federal Backstop for Catastrophic Coverage: A federal backstop, similar to terrorism risk and national flood insurance, could help stabilize the market.
    • Adjust Operating Cost Adjustment Factor (OCAF) Methodology at HUD: Use industry data for property and casualty insurers to reflect actual insurance costs for rental housing.
    • Modernize Insurance Requirements: Revise stringent insurance requirements for federally-backed loans to provide more flexibility.
    • Expand Federal Grants and Programs: Leverage existing federal programs to subsidize insurance costs and support resiliency investments.

Unprecedented Insurance Rates

  • The volatility in the insurance market, driven by more frequent natural catastrophes and inflation, has led insurers to raise premiums, increase deductibles, and limit coverage.
  • Rising insurance premiums significantly impact housing providers, developers, and renters across the U.S., exacerbating housing affordability challenges and disincentivizing providers from participating in the affordable housing market.
  • Insurance rates have surged dramatically, with property insurance rates increasing for 25 consecutive quarters and casualty insurance rates for 17.
  • Over the past three years, affordable rental housing communities have seen premium increases ranging from 30% to 100%.

  • An October 2023 survey and report, commissioned by the National Leased Housing Association (NLHA), found that affordable housing providers are facing much higher premiums, with nearly one in every three policies experiencing rate increases of 25% or more in the most recent renewal period.

National Flood Insurance Program (NFIP)

  • A recent report by the Joint Economic Committee Democrats found that the total annual economic burden of flooding in the United States is between $179.8 and $496 billion—equivalent to 1-2% of U.S. GDP in 2023. (JEC Report on Flooding)
  • Congress has enacted 30 short-term extensions of the NFIP. The most recent stopgap spending bill extended the NFIP’s funding through September 2024. (PoliticoPro, June 10)
  • The Roundtable has been a long-standing supporter of a long-term reauthorization of the NFIP with appropriate reforms.
  • A long-term reauthorization of the NFIP is essential for residential markets, overall natural catastrophe insurance market capacity, and the broader economy.

The Roundtable, along with its industry partners, continues to work constructively with policymakers and stakeholders to address commercial insurance gaps and rising costs through targeted policy solutions that can help alleviate the burden on housing providers and ensure the availability of affordable housing nationwide.

Reports Show Single-Family Rentals Increase Housing Availability, Drive Educational Advancement

Posted on by Abigail Grenadier

Recent studies show major investments that grow the single-family rental (SFR) market increase housing supplies for low-income and middle-class households, and create more educational opportunities for families with improved access to quality school districts.

Positive SFR Research

  • A report released last month by the U.S. Government Accountability Office (GAO) highlights the positive impact of major SFR investors in the aftermath of the 2007—2009 financial crisis. Large investors leveraged capital and technology to convert foreclosed homes into rentals, stabilizing neighborhoods and increasing housing availability. (GAO Report Highlights | Full GAO Report)
  • Another study out of UNC Charlotte, also released in May, finds that children from low- and moderate-income households see improved achievements in school when they rent single-family homes in neighborhoods where they cannot afford to buy.  (UNC Study Highlights | Full UNC Report)

Key Findings

Apartments
  • Market Stabilization: The GAO explained that institutional investors bought foreclosed homes in bulk, converting them into rental properties, during the Great Financial Crisis. This helped stabilize neighborhoods and increased home values.
  • Technological Efficiency: Advanced digital platforms and online management tools enabled investors to efficiently manage large property portfolios, improving tenant experiences and reducing costs, according to the GAO.
  • Improved Housing Stock: Larger equity investors were able to underwrite substantial repairs and renovations to the units they purchase, “the cost of which is out of reach for many homebuyers,” according to a study cited by GAO.
  • Educational Achievement: According to the UNC-Charlotte study, “low-income parents [are] taking advantage of these newly available rental units” and “their children are experiencing substantial achievement gains from attending high-performing schools.”

Clear SFR Benefits

  • Expanding the supply of housing across the geographic and economic spectrum is essential for the nation’s economic vitality.
  • Large-scale SFR investments have helped revitalize distressed properties and communities, contributing to economic growth and stability.
  • “Changing lifestyles are driving people to seek more flexible housing options that also provide better education opportunities without the long-term financial commitment of homeownership. Large-scale single-family rental businesses are responding to meet this demand,” said Jeffrey DeBoer, Roundtable President and CEO.
  • As American households increasingly turn to the rental market for housing, a strong housing finance system should support homeowners and aid the expansion of affordable rental housing.

The Roundtable’s Annual Meeting on June 20-21 in Washington, DC, will feature discussions regarding the policies needed to help expand the supply of affordable and workforce housing.

Roundtable to House Committee: Balance Housing and Energy Efficiency Priorities

Posted on by Abigail Grenadier

The Real Estate Roundtable asked House lawmakers on Wednesday to direct the U.S. Department of Housing and Urban Development (HUD) to reconsider a recent federal energy codes rule because it does not adequately consider impacts on affordable housing. (Roundtable Statement, May 22 for House Hearing)

HUD’s Energy Codes Rule

  • Last month, HUD and the U.S. Department of Agriculture (USDA) issued a joint rule that applies the most recent, stringent—and costly—model energy code standards to new residential construction receiving the agencies’ financial support. (Roundtable Weekly, May 3)
  • The rule would apply to both single- and multifamily homes covered by HUD and USDA programs, including homes backed with federal mortgage insurance. HUD itself estimated the rule would add at least $7,229 to the cost of building a new single-family home. (HUD’s rule | House subcommittee memo)
  • The May 22 House hearing considered how HUD’s rule and other green building policies impact homeownership, price buyers out of the market, and burden renters. The National Association of Home Builders testified at the hearing, and the National Multifamily Housing Council and National Apartment Association submitted a joint statement. (Subcommittee hearing YouTube video)

Roundtable Recommendations

  • The Roundtable’s statement explained that policymakers must prioritize both the climate crisis and our nation’s housing crisis, but that HUD’s federal codes rule is not balanced and should be re-considered.
  • The new nationwide rule imposing the highest energy efficiency standards, currently adopted by only a handful of states, must be assessed in light of the Biden-Harris administration’s goals to address the serious U.S. housing shortage and create two million affordable units. (Biden Administration Affordable Housing Policy Fact Sheet, March 7)
  • RER’s letter also explained how the new federal codes rule adds yet another layer to a stacked mix of stringent government rules and other headwinds that have made single- and multifamily housing construction a “hyper-regulated business.”
  • Reducing buildings’ energy use and climate emissions are critical policies, but the Administration should not pass new regulations that “make the housing crisis worse,” The Roundtable explained. A more balanced re-assessment of HUD’s and USDA’s action is warranted.

This week’s hearing follows House testimony recently delivered by Roundtable President and CEO Jeff DeBoer, who reinforced the messages that the health of commercial and residential real estate markets are intertwined—and excessive regulations that make housing prices and rents unaffordable for working-class families must be avoided. (DeBoer’s April 30 oral statement and written testimony | Roundtable Weekly, April 30)

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