CREFC and Real Estate Groups Urge Congress to Address Housing Shortage
May 25, 2023
CREFC joined a coalition of 19 housing and real estate groups urging U.S. lawmakers to work with the Biden Administration, housing providers, lenders, and other stakeholders to pursue bipartisan solutions to address the nation’s shortage of affordable housing.
Why it matters: There are not enough homes to meet long-term demand for housing tailored to low- and middle-income households. The shortage is immense, widespread and enduring.
CREFC has been working with its members and industry partners to delivery policy and market solutions to address the housing crisis. The total share of cost-burdened households (those paying more than 30% of their income on housing), increased from 28% in 1985 to 37% in 2021. The shortage of affordable housing has become more acute amid a period of high inflation.
The letter to Congress and President Biden highlights that a combination of factors has propelled development costs higher, including increased borrowing costs tied to the Fed’s rate tightening moves and costly regulations.
CREFC and the coalition’s strategy supports the following principles:
- Strong private and public partnerships;
- Increased housing supply at all price points and short-term solutions to renter populations in need of immediate support;
- Increased subsidies and emergency housing support for those of modest means; and
- Incentive-based programs, streamlined regulations, and innovative solutions that increase affordable housing supply.
Proposals to Alleviate Shortage of Affordable Housing. The coalition lauded the administration’s Housing Supply Action Plan and urged Congress to work with the White House to enact key policies included in the plan:
- Low-Income Housing Tax Credit (LIHTC): The President’s FY24 Federal Budget includes a proposal to expand and enhance the LIHTC program, which has developed or preserved 3.74 million apartments between 1986 and 2021.
- Neighborhood Homes Credit: The White House FY24 Budget includes a new allocated tax credit to support new construction or rehabilitation of homes for sale and existing homes by current owners who will remain in their neighborhoods. The credit could create 500,000 more affordable homes for moderate- and middle-income families.
- Reducing Regulatory Burdens: The coalition supports proposals to grant funding that incentivizes state and local governments to expand housing supply by reducing barriers to development.
- Housing Preservation: The White House budget includes an expansion of the Housing Choice Voucher programs and the HOME Investment Partnerships Program, which supports building, buying, and rehabilitating affordable housing.
Opposing Tax Increases: While the coalition praised aspects of the President’s budget, new taxes would reduce real estate investment, leading the coalition to urge Congress to reject proposals that:
- Increase the top marginal income and capital gains tax rates,
- Tax carried interest as ordinary income,
- Expand the net investment income tax to encompass active business income,
- Require 100% recapture of depreciation deductions as ordinary income for real estate, and
- Limit the deferral of a taxable gains from 1031 like-kind exchanges.
Burden on Housing Providers. The coalition remains concerned the White House’s “Blueprint for a Renters Bill of Rights” could create duplicative and confusing regulations that interfere with state and local laws meant to govern housing provider and resident relationships. The added complexity of this blueprint could discourage private market investment in new housing construction.
Legislation. In line with the above principles, CREFC and the coalition support the following bills in Congress to address the shortage of affordable housing:
What’s next: CREFC continues to work with policymakers and industry partners on addressing housing affordability. CREFC members who wish to weigh in on this issue and/or work alongside us on this issue, should contact:
- Sairah Burki (sburki@crefc.org) with questions about regulation related to housing.
David McCarthy (dmccarthy@crefc.org) with questions about the legislative proposals.