The apartment industry this week provided Congress with solutions to address housing affordability challenges confronting the nation. Submitting detailed proposals ahead of a Senate Finance Committee hearing, America’s Affordable Housing Crisis: Challenges and Solutions, scheduled for August 1, NMHC/NAA called on Congress to expand housing tax incentives, fully fund housing programs and remove regulatory barriers.
NMHC/NAA recommended that policymakers take a three-pronged approach to meet housing affordability challenges, namely new development, preservation and rehabilitation. The industry called on Congress to pass legislation introduced by Senators Cantwell (D-WA) and Hatch (R-UT) that would expand the Low-Income Housing Tax Credit (LIHTC) by 50 percent and enable the program to serve families earning up to 80 percent of area median income, among other improvements. We also strongly favor legislation Senator Wyden (D-OR) introduced last year to establish a Middle-Income Housing Tax Credit (MIHTC). A complement of measures to expand and improve LIHTC, MIHTC is designed to benefit populations earning below 100 percent of area median income. NMHC/NAA worked with Senator Wyden on the MIHTC bill in 2016 and is looking forward to its reintroduction this Congress.
Although the Finance Committee is focused on tax policy,
our statement also recommends that Congress consider other proposals to address
housing affordability. We noted that if Congress were to overhaul Fannie Mae
and Freddie Mac, it must maintain an explicit Federal guarantee to ensure
continued capital availability to the multifamily sector. Additionally,
Congress should maintain the FHA’s multifamily programs and continue to support
other Federal housing assistance initiatives, including Section 8 and the
Rental Assistance Demonstration Program. Finally, we called on Congress to urge the Department of Labor to reexamine and modify
its Davis-Bacon methodology to avoid exacerbating housing construction costs.
The Finance Committee hearing provided NMHC/NAA the opportunity to highlight just-released research concluding that the nation will need 4.6 million new apartments by 2030 to meet surging demand. We were also able to highlight key barriers inhibiting the production of new apartments, including land costs, zoning laws, entitlements, regulations, construction and labor costs, impact fees, and capital availability. The bottom line is that policymakers at all levels of government must recognize that addressing local housing affordability needs requires a partnership between government and the private sector.
Affordability has been a longstanding problem in housing. The total share of cost-burdened apartment households (those paying more than 30 percent of their income on housing) increased steadily from 42.4 percent in 1985 to 54.8 percent in 2015. Also during this period, the total share of severely cost-burdened apartment households (those paying more than half their income on housing) increased from 20.9 to 29.2 percent. This housing cost burden also places pressure on a household’s ability to pay for basic necessities, including food and transportation, and ultimately impacts their future financial success.
This issue is not unique to households receiving federal subsidies and, in fact, is encroaching on the financial wellbeing of households earning up to 120 percent of area median income. Consider that the median asking rent for an apartment constructed in 2015 was $1,396. For a renter to afford one of those units at the 30 percent of income standard, they would need to earn at least $55,840 annually. As a basis of comparison, the median household income in 2015 was $56,516.
- Resources on New York’s Recently Enacted Rent Control Law
- A Case Study in Affordability Solutions
- Harvard Report Links Cost of Construction and Regulation to Housing Affordability
- NMHC and NAA HUD Opportunity Zones Comment Letter - June 2019
- NMHC Leads Coalition Against California Rent Control Legislation