To address the country’s shortage of affordable housing, the Trump administration is calling on federal regulators to collaborate and reach out to state and local governments. President Trump’s recent executive order sets forth the administration’s stance on barriers to affordable housing and creates a White House Council to make policy recommendations to eliminate these barriers.
“Recent remarks from housing regulators earlier this year suggested affordable housing, building restrictions and the regulatory burden on new home construction were garnering more attention from the administration,” said Tom Cronin, Managing Director of The Collingwood Group, a Situs company. “The interagency collaboration should help the administration tackle this multifaceted issue.”
Rising home prices and shrinking inventory have pushed many prospective homebuyers out of the housing market. Renting, in addition to homeownership, remains unaffordable for millions of households. Roughly 18 million households spend more than half their income on rent or mortgage payments.
New home construction has lagged behind the pace needed to keep up with household formation, because of the regulatory costs associated with new construction. The Census Bureau estimates that only seven homes were built for every 10 households formed from 2010 to 2016. The National Association of Home Builders estimates that regulations add more than $80,000 in cost to a new home construction.
The executive order says regulators at every level “impose a multitude of regulatory barriers – laws, regulations and administrative practices – that hinder the development of housing.” These barriers include zoning rules, rent controls, building codes, preservation requirements and a lengthy permitting process, among others.
“While this is a national problem, it’s going to require a local solution,” said Cronin. The executive order states the administration will work with “state, local, tribal and private sector leaders” to re-examine obstacles to affordable housing.
The White House Council on Eliminating Regulatory Barriers to Affordable Housing will coordinate the administration’s efforts. Department of Housing and Urban Development (HUD) Secretary Ben Carson will lead the council of federal agencies, including the Treasury Department, Department of Energy, Office of Management and Budget, Council of Economic Advisers, and the Department of Labor.
“Expanding affordable housing options will take time, but the administration has taken an important first step,” said Cronin.
The mortgage industry has welcomed the executive order.
Robert Broeksmit, President and CEO of the Mortgage Bankers Association, said, “President Trump’s administration is to be commended for shining further light on the housing affordability challenges facing low-to-moderate-income Americans and the middle class. Housing affordability is an issue affecting millions of Americans, and we believe the public and private sectors must work together on solutions that ensure those looking to rent or buy a home are given every available opportunity.”
National Association of Home Builders Chairman Greg Ugalde said, “NAHB applauds President Trump for making housing a top national priority. With housing affordability near a 10-year low, the president’s executive order on this critical issue underscores that the White House is ready to take a leading role to help resolve the nation’s affordability crisis.”
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