For Immediate Release:
Wednesday, July 24, 2024
Contact:
Justin Pressfield, Principal, Dewey Square Group
Justin.Pressfield@deweysquare.com, (202) 813-7887
The House Financial Services Committee’s Subcommittee on Housing and Insurance held a hearing today titled “Housing Solutions: Cutting Through Government Red Tape,” which addressed the impact of government regulations on housing affordability. The discussion highlighted the significant challenges posed by various regulatory requirements at the federal, state, and local levels.
The hearing made clear that there are serious obstacles in addressing rising housing costs and delivering much-needed supply, but rent caps are not the answer. Earlier this week, a broad coalition of 19 housing providers sent a letter to the Administration and Members of Congress, expressing strong opposition to the Biden Administration’s recent proposal to cap rent increases at 5 percent annually.
A growing number of working Americans are struggling to find housing they can afford. Rent control creates economic instability and reduces housing supply. As the country faces a massive housing deficit, common sense solutions are desperately needed that prioritize building more homes to drive down costs for renters and future homeowners.
The Housing Solutions Coalition (HSC), a broad coalition of housing groups, remains firm in our stance against President Biden’s proposed 5% rent cap. Rent caps, also known as rent control, have never been viable solutions to the ongoing affordability challenges facing our nation’s rental housing market.
As former President Obama’s chair of the Council of Economic Advisers, Jason Furman, said to the Washington Post, “Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”
Member Insights
Today, our coalition members provided valuable testimony to the Committee, highlighting the real-world implications of these issues and offering actionable recommendations. Here are some key quotes from their testimonies:
National Multifamily Housing Council/National Apartment Association Joint Statement: James H. Schloemer, Chief Executive Officer of Continental Properties Company and Chair of NMHC:
- “Challenges present themselves differently from community to community, but it will come as no surprise to Americans nationwide that we are facing a widespread housing affordability challenge. No wonder communities are feeling pinched—we simply do not have enough housing to go around.”
- “Housing affordability, driven by a lack of supply, is a top issue plaguing communities nationwide. The only way out of this supply shortage crisis is to build more housing—but the current political and regulatory environment makes it incredibly hard to do so.”
- “At a time when housing providers are facing increasing pressure to meet booming demand, an overly burdensome regulatory framework is forcing financers, developers, and operators to manage numerous compliance hurdles and rising costs.”
- “According to research conducted by Hoyt Advisory Services and Eigen10 Advisors, LLC, and commissioned by NMHC and NAA, the U.S. is facing a pressing need to build 4.3 million new apartment homes by 2035.”
- “NMHC and National Association of Home Builders (NAHB) research has found that many regulations can go far beyond the important goals of ensuring the health and well-being of the public, and instead impose costly mandates on developers that drive housing costs higher. In fact, according to that research, regulation imposed by all levels of government account for an average of 40.6 percent of multifamily development costs.”
- “Barriers to development, high construction and operating costs, and regulatory burdens all make it difficult, if not impossible, for developers to help remedy this problem. The total share of cost-burdened households (those paying more than 30 percent of their income on housing) increased steadily from 28.0 percent in 1985 to 36.9 percent in 2021, while others have been priced out of communities altogether.”
- “Operating apartments has become increasingly challenging, highlighted by rising expenses. Industry data shows that operating expenses per unit nationally increased by 8.0 percent year over year in 2023, with insurance (+29 percent), marketing (+12.7 percent), administrative (+10.8 percent), and repairs/maintenance (+9.8 percent) costs taking the lead.”
National Association of Home Builders: Carl Harris, NAHB 2024 Chairman of the Board of Directors:
- “Housing is by far the largest single expense for American households and rising costs are putting the nation in an untenable situation.”
- “As a nation, we must do better. All home buyers and renters in America should have the option to secure safe, decent, and affordable housing where they want to live. America’s workforce families, including members of the armed forces, teachers, and first responders, should be able to afford to live in homes or apartments in the communities they serve. Increasing the inventory of new single-family and multifamily housing is key to improving housing affordability.”
- “NAHB unequivocally opposes rent control in any form at any level of government. Rent control in any form is bad for housing, and President Biden’s tax plan to cap rents at 5 percent on existing multifamily structures will worsen the housing affordability crisis.”
- “Moreover, rent regulation is not equitable, as it does not target lower- and moderate-income renters that are in most need of assistance, support and stability. Instead, it incentivizes current renters to remain in place for longer periods of time and disincentivizes additional investments in housing. In this way, rent control limits opportunities for those who do not have access to the rental housing market in favor of those that already do.”
We thank the members of the House Financial Services Committee for their dedication to these critical issues. Our organization remains committed to working collaboratively with policymakers to address America’s housing supply crisis.###
About HSC
The Housing Solutions Coalition is a collaborative effort of professionals and experts from different but related corners of the real estate industry. Through this coalition, we aim to promote workable solutions to the current housing crisis, guided by the belief that every American should have fair access to quality housing that they can afford.