Experts have mixed reaction to ‘transformational’ bill to address housing affordability

(TNND) — The House passed a bill Wednesday that lawmakers say will make housing more accessible and affordable for American families, but some experts are giving the legislation mixed-to-poor reviews.

Speaker Mike Johnson called the bill, the 21st Century ROAD to Housing Act, “transformational legislation that will immediately address the housing affordability problem and bring the American Dream back within reach for millions of young and working American families.”

Majority Leader Steve Scalise said the bill “takes meaningful steps to increase the supply of homes and cut the red tape standing in the way.”

And California Rep. Maxine Waters, the ranking member of the Financial Services Committee, said the bill is “a huge step towards finally addressing the affordable housing and homelessness crises in this country.”

The House passed the bill with strong bipartisan support, 396-13. And now the amended version of the long-debated bill will head back to the Senate, which previously passed a different version.

A White House official said President Donald Trump supports the House’s version, thanks to the changes that were made.

Taxpayers Protection Alliance Executive Director Ross Marchand said the bill wisely addresses a key driver of high housing costs, which he said is “out-of-control red tape.”

“While the House bill is far from perfect, it is, on balance, a good bill that will support housing investment and start the process of rolling back costly red tape,” Marchand said via email.

But another expert, Norbert Michel, the vice president and director of the Cato Institute’s Center for Monetary and Financial Alternatives, described the bill as “on the border of benign and bad.”

“If you are a fan of free markets, there’s just not a whole lot to like there,” Michel said. “If you’re a fan of really changing some of the regulations and supply constraints and ending subsidies and grants and stuff like that, there’s not a lot to like in there.”

Both Marchand and Michel applauded the House for stripping a Senate provision that would’ve forced large institutional investors to sell off single-family rental homes to individual homebuyers after seven years.

But the House version still includes a new limit on how many rental homes large institutional investors can own, which both experts said could have unintended consequences.

Trump signed an executive order earlier this year intended to keep Wall Street investors from crowding out everyday Americans in the housing market, at a time when affordability is a real challenge and the age for a typical first-time homebuyer has hit a record high of 40.

But both Marchand and Michel said institutional investors own less than 1% of U.S. single-family houses.

Michel said capping the number of rental properties institutional investors can own might even work to reduce the supply of housing, chilling incentives to build more homes if the opportunity to scale up evaporates.

The lawmakers said the House bill restores critical community banking provisions while preserving key measures to streamline housing development, improve affordability, encourage new construction, update outdated Housing and Urban Development programs, and eliminate burdensome regulatory barriers.

Michel said the bill mainly tweaks grant formulas for existing HUD and community development programs that have been in place for decades, rather than implementing major reforms to reduce supply constraints.

Marchand applauded a provision to streamline the environmental review process for a range of HUD building activities. The changes would not only reduce the burden on taxpayers but also lower housing costs for everyone, he said.

But Michel said even the impact of the fast-tracked environmental reviews is being overstated.

Michel said the bill mainly formalizes an existing HUD exemption for certain federally assisted affordable housing projects rather than creating broad new relief for private developers.

Both Marchand and Michel liked an added House provision that reduces regulatory burdens on small banks, which they said are critical in financing residential construction.

Marchand said he’s optimistic the Senate will come around to the House’s version of the bill, which he called “a lighter-touch approach that supports needed investments in housing supply.”

But Michel is expecting a fight from the Senate.