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The numbers often differ on the size of the housing shortfall in the United States. Estimates tend to vary between 1.5 and 5.5 million units, and nearly everyone agrees we aren't building enough homes. The question of how to create more affordable housing is center stage as we head into the presidential election.
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While the finer details of presidential candidate Kamala Harris's housing plan aren't entirely laid out, many wonder if she will support President Biden's plans for a 5% rent increase cap for institutional owners. This plan has raised controversy, with many industry insiders saying that the plan will do little to solve the existing problems. Bob Broeksmit, President and CEO of the Mortgage Bankers Association, called the plan “a counterproductive policy idea that ultimately harms renters by distorting market pricing, discouraging new construction, and degrading the quality of rental housing.”
President Donald Trump proposed privatizing government-sponsored enterprises, Fannie Mae and Freddie Mac, during his first administration. One of his most famous real estate policies was Opportunity Zones, a plan to incentivize builders and developers to create projects in underserved neighborhoods. Opportunity Zones are areas designated by state governors, and investors receive special tax treatment, including deferred capital gains, for their investments in Qualified Opportunity Funds. Opportunity Zones projects covered all real estate types, from luxury hotels to affordable housing communities.
Massachusetts Sen. Elizabeth Warren isn't waiting for the election to deliver her plan for incentivizing more housing. In an interview with WCVB in Boston, she announced that she is introducing a new housing bill in the Senate, and U.S. Rep. Emanuel Cleaver would do the same in the House. The new bill calls for building three million units of housing nationwide. The American Housing and Economic Mobility Act is designed to reduce costs for renters and buyers, including first-time homebuyers.
Where the funding would come from may be controversial. Warren said, "This bill is fully paid for by changing the rules around the estate tax so that billionaires will not be able to pass on their fortunes to their children by paying virtually nothing, which is what they do now.” Warren quickly clarified that this would not impact most people who want to leave something to their children.
Warren said the bill would give money to communities that could create housing by changing zoning laws and adding more density. She also said funding would be available for schools and other community benefits, including public transit. The bill provides funding through 2031 for the first-time homeowner grant program. It outlines various ways communities can receive a federal grant, including allowing accessory dwelling units, revising parking requirements, and reducing lot size.
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Specific allocations from the bill include $445 billion in the Housing Trust Fund to create two million homes for low-income families and $25 billion for the Capital Magnet Fund, which will be leveraged 10:1 with private capital to build more than 750,000 new homes for lower-income and middle-class families. The bill also calls for $4 billion to create a Middle-Class Housing Emergency Fund for middle-class buyers and renters and $1 billion for rural housing.
Some housing advocates have already expressed support for the plan. Sharon Cornelison, Director of Housing at the Consumer Federation of America, said, "This bill would turbocharge affordable housing construction, incentivize communities to remove exclusionary and unfair zoning restrictions, and ensure that first-time, first-generation homebuyers, including veterans, get their chance at building wealth through homeownership too."
While many bills designed to reform housing have been brought before Congress, many don't move past the discussion stage. For a bill to truly gain steam, it will likely need bipartisan support, which may be hard to come by in the current political environment.
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This article Sen. Warren Wants To Tax Billionaires' Estates To Pay For Housing originally appeared on Benzinga.com