[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                   BOOM AND BUST: THE NEED FOR BOLD
                  INVESTMENTS IN FAIR AND AFFORDABLE
                     HOUSING TO COMBAT INFLATION

=======================================================================

                             HYBRID HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION
                               __________

                            DECEMBER 1, 2022
                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-105
                           
                           
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]   
                                    
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
50-158  PDF               WASHINGTON : 2023  



                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
BILL FOSTER, Illinois                FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio                   TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
CINDY AXNE, Iowa                     TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois                ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts       JOHN ROSE, Tennessee
RITCHIE TORRES, New York             BRYAN STEIL, Wisconsin
STEPHEN F. LYNCH, Massachusetts      LANCE GOODEN, Texas
ALMA ADAMS, North Carolina           WILLIAM TIMMONS, South Carolina
RASHIDA TLAIB, Michigan              VAN TAYLOR, Texas
MADELEINE DEAN, Pennsylvania         PETE SESSIONS, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   RALPH NORMAN, South Carolina
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    December 1, 2022.............................................     1
Appendix:
    December 1, 2022.............................................    65

                               WITNESSES
                       Thursday, December 1, 2022

Bailey, Nikitra, Executive Vice President, National Fair Housing 
  Alliance.......................................................     5
Eaddy, Margaret, activist and housing seeker.....................     6
Holtz-Eakin, Douglas, President, American Action Forum...........    10
Mitchell, Michael, Director, Policy and Research, Groundwork 
  Collaborative..................................................     8
Zandi, Mark, Chief Economist, Moody's Analytics..................    11

                                APPENDIX

Prepared statements:
    Bailey, Nikitra..............................................    66
    Eaddy, Margaret..............................................    78
    Holtz-Eakin, Douglas.........................................    80
    Mitchell, Michael............................................    86
    Zandi, Mark..................................................    94

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of Liberation in a Generation..............   101
    Written statement of National NeighborWorks Association......   105

 
                    BOOM AND BUST: THE NEED FOR BOLD
                   INVESTMENTS IN FAIR AND AFFORDABLE
                     HOUSING TO COMBAT INFLATION

                              ----------                              


                       Thursday, December 1, 2022

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:09 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Scott, Green, 
Cleaver, Himes, Foster, Vargas, Gottheimer, Lawson, Pressley, 
Torres, Lynch, Adams, Tlaib, Dean, Garcia of Illinois, Garcia 
of Texas, Auchincloss; McHenry, Lucas, Posey, Luetkemeyer, 
Huizenga, Barr, Williams of Texas, Hill, Emmer, Zeldin, 
Loudermilk, Mooney, Davidson, Budd, Rose, Steil, Timmons, 
Sessions, and Norman.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    I want to thank the Members for their patience this 
morning. We are in the process of reorganizing the Democratic 
Caucus, so I don't know how this is all going to work out, but 
we are going to get started.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``Boom and Bust: The Need for 
Bold Investments in Fair and Affordable Housing to Combat 
Inflation.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    Good morning, everyone. First, I would like to say that I 
am incredibly proud that this committee has made it a top 
priority to ensure that every family has access to fair and 
affordable housing across the country.
    Since I became Chair in 2019, this committee has held 55 
hearings on housing, including the first-ever Full Committee 
hearing on homelessness. However, the opposite side of the 
aisle has repeatedly complained about our focus on housing, 
while offering no solutions to safely and affordably house 
families.
    With Republicans holding the Majority next Congress, this 
will likely be our last hearing on housing affordability for 
the foreseeable future. But I know the ranking member is a good 
person, so I hope he will prove me wrong.
    Unfortunately, our nation's housing crisis is getting 
worse. Some believe that robust Federal investments in fair and 
affordable housing aren't needed, but that deregulation in the 
private market alone will solve this crisis. But decades of 
dismal Federal investment in housing have landed us in the 
current housing crisis, and we cannot expect different outcomes 
without different interventions.
    Today, there is no metropolitan area in the country where 
families can afford a home while making minimum wage. A chronic 
undersupply of housing has led to skyrocketing costs, and 
today, housing is a primary driver of core inflation.
    While the Federal Reserve has leaned on interest rate hikes 
in the hopes of curing inflation, including four supersized 
rate hikes this year alone, those hikes do nothing to address 
the fundamental shortage of affordable housing and, in fact, 
make it worse. These hikes have made lending more costly, 
pricing first-time and first-generation homebuyers out of the 
market to record lows by adding to the already-high costs of 
purchasing a home. Housing construction has also slowed due to 
increased lending costs, exacerbating the existing supply 
shortage.
    The Fed cannot address inflation alone. That is why last 
year, my committee fought to secure over $150 billion in fair 
and affordable housing investments in the House, which would 
reduce core inflation by addressing the root cause of our 
inadequate housing supply. These investments are estimated to 
create more than 1.4 million affordable homes, help 868,000 
families lower their housing costs, and create jobs that will 
boost local economies.
    Without these target investments, we will never fully 
address housing inflation. Instead, we will continue to face a 
homelessness crisis and skyrocketing rents, and homeownership 
will move further out of reach for everyday people, while 
private equity firms and banks, like JPMorgan Chase, gobble up 
more and more homes for profit.
    We need bipartisan support for bold investments to make 
housing affordable and finally rein in core inflation.
    With that, I yield back.
    And I now recognize the ranking member of the committee, 
the gentleman from North Carolina, Mr. McHenry, for 4 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman.
    And we will certainly, with the incoming Republican 
Majority, prioritize housing and financial stability next 
Congress, and put a great emphasis on that. And it is our hope 
that we can actually achieve some bipartisan results in the 
world of housing in a way that this committee hasn't done for--
well, actually, probably as long as we have both served on this 
committee, unfortunately, but not for a lack of trying. But our 
hope is that we can work together and get something done.
    But for this hearing, I am grateful that my colleagues 
across the aisle are finally ready to talk about inflation and 
how to combat it. Committee Republicans have consistently taken 
every opportunity to discuss the skyrocketing prices clobbering 
American families.
    For more than a year, Republicans have been sounding the 
alarm about the Democrats' reckless fiscal agenda and its 
impact on households and job creators. Democrats chose to 
ignore those warnings. Republicans said that a massive $1.9-
trillion spending bill would wreak havoc on our economy, and 
Democrats doubled down with even more spending.
    Republicans offered simple amendments to the Democrats' 
partisan bills during our June markup this year to actually 
address the inflation crisis, and the Democrats rejected each 
one.
    So I have to say, today's hearing is simply too little, too 
late.
    Since Democrats took control of Washington, the cost of 
everything has gone up: food, energy, healthcare, and, yes, 
housing, the topic of this hearing, are all much more expensive 
today than they were just 2 years ago.
    Rather than focus on the rising costs of housing, Democrats 
continue to turn to their tired old playbook of policies that 
actually make the problem worse, not better. These are policies 
such as the Down Payment Assistance Program and the numerous 
other programs included in the Democrats' doomed Build Back 
Better Act, which threw hundreds of billions of dollars into 
ineffective housing programs. While well-intentioned, this 
would do nothing to help lower the costs of housing or to 
increase our housing supply. Those are the things we need to 
address.
    To find real solutions to bring to this housing crisis, we 
need to take a step back. Consider this: The average 30-year 
fixed-rate mortgage rate from June 2009 until the end of 2021 
was 3.97 percent. Today, that same mortgage comes with a rate 
approaching a whopping 7 percent, whopping in comparison to the 
last decade, which was historically not whopping.
    The speed and the magnitude of this increase is without 
comparison in history. So, there is that.
    Then, there are two main contributors to this housing 
problem. First, Democrats' fiscal policies and regulatory 
policies are discouraging the building of new homes. We know 
that artificial local barriers to construction, such as 
restrictive zoning ordinances and overly-burdensome 
regulations, play a significant role in limiting new 
construction. A limited supply of something, coupled with 
increased demand, always leads to higher prices. And higher 
prices require larger loans, making it less affordable for 
families.
    The second contributor is our current environment in which 
the Fed must tighten its monetary policy and reduce its balance 
sheet to fight out-of-control spending. This causes mortgage 
rates to increase, making them more expensive and riskier.
    Economists are rightly concerned about the effect of 
quantitative tightening on the housing market. The $35-billion-
per-month in agency mortgage-backed securities that are rolling 
off of the Fed's balance sheet takes money out of the housing 
market, limiting the availability of credit. We know the Fed's 
tools to address runaway inflation are blunt, but they are 
necessary to stabilize the economy and return to normal credit 
environments.
    As lawmakers, we should do our part to assist in this 
effort to bring down prices. That means reining in spending and 
practicing fiscal discipline. A doubling down of failed housing 
policies is not the answer. We need innovative solutions.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you, Ranking Member McHenry.
    I now recognize the Chair of our Subcommittee on Housing, 
Community Development, and Insurance, the gentleman from 
Missouri, Mr. Cleaver, for 1 minute.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    Gas prices fell this week to a national average of $4.67, 
which is 12 cents lower than it was last week, so inflation is 
coming down. Nevertheless, we do have inflation and elevated 
consumer prices which are hitting our people in this country. 
The impact of inflation is felt particularly hard among low- 
and moderate-income Americans who have tight budgets and lack 
discretionary income.
    However, as much as we are concerned about prices, we must 
not forget that housing is the single-largest expense for 
American families. Rents are 22.8 percent higher in the 50 
largest cities than 2 years ago, with some hikes far exceeding 
what is reported in the Consumer Price Index, in some cases by 
hundreds or thousands more. The lack of housing stock has 
driven up the prices, and the Federal Reserve's rate hikes do 
nothing to alleviate housing inflation.
    Bringing inflation under control and addressing the impact 
of inflation on American families begins and ends with the 
housing crisis.
    Thank you, Madam Chairwoman, for your leadership and for 
holding this hearing today. And I yield back.
    Chairwoman Waters. Thank you, Mr. Cleaver.
    I now recognize the ranking member of our Subcommittee on 
Housing, Community Development, and Insurance, the gentleman 
from Arkansas, Mr. Hill, for 1 minute.
    Mr. Hill. Thank you, Madam Chairwoman.
    Americans continue to fall behind because of Biden 
inflation, and their paychecks are worth less every month. 
Working Americans in central Arkansas and across the country 
are getting fleeced. So, I am glad the Majority has finally 
decided to hold a hearing on combating inflation.
    Wasteful spending, productivity-killing regulations, and 
overly-accommodative monetary policy have led to a 40-year high 
in inflation. So, it doesn't make a whole lot of sense to me 
why the Majority keeps noticing bills that will make inflation 
worse, and put homeownership further out of reach, like the 
noticed Downpayment Toward Equity Act.
    Today, we will hear from some of our witnesses advocating 
for tempting ideas, like rental or down payment assistance. But 
doubling down on failed housing policies won't make housing 
more affordable in America.
    I have said it before, and I will say it again: Federal 
housing policies which only subsidize demand and don't address 
barriers to supply will never make housing more affordable.
    I yield back.
    Chairwoman Waters. Thank you very much, Mr. Hill.
    I want to welcome today's distinguished witnesses to the 
committee: Nikitra Bailey, the executive vice president of the 
National Fair Housing Alliance; Margaret Eaddy, an activist and 
housing seeker; Michael Mitchell, the director of policy and 
research at Groundwork Collaborative; Mark Zandi, the chief 
economist at Moody's Analytics; and Douglas Holtz-Eakin, the 
president of the American Action Forum.
    You will each have 5 minutes to present your oral 
testimony. You should be able to see a timer that will indicate 
how much time you have left. I would ask you to be mindful of 
the timer so that we can be respectful of everyone's time.
    And without objection, your written statements will be made 
a part of the record.
    Ms. Bailey, you are now recognized for 5 minutes to present 
your oral testimony.

STATEMENT OF NIKITRA BAILEY, EXECUTIVE VICE PRESIDENT, NATIONAL 
                  FAIR HOUSING ALLIANCE (NFHA)

    Ms. Bailey. Good morning, Chairwoman Waters, Ranking Member 
McHenry, and distinguished members of the committee. Thank you 
for the opportunity to testify in today's hearing.
    I am Nikitra Bailey, the executive vice president of the 
National Fair Housing Alliance (NFHA), the only national civil 
rights organization dedicated to eliminating housing 
discrimination and ensuring equitable housing opportunities for 
everyone.
    NFHA's top equity initiative creates fairness and 
transparency in algorithms to stop technology from recycling 
discrimination. Rising housing, gas, and food costs are the 
main drivers of inflation, but housing costs are the key 
driver. Home prices rose 10.4 percent in 2020, and another 18.8 
percent in 2021. Rental housing prices rose 17.6 percent in 
2021, far outpacing income increases. The Consumer Price Index 
rose 7.9 percent in the last year, the highest increase since 
1982.
    Housing costs accounted for more than 40 percent of the 
increase in the core inflation rate. Despite the Federal 
Reserve's quantitative easing, these trends are not slowing 
down. Housing continues to be the single-largest expense for 
the average consumer, with shelter accounting for 33 percent of 
the CPI.
    While rental inflation is lessening as of October 31, 2022, 
Americans paid an average of $2,040 in market rent. There 
continues to be no city in our nation where someone making the 
minimum wage can afford to live in a two-bedroom apartment. It 
could take as long as 2023 for housing changes to be felt by 
consumers, and high inflation is likely to last through 2024.
    The Federal Reserve lacks the teeth to address housing 
inflationary impact. Low housing inventory, record competition 
from corporate cash investors, restrictive zoning ordinances, 
supply-chain disruptions, rising building material costs, and 
labor shortages are all driving prices higher.
    While carefully weighing anti-inflationary measures, the 
Fed's actions did not prevent the housing market from entering 
into a recession. Mortgages rates returned to well over 7 
percent. And as of September 2020, pending home sales were down 
10.2 percent month over month, with the declines the most acute 
in the Northeast. And that is just locking out first-time 
homebuyers, including many millennials from Charlotte, North 
Carolina, to Boise, Idaho.
    Further, there is a shortage of 7 million affordable and 
available rental homes for extremely low-income renters. There 
is great irony in passing the Inflation Reduction Act without a 
single penny for fair and affordable housing, when every 
economic indicator has shown the direct connection between 
housing and inflation.
    Congress and the Biden Administration are equipped to 
mitigate housing's outsized role in inflation, and voters are 
demanding action. Americans support major investments to build 
safe and affordable housing, even if it would grow the national 
debt, mean raising taxes, or cutting spending of the areas to 
pay for it. Voters want the Federal Government to address high 
housing costs with bipartisan legislation that grows the supply 
of homes, improves housing affordability, and provides rental 
and down payment assistance.
    During the recent midterm elections, voters approved 
capping rate increases on rent, and ballot proposals to fund 
and authorize affordable housing construction across the 
country. Making key, impactful, demand-sized investments and 
supply-sized subsidies that prioritize fair housing will help 
to drive down housing costs while growing the economy. It is 
critical to embed fair housing in every action.
    As a nation, we have tried and failed to create affordable 
housing opportunities by implementing Federal housing policies 
in discriminatory ways that entrench residential segregation. 
The roots of discrimination in housing are deep, pernicious, 
and persistent. Past race-conscious housing policies, banking, 
and other practices created today's structural inequalities.
    By contrast, the equity-based provisions in the American 
Rescue Plan Act help to stave off another foreclosure-induced 
recession. The Great Recession robbed Black and Latino 
communities of $1 trillion in wealth. Even before the Fed's 
COVID-19 interventions exacerbated racial inequality, the 
Black-White wealth gap had grown by $20 trillion, with 
inequitable housing prices driving the disparity.
    Why would we want to go back? The nation needs a 
comprehensive housing strategy rooted in equity. Equitable 
policies advance opportunity for everyone and create an economy 
that works for all. Priorities for funding must include 
critical support for local fair housing enforcement agencies to 
fight over 4 million incidents of housing discrimination, 
mostly in housing and rental, First-Generation DPA, the 
Neighborhood Homes Investment Act, and increased support for 
vouchers for families with children, and support for Native 
communities, older Americans, and people with disabilities.
    Thank you.
    [The prepared statement of Ms. Bailey can be found on page 
66 of the appendix.]
    Chairwoman Waters. Thank you, Ms. Bailey.
    Ms. Eaddy, you are now recognized for 5 minutes to present 
your oral testimony.

    STATEMENT OF MARGARET EADDY, ACTIVIST AND HOUSING SEEKER

    Ms. Eaddy. Good morning. My name is Margaret Eaddy, and I 
am from Hampton, Virginia. I am grateful to the Office of 
Representative Maxine Waters for providing me an opportunity to 
speak to you today.
    The topic of this hearing, fair and affordable housing, is 
personal for me, and that is because my husband and I currently 
live in our vehicle. There are so many other things about me I 
would rather be sharing with you today. I am a visual artist 
who paints beautiful abstract paintings. I am a former 
librarian. I am an advocate for other parents like me who have 
been impacted by gun violence.
    Being homeless steals your identity. People like my husband 
and I need stable housing first before we can accomplish our 
full potential. So today, I wanted to briefly share our housing 
story with you. Our experience has also brought us into contact 
with other families who are facing similar challenges, and I 
hope to speak up for them as well.
    When the pandemic hit in 2020, my husband saw his hours cut 
in his job hauling trash to the landfill. We fell about $150 
short on our rent. Instead of working with us, the landlord 
evicted us. My husband and I decided to move into our vehicle 
while we searched for other places, but we soon found out the 
barriers to finding a home were very steep. Whenever my husband 
and I would speak with rental offices, I would give them my 
name, they would type my name into some sort of data system, 
and then tell me, we see an eviction on your public record so 
we can't help you.
    My husband and I were able briefly to find a place to live 
after our story received news coverage. We received support 
from kind individuals on GoFundMe. But this year, after that 
attention faded, our landlord chose to do what many landlords 
have done recently: They failed to renew our lease after it 
expired and then increased our apartment's rent beyond what we 
could pay. So for the last 4 months, my husband and I have been 
living in our car again.
    In the parking lots where we sleep, and in homeless 
agencies where we visit, I have met many other homeless 
families. It hurts so bad to see moms and dads out there with 
their kids. The dads look like their pride was stolen away from 
them. And when they tell you their stories, they will tell you 
that their world turned upside down because their rent went up 
by even just 50 or 60 more dollars, and they couldn't afford 
that.
    Even if an apartment were to be offered to us, the deposit 
and income requirements are so high. A landlord typically asks 
for 3 times the rent up front, $3,000, for example, for a place 
that rents for $1,000. We don't have that. The landlords can 
also require you to show that you make 3 times the monthly rent 
just to qualify. We can't show that.
    All of this makes people in our situation more vulnerable 
to any landlord who will accept you, even if they overcharge 
you and provide unsafe conditions. When people have stable 
housing, it allows them to do so much more in life. I know that 
it is hard for a Member of Congress to imagine yourself living 
in your car. It was hard for my husband and I to imagine 
ourselves in this situation, but I am asking you today to 
imagine yourself in our situation.
    You don't know how good it is to have a knob to turn every 
evening, to enter a space where you are safe and not in danger, 
until that is taken away from you.
    There are so many people out here who, if they had safe, 
affordable houses they could stay in until the day they died, 
that would be something that they really do desire. Anything 
that you can do to help make this a reality will mean a lot to 
people.
    Thank you.
    [The prepared statement of Ms. Eaddy can be found on page 
78 of the appendix.]
    Chairwoman Waters. Thank you so very much for your 
testimony.
    Ms. Eaddy. You are welcome.
    Chairwoman Waters. Mr. Mitchell, you are now recognized for 
5 minutes to present your oral testimony.

 STATEMENT OF MICHAEL MITCHELL, DIRECTOR, POLICY AND RESEARCH, 
                    GROUNDWORK COLLABORATIVE

    Mr. Mitchell. Thank you. Thank you, Chairwoman Waters, and 
Ranking Member McHenry. Thank you for inviting me to testify 
today.
    My name is Michael Mitchell, and I am the director of 
policy and research at the Groundwork Collaborative, an 
economic policy think tank based in Washington, D.C., dedicated 
to broadly share prosperity and abundance for all.
    My testimony today will focus on three key points.
    First, the Federal Reserve's actions to combat inflation on 
driving up rents as high interest rates increasingly price 
people out of the home-buying market and further crowd the 
rental market. They are also exacerbating the long-standing 
housing crisis by dampening sorely-needed investment in new 
construction.
    Second, the Federal Reserve's aggressive interest rate 
hikes risk undermining a strong labor market and pushing our 
economy towards a recession. These actions are coming at great 
costs to workers and families across the country, particularly 
the most vulnerable.
    And third, policymakers have the tools at their disposal to 
build a more resilient and equitable housing sector.
    To my first point, the Federal Reserve's actions to combat 
inflation are driving up rents and dampening sorely needed 
investment in new housing construction. The Federal Reserve has 
raised interest rates 6 times so far in 2022, including 4 
interest rate hikes of 75 basis points.
    As the Federal Reserve continues to raise interest rates, 
other rates, such as mortgage rates, follow suit. The average 
30-year fixed-rate mortgage rate across the U.S. is above 6.5 
percent, and near 15-year highs.
    As the cost of buying a house becomes more expensive, 
potential homebuyers are forced to remain in the rental market, 
where there are already too few rental units to meet demand, 
putting upward pressure on rental prices. The most recent CPI 
report for October revealed that rent prices have gone up 7.5 
percent year over year, the highest rate in over 40 years.
    Federal Reserve action also undermines private-sector 
investment in housing construction as the rising costs of 
borrowing makes such construction more costly and less 
profitable. In recent months, we have seen declines in permits 
for single-family home construction and single-family housing 
starts. The Fed-induced slowdown in the housing market will 
only exacerbate the 4-million-unit deficit in housing that 
predated this inflationary period.
    The Federal Reserve's aggressive approach to interest rate 
hikes risks undermining a strong labor market and harming 
marginalized workers, while large corporate landlords use this 
moment to push up rents and boost profits.
    Thanks to timely actions taken by the Biden Administration 
and Congress, we have experienced one of the strongest post-
recession recoveries on record. However, this recovery is in 
jeopardy because of the Federal Reserve's aggressive interest 
rate hikes. In recent months, job and rate growth have slowed, 
and a broad range of experts, from Nobel Prize winning 
economists to financial analysts, have started to sound the 
alarm about how the Federal Reserve interest rate hikes could 
throw us into a devastating and totally-avoidable recession.
    A recession at this moment would be particularly damaging 
to marginalized workers, workers of color, workers with 
disabilities, and women in the labor market, as discrimination 
in the labor market means these workers are the last to benefit 
from a strong economy and the first to suffer in a recession.
    Yet, despite the significant threats that the Federal 
Reserve's interest rate hikes pose to economic security for 
millions, many of which are renters, large landlords have seen 
this moment as an opportunity to raise rents by as much as they 
possibly can. These companies have been very explicit about the 
fact that the Fed's actions have given them cover to raise rent 
more than overall inflation in order to pad their own pockets 
and those of their shareholders. On earnings calls, they have 
been forthright with shareholders about their ability to raise 
rents with zero concerns for the tenant.
    So, what is to be done? While the Federal Reserve may be 
exacerbating the rent affordability crisis, there are a number 
of actions that Congress can take to address the growing costs 
of rent while also tackling key underlining factors to ensure 
adequate affordable housing into the future.
    For immediate impact, Congress can protect lenders from 
burdensome rent increases in homes with federally-backed 
mortgages, tackle corporate profiteering in the housing sector, 
and make investments in helping families afford housing.
    And for the longer horizon, Congress can make public 
investments geared toward boosting the housing supply, and work 
with municipalities to adopt new forms of zoning regulation 
that would enable an increase in the supply of affordable 
housing.
    The Federal Reserve's actions to combat inflation are 
driving up rents and exacerbating a housing crisis that 
threatens the well-being of millions of families across the 
country. Congress will need to act to ensure that struggling 
families have access to quality and affordable housing.
    In the long run, public investment in boosting housing 
supply will be critical to building a housing sector capable of 
meeting our country's needs.
    Thank you. And I look forward to your questions.
    [The prepared statement of Mr. Mitchell can be found on 
page 86 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Dr. Holtz-Eakin, you are now recognized for 5 minutes to 
present your oral testimony.

 STATEMENT OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION 
                             FORUM

    Mr. Holtz-Eakin. Thank you, Chairwoman Waters, Ranking 
Member McHenry, and members of the committee for the privilege 
of being here.
    I want to make just a couple of simple points, and then I 
look forward to your questions.
    The first is that obviously, housing is central to the 
inflation that is at decade highs, and also to efforts to 
control that inflation. As the committee well knows, measured 
year over year, inflation--CPI inflation in the most recent 
poll was 7.7 percent. But I think the more striking number is 
that if you look at the bundle that is food, energy, and 
shelter, that is now rising at 9.5 percent annually, down a bit 
from the 10 percent earlier. But still, every family when they 
fill up their car, go to the grocery store, and then go home is 
reminded of the erosion in their standard of living coming from 
this inflation.
    Of that bundle, shelter stands out as the most important. 
Shelter inflation is now 6.9 percent year over year, up from 
6.6 percent the month before, and indeed has risen every month 
since early 2021, and has shown no sign yet of peaking. And 
that puts the Federal Reserve in a great dilemma.
    If shelter inflation is at 6 percent, and it's a third of 
the CPI, the only way the Fed can hit a 2-percent target is to 
have everything else be zero. That is not going to happen. And 
getting housing inflation under control is central to success 
in returning to a price stability mandate for the Federal 
Reserve. So as a direct matter, the Fed is going to have to 
focus on housing.
    As an indirect matter, the housing market is an important 
conduit for monetary policy. If mortgage rates are higher and 
people want fewer mortgages, they are going to buy fewer homes. 
They are going to build fewer apartments. And in those fewer 
homes and fewer apartments, we are not going to put in 
furnaces, we are not going to put in refrigerators, and we are 
not going to carpet them, so the Fed's actions will have a 
broad cooling effect on large swaths of the economy. And so as 
a conduit, the housing market is going to carry an especially-
large burden in controlling inflation.
    This Fed's strategies will make that burden even larger 
because, as the ranking member mentioned, the Federal Reserve 
has gone from buying $30 billion a month in mortgage-backed 
securities to unwinding $35 billion a month in mortgage-backed 
securities. That's a $65-billion-a-month swing, roughly a fifth 
to a quarter of normal mortgage finance, which puts extra 
pressure on access to capital in the housing sector. So, we are 
going to see a Federal Reserve that needs to control housing 
inflation, and its procedures will indeed target the housing 
sector disproportionately.
    Sadly, this tightening cycle comes at a time when there 
were record-low vacancies in the rental market, and a record-
low inventory in the owner-occupied sector. And so, we, once 
again, learn the lesson that if you let inflation get embedded 
into the economy, you have no good choices. You either live 
with the inflation, which is untenable in most people's minds, 
or you have to undertake actions which seem at odds with your 
other goals. And that is the position that we find ourselves in 
today.
    It is unsurprising to me that in those circumstances, there 
will be calls for additional assistance into both rental and 
unoccupied housing. You are hearing those calls today. I would 
say two things about that. The first is, they are unlikely to 
succeed. The Fed's goal and its necessity is to cool the 
housing market and then allow housing demand to continue. 
Adding more demand subsidies will simply be counteracted by a 
higher and more-aggressive Fed of necessity. So, it is not 
going to be effective at this point in time.
    And the historical record on demand subsidies is not 
exactly a sparkling one. Housing was at the center of the 2007-
2008 financial crisis, and the Great Recession that was 
attributed to the housing Government-Sponsored Enterprises 
(GSEs), Fannie Mae and Freddie Mac. Long-standing subsidies to 
owner-occupied housing placed the taxpayers at tremendous risk, 
fed an unwise credit boom in the housing sector, and ultimately 
led to enormous losses in personal wealth across the economy.
    Since then, nothing has changed. The GSEs remain in 
conservatorship. They are undercapitalized, and they are back 
to their traditional mission creed of finding additional ways 
to subsidize housing when it has been proven that that is an 
unwise course and is not going to be effective.
    And so, I would encourage this committee to look at the 
other side of the market. Look at the supply side and find 
effective ways to deal with the chronic undersupply of housing; 
do not repeat failed demand stimulus.
    Thank you.
    [The prepared statement of Dr. Holtz-Eakin can be found on 
page 80 of the appendix.]
    Chairwoman Waters. Thank you very much.
    And Dr. Zandi, you are now recognized for 5 minutes to 
present your oral testimony.

   STATEMENT OF MARK ZANDI, CHIEF ECONOMIST, MOODYS ANALYTICS

    Mr. Zandi. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee. Thank you for this 
opportunity to participate in today's hearing.
    My name is Mark Zandi, and I am the chief economist at 
Moody's Analytics. I am also the lead director of the 
Reinvestment Fund, a large Community Development Financial 
Institution (CDFI). And I am on the board of directors of MGIC, 
which is one of the nation's largest mortgage insurers. But the 
views I am expressing here today are my own.
    I will make four points in my remarks, and they echo many 
of the remarks made by the other witnesses.
    First, it is clear that American households are struggling 
with the hit to their purchasing power from the very high 
inflation. Prices are rising quickly for many goods and 
services, gasoline and food, new vehicles and, of course, 
housing, the subject of this hearing.
    Just to make that point concrete, the typical American 
household making the median income has to devote $433 more per 
month to purchase the same goods and services that they were 
buying this time last year because of the high inflation. 
Clearly, for someone making $70,000 a year, that is financially 
overwhelming.
    Second, there is a long list of reasons for why inflation 
is high. I would put at the top of the list the Russian 
invasion of Ukraine and the resulting surge in oil, natural 
gas, agriculture, and other commodity prices. The pandemic is 
still creating havoc, as we can see in China, the global supply 
chains into the labor market, and, of course, also the 
affordable housing shortage, which has been building since the 
great financial crisis over 10 years ago. In fact, I estimate 
that the shortfall in housing at this point is about 1.6 
million homes, which is about 1 year's worth of new 
construction at the current pace.
    This shortfall has been long in the making. It is behind 
the very-high house prices and the rents that we are struggling 
with, and it is key to the inflation that we are suffering 
through right now.
    As others have pointed out, housing accounts for one third 
of the Consumer Price Index, and it has accounted for over a 
percentage point of inflation, given the Federal Reserve's 
target of 2 percent. That gives you a sense of how daunting 
this is.
    My third point is that the Federal Reserve really does not 
have the policy tools needed to address this shortage, and its 
effort to quell inflation by raising interest rates, while 
appropriate, is adding to the cost of housing services. The 
higher mortgage rates resulting from the Fed tightening are 
undermining the affordability and the demand for homeownership, 
and that is causing more people to have to rent, which is 
causing rents to rise and adding to the cost of housing 
services.
    Also, and I think less appreciated, the higher costs, the 
lending rates for new construction, those weigh against the 
building of new multifamily units for single-family rental, and 
that reduction in supply is also adding to rents and housing 
costs.
    And this leads to my final point. Because of the inability 
of the Fed to address this issue, it is up to Congress and the 
Administration to adopt policies to help alleviate the 
shortage, and to improve supply to help rein in the inflation. 
These policies can include a range of things, including tax 
breaks, grants, access to less-expensive capital, and critical 
incentives to get local decision-makers to ease zoning rules 
and restrictions on development.
    Now, grants tend to close the economic gap for local 
governments and philanthropies to build and renovate housing, 
and tax incentives tend to close the gap for private businesses 
to do the same.
    But most immediately, I think I would focus on the tax-
related policies. I think they can work quickly to increase 
housing supply, which has to be the focus, and bringing private 
capital to bear to address the affordable housing shortfall 
will be needed to bring it to scale and to help over the longer 
run, because even on the other side of the pandemic and its 
effects, the housing shortfall is going to be significant and 
add to inflationary pressures.
    So, affordable housing is a serious problem. It is driving 
up the cost of housing and homeownership, and putting upward 
pressure on inflation that will be long with us, and it is a 
pernicious problem. But fortunately, there are policy solutions 
to this problem that make good economic and political sense.
    I look forward to your questions.
    Thank you.
    [The prepared statement of Dr. Zandi can be found on page 
94 of the appendix.]
    Chairwoman Waters. Thank you so very much, Dr. Zandi.
    I now recognize myself for 5 minutes for questions.
    Mrs. Eaddy, I want to thank you so much for appearing here 
today to share your very difficult story with this committee, 
and I am also very saddened that your experience is one that is 
shared by millions of families all across this country, 
especially among low-income families and people of color. No 
one should have to rely on GoFundMe to afford a roof over their 
head.
    We throw around large amounts of money in our 
conversations. We talk about millions and billions and 
trillions. So, could you just talk a little bit about what 
something like $150 billion in fair funding or affordable 
housing investments would do for you and your family, and for 
those in similar circumstances? Would it make a difference in 
your life? What would it do for you?
    Ms. Eaddy. Of course, it would make a difference, 
Chairwoman Waters. Just a little bit of that, like one little 
drop of that money could change not only my life and my 
family's, but a lot of families' lives. That money could give 
us back our identity and our dignity, to feel safe again, to 
feel like we are human again, because when we are out here 
being homeless, it is just like everything is stripped away 
from us. It is like we don't see an end to it. But if we did 
have funds to help us, it would change our whole perspective. 
It would give us back our identity. It would give us our place 
back in society where we won't feel like we are the bottom of 
the barrel. It will give us just a safety net where we can feel 
as though we can accomplish things. Because if we have to 
constantly worry about having a roof over our head, we don't 
have time to adapt or try to even put into words, is there any 
hope to get housing.
    I feel as though the money would be something that could 
really help us bring back not only our identity and our self-
worth, but it would be something that would definitely help us 
go towards trying to make our lives better in the future.
    So, having the resources to be able to get affordable 
housing would be an asset to us.
    Chairwoman Waters. Thank you so very much.
    Dr. Zandi, can you tell us what robust Federal investments 
in affordable housing like those that we had in Build Back 
Better, which we passed through the House, would mean for 
inflation and the economy overall?
    Mr. Zandi. Chairwoman Waters, I think they would be very 
positive because they were almost entirely focused on the 
supply side of the housing market. And the lack of supply that 
has been developing since the financial crisis over a decade 
ago is the key reason for the surge in house prices and rents 
that are adding to the inflationary pressures that we are 
suffering through right now. Those various grants and tax 
breaks that were provided in the Build Back Better Plan to 
increase supply would address that question.
    And those programs are already in place. Those tax breaks 
are already in place. They are tried and true. They are not 
perfect, but they do work, and many of them do work very, very 
quickly and can help increase the supply, particularly of 
affordable rental housing in the next 12, 18, 24 months when 
obviously, it is going to be very critical that we get 
inflation back in. And housing cost inflation, as has been 
pointed out, is a very key part of overall inflation. So 
getting rent growth, slowing it down, that would go a long way 
toward getting inflation back into its box and allowing the Fed 
to bring down interest rates, which, of course, would be 
critical to making sure the economy can get through the next 12 
to 18 months without going into a recession.
    So, I think of all of the policies in Build Back Better, 
the housing-related supply-side policies are particularly 
important in addressing the high inflation that we are 
suffering through at this point in time.
    Chairwoman Waters. Thank you very much.
    The gentleman from North Carolina, Mr. McHenry, who is the 
ranking member of the committee, is now recognized for 5 
minutes.
    Mr. McHenry. Thank you, Madam Chairwoman.
    Dr. Holtz-Eakin, with inflation that we haven't experienced 
since the 1970s, like the Carter Administration, the Biden 
Administration has exacerbated price instability and the cost 
of consumer goods going up. And that has been exacerbated by 
Federal spending. Obviously, the Fed has a certain role in 
monetary policy, but the fiscal house adds a key ingredient to 
the experience that we have here in the United States, pre-
Ukrainian invasion.
    So, can you explain how massive spending bills impact 
inflation price instability and, thereby, housing prices as 
well?
    Mr. Holtz-Eakin. Certainly. In 2021, we saw a 6-percentage-
point increase in consumer price inflation in the United 
States. That has only happened three times. The first time was 
in 1952, when the U.S. economy was growing rapidly, 10.5 
percent, a pretty big number, and the Federal Government 
increased its spending by 50 percent to prosecute the Korean 
War. With big Federal spending and a hot economy, consumer 
price inflation jumped right up. The Fed did nothing to offset 
it.
    That is exactly what we saw in 2021. The $1.9-trillion 
American Rescue Plan was about a 50-percent increase in typical 
Federal spending. The Fed did nothing to counteract it. We saw 
a big jump in inflation in 2021. I think that's unquestionably 
a big root of the current inflation problem.
    The other episode that is illustrative as well is in 1974 
with the OPEC oil embargo, when global oil prices quadrupled 
overnight. That caused pressures in every business in America, 
which got passed on to consumers. And we saw supply chain 
issues. Those are certainly part of the inflation story, but 
they are not all of it. That excessive Federal spending, 
excessive stimulus produced demand across-the-board and rapid 
increases in prices.
    Mr. McHenry. So, the Federal Housing Finance Agency (FHFA), 
in response to substantial changes in housing prices, and 
because of the change in Administration, has raised the 
statutory limit for the maximum-size mortgages that Fannie and 
Freddie can buy. And now, you have Government-Sponsored 
Enterprises enabling the financing of mortgages on homes sold 
up to $1,089,300, in some places across America.
    So translated, taxpayers will now be on the hook to 
guarantee $1-million homes in places like California, New York, 
and the D.C. suburbs. Housing experts, like former FHFA 
Director Ed DeMarco, have observed that, ``Excessively high 
loan limits exacerbate the affordability crisis.''
    Do you agree with Director DeMarco that something is not 
right here?
    Mr. Holtz-Eakin. I do. We have seen the track record of 
demand subsidies exacerbating higher prices because of the 
inadequacy of supply. These are especially poorly-targeted 
demand subsidies--$1-million homes are not exactly targeting 
those subsidies toward those who are most in need. So, it is 
the worst of both aspects of that policy.
    Mr. McHenry. Okay. So to address inflation, what should 
Congress do?
    Mr. Holtz-Eakin. First, it should not exacerbate the 
problem. That is the number-one thing that a future Congress 
could do is not put the U.S. in this position again. As I 
mentioned, now that inflation is entrenched, there are no good 
choices for combating it. So, don't put the U.S. in that 
position again by having fiscal policies that add up, and don't 
exacerbate demand in an excessive fashion.
    Mr. McHenry. And if Congress could do one or two things on 
housing to increase the affordability of the housing supply, to 
enhance the supply of housing, what would you say?
    Mr. Holtz-Eakin. I would echo some of the things that Mark 
Zandi said, which is, a carefully-thought-out long-term plan to 
increase supply is the key. A rapid response, trying to sort of 
solve this problem overnight, really just produces a huge 
construction boom and exacerbates the inflation problem. This 
is the wrong time for that. So, have a patient strategy that is 
going to increase the supply of rentals, especially housing in 
the United States.
    Mr. McHenry. So, a long-term approach to a long-term 
problem?
    Mr. Holtz-Eakin. Yes.
    Mr. McHenry. Mr. Zandi, do you agree?
    Mr. Zandi. Yes. I would focus on the supply side here in 
the immediate future. And I do think the tax incentives that I 
mentioned in my remarks would be particularly effective in the 
near term: the Low-Income Housing Tax Credit (LIHTC); the 
Neighborhood Homes Investment Act tax credits; and the New 
Market Tax Credits Program. Again, the infrastructure for 
getting that capital out into the marketplace is already there. 
It is well-functioning. The Administration is making tweaks to 
these programs to make them more effective. Congress is passing 
legislation or proposing legislation to make them more 
effective.
    Mr. McHenry. Thank you for your testimony. Thank you for 
testifying, and thank you, Dr. Holtz-Eakin.
    Chairwoman Waters. Thank you very much.
    The gentleman from Georgia, Mr. Scott, who is also the 
Chair of the House Agriculture Committee, is now recognized for 
5 minutes.
    Mr. Scott. Thank you very much, Madam Chairlady.
    About 10 years ago, the U.S. Department of Housing and 
Urban Development estimated that we in Congress needed to spend 
$26 billion on construction projects for repairing the nation's 
stock of aging housing. Unfortunately, Congress didn't do 
anything about that.
    After years of failing to address this problem, the current 
backlog of unfunded capital projects has now ballooned to an 
estimated $80 billion. These types of projects include things 
like repairing damaged roofs, replacing broken heating and air-
conditioning, and reconstructing aging sewage lines, critical 
repairs that also affect the health and the safety of 1.2 
billion families who are living in public housing units.
    And so, Ms. Bailey, I want to ask you, how do we get into a 
situation where we have an $80-billion backlog of public 
housing construction and projects? And specifically, how many 
public housing units are lost each year to this backlog?
    And, Ms. Bailey, I want to express to you that I am very 
concerned about this. Public housing is how I got my start in 
politics. I represented all of the basic large public housing 
in Atlanta as I launched my political career, so I am very 
concerned about it.
    How many public housing units are lost each year to this 
$80-billion backlog? This is a major national issue.
    Ms. Bailey. Thank you so much for the question.
    I agree with you. Even before this crisis, families were 
struggling and our infrastructures were struggling. We have a 
massive underload. We are not properly resourcing the 
communities that have been locked out of opportunity for the 
entirety of our nation. We have constantly relied on affordable 
housing with our root in it in fair housing to lead the nation 
forward exacerbating inequality. So we need a ton of 
investment, as you outlined, to address the public housing 
deficiencies all over our country.
    And what is important about using those resources to affect 
those deficiencies is the reality that the courage that Mrs. 
Eaddy used today in being here gives us an opportunity to help 
families just like hers have the God-given human dignity 
restored that they desperately need.
    Mr. Scott. Right, that's an excellent answer. And we have 
to draw more attention to helping those people. It is public 
housing. That means it is congressional housing. It is what we 
in the public sector, which is the Federal Government, which is 
HUD, this is our challenge to do.
    My second question to you is, from what I understand, 
public housing authorities are not required to submit capital 
needs assessments for what projects need repair. You can't 
repair projects if you don't know which ones to repair. If that 
is correct, how does HUD keep track of the number of backlogged 
projects?
    Ms. Bailey. I would like to follow up with you--
    Mr. Scott. Ms. Bailey, if you could answer that.
    Ms. Bailey. I would like to follow up with you in response. 
I would say we have to make sure HUD is adequately funded 
because part of the challenge is that it lacks the technology 
and staffing, people, that it needs to effectively operate. HUD 
was massively defunded by the former Administration, and we 
have to, right now, make sure HUD has every resource to 
continue to do all that Secretary Fudge is doing to address our 
nation's affordable housing crisis.
    Mr. Scott. And do you know that there are people who 
started out in the public housing, and they are out, they are 
sleeping on the streets in my district in Georgia. And we have 
been helping them. We have been saving them. And Chairwoman 
Waters and I and this committee have put together housing 
assistance, helping them with getting running water.
    Thank you, Madam Chairwoman, but this is a serious issue.
    Chairwoman Waters. Thank you very much.
    The gentleman from Texas, Mr. Sessions, is now recognized 
for 5 minutes.
    Mr. Sessions. Thank you very much, Madam Chairwoman.
    Mr. Mitchell, I would like to go through a quick discussion 
with you.
    Do you work well with HUD?
    Mr. Mitchell. Our organization does not work with Housing 
and Urban Development.
    Mr. Sessions. I have tried. I have tried, and we have had 
at least one hearing with Secretary Fudge of HUD. Today, we 
have heard our young chairwoman say Republicans offered no 
solutions to try and fix the housing crisis. Today, we heard a 
blame game for there is not enough money, funding. But, Madam 
Chairwoman, I would like to enter into the record a series of 
letters--
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Sessions. --about discussions that people back in Texas 
have had with not only Secretary Fudge, that was very 
unsuccessful, but also from her organization on issues related 
to north Texas having an excessive number of people who were 
without housing. And the executive director of the Dallas 
Housing Authority, Mr. Troy Broussard, had been working for 
quite some time with local advocates, people who wished to come 
in and provide affordable housing and to do these things 
because they saw firsthand the problems in north Texas. As you 
know, Texas is growing, and north Texas is exponentially 
growing. In a series of letters and conversations, including 
with the senior Member from north Texas, Chairwoman Eddie 
Bernice Johnson, and myself, we were completely unsuccessful in 
attempting to get HUD to even respond properly. And they came 
back and, by and large, gave excuse after excuse after excuse, 
saying a waiver would be too complicated for Dallas, Texas, to 
deal with the problems that local people have. That is all they 
asked for.
    And instead of saying, let's work with you, they ignored 
over a year of trying to solve the problem. And the problem, 
while I am not a housing expert, should have put a person from 
the Secretary of HUD, where they flew down to Dallas, Texas--
and we are going to find this out next year when our young 
chairman will be--as the chairman, we are going to have the 
Secretary come and tell us what did they do? Did they fly down? 
Did they do calls? And then, we are going to have the Dallas 
Housing Authority come and tell us about all their efforts to 
try and do something.
    So, I find what is happening today very regrettable, 
because Republicans did try and help. The Honorable Eddie 
Bernice Johnson, a senior Member of this body, and the 
Honorable Greg Meeks, a senior member of this committee--we 
went and personally met with them earlier in the year to try 
and say, please help us in Texas and in north Texas. And we got 
zero help from HUD.
    I would have to beg the question, what good does it do to 
have someone whose job is bigger than they are in that 
position? And so, I would like to let each of you know we do 
appreciate your feedback today.
    I don't agree that the blame game of Republicans or the 
prior Administration holds any significance to where we are. 
President Biden accepted the ball where it lay, and that is 
what he will be held accountable for. And each of you, I 
sympathize with you. I have a Down's Syndrome son. I am in the 
disability community. They are struggling mightily, people who 
cannot take care of themselves. This Administration has turned 
its back on them.
    Thank you for the time, Chairwoman Waters.
    Chairwoman Waters. You are so welcome. And let me remind 
you that we passed from this committee, the Build Back Better 
bill, $150 billion, and HUD and the President are providing the 
leadership.
    The gentleman from California, Mr. Sherman, who is also the 
Chair of our Subcommittee on Investor Protection, 
Entrepreneurship, and Capital Markets, is now recognized for 5 
minutes.
    Mr. Sherman. Thank you.
    There has been a comment about inflation. I should point 
out that inflation is going to be worse, or has been worse over 
the 2022-2023 period in most other developed countries as 
compared to the United States. So the real lesson is, don't be 
a developed country on a planet with COVID-19 and a European 
war. We have done our best to handle the situation. Every other 
country that is similarly situated has as well.
    We are told that maybe we shouldn't have a higher 
conforming loan limit in California than in other States. I 
take this personally. If you have a similar house, in a similar 
neighborhood, in one State, in another State, the U.S. 
Government should provide the same level of assistance rather 
than say it is okay to do it somewhere else but not in 
California.
    I believe Mr. Holtz-Eakin pointed out the inadequacy of 
supply, which I think is the problem. It is supply and demand. 
But keep in mind we have more square footage of housing in our 
country than any other major country in the world. It is just 
we have giant homes for some people and others are living on 
the streets. We are urged to be patient. It is hard to be 
patient while you are living in your car.
    There are three problems: There is the homelessness 
problem, where people can't even get an apartment; there are 
people who are in apartments, but the rent is too damn high; 
and there are people who can't afford or cannot comfortably 
afford to buy a home. We can build a few buildings with Federal 
money. We as politicians can be there to cut the ribbon. But if 
you are trying to provide housing for nearly 340 million people 
in a capitalist society, you have to look at the homes that are 
going to be built and operated in the capitalist society, 
otherwise you are just cutting ribbons for a few hundred 
people.
    We can incentivize the building of homes, but it is nothing 
compared to what local governments do to prevent the building 
of workforce housing. If you require no more than 4 homes on an 
acre, and a $100,000 feed to hook up to local services, you are 
not going to have housing that people can afford.
    We have the fiscalization of land use planning where a city 
in my State loses money if they allow the construction of 
housing, and in many places. The way for the city, which makes 
the land use planning decisions to make money, is an auto 
dealership or luxury homes. Low cost to the city. Lots of 
revenue for the city. It is absolutely absurd that we provide 
cities with money based upon how rich their residents are. If 
every city in every State got the same amount of money per 
resident, we would have a fair provision of local services and 
the end of an incentive to keep out workforce housing.
    We see zoning decisions made to keep out poor people, 
sometimes to keep out people of color, and sometimes to 
preserve the environment, which often adds up to being the same 
thing. If you can't build an apartment building anywhere in the 
city, you can't have workforce housing in that city. And when 
you look at the zoning and the fees, which this Congress has 
not prohibited, it is not surprising that we have more square 
footage than any other developed country and more per person, 
and we have more homeless than any other developed country.
    I have to shift to another issue. Ms. Bailey, should we be 
doing more to provide assistance for safe parking? Because a 
good chunk of the homeless people in my area have a car; they 
just don't have a place to live.
    Ms. Bailey. Sir, we should be doing more. I am sorry, thank 
you so much for the question. And we should be doing more to 
make sure families can remain safely housed. The American 
Rescue Plan Act that this Congress passed included increased 
support to protect homeowners with the Emergency Rental 
Assistance Program. We have done a tremendous job of holding--
    Mr. Sherman. I am going to try to squeeze in one more 
question.
    Mr. Mitchell, is there any way that we can create enough 
housing if we allow cities to charge $100,000, $150,000 per 
unit to the developer and to not allow more than 4 or 5 units 
of housing per acre?
    Mr. Mitchell. I think it will be critical for local 
governments to make sure that they are creating zoning laws 
that allow for construction of the kinds of units that are 
necessary to house the number of people to meet demand, and 
currently we are not doing that. And as you mentioned, in most 
localities it is not possible at this moment.
    Mr. Sherman. Thank you.
    Chairwoman Waters. Thank you very much.
    The gentleman from Florida, Mr. Posey, is now recognized 
for 5 minutes.
    Mr. Posey. Thank you very much, Chairwoman Waters, for 
holding this hearing, and for holding the many hearings that 
you have held in seeking solutions to the unaffordable housing 
crisis.
    Mr. Holtz-Eakin, in the Inflation Reduction Act and many of 
our housing proposals, we see proposals that attempt to solve 
inflation or housing pricing by simply giving more money to 
groups to pay higher prices. We also have proposals to give 
some people money to buy gasoline. Please comment on this 
approach to inflation and high prices.
    Mr. Holtz-Eakin. This is subsidizing demand. One of the 
problems is that demand is too high relative to supply. And so, 
it just exacerbates the problem in the long run and undermines 
the intent of the program.
    Mr. Posey. The Build Back Better Act is being noticed in 
this hearing. Can you please comment on the housing strategy in 
this proposal, including the heavy emphasis the bill places on 
investment and refurbishing of public housing projects?
    Mr. Holtz-Eakin. I have not stayed current with the 
provisions in Build Back Better since it did not become law, 
but I would be happy to get back to you in writing.
    Mr. Posey. Okay. Madam Chairwoman, I yield back the balance 
of my time.
    Chairwoman Waters. The gentlewoman from New York, Mrs. 
Maloney, who is also the Chair of the House Committee on 
Oversight and Reform, is now recognized for 5 minutes.
    Mrs. Maloney. Thank you so much, Madam Chairwoman. And I 
thank you for holding this hearing, and I thank you for 
focusing on the need for more housing. It is a persistent 
problem, the affordability of housing in my own district, and I 
would say in my city, in my State, and clear across this 
country.
    And the raising of interest rates has worsened 
affordability for homebuyers and homeowners and even renters. 
For example, between April 2021 and April of this year, 
mortgage rates increased by nearly 2 basis points, and the 
median home price rose by over $50,000. And the monthly cost of 
homeownership, which includes a monthly payment on a 30-year 
mortgage, property taxes, property insurance, and mortgage 
insurance grew by at least $500-a-month. But in some cases, in 
metropolitan areas, it has grown by over $1,000 a month.
    I would like to ask Dr. Zandi, an economist, whether 
raising these interest rates contributes to the increased cost 
of housing for homeowners, which is a goal of most families and 
renters in this country.
    Mr. Zandi. Thank you, Congresswoman, for the question. Yes, 
clearly it does. I think your statistics strike that point 
quite clearly. I will point out, though, that to a significant 
degree, this is by design. The Federal Reserve is working hard 
to slow the economy's growth, to quell the wage and price 
pressures. And the most rate-sensitive sectors of the economy 
are going to suffer the most as a result. Single-family housing 
is the most rate-sensitive sector of the economy. If you are 
going to buy a home, most people have to get a mortgage, and 
thus the rate sensitivity.
    Unfortunately, this is by design. But it does bring up the 
broader point that housing affordability is going to be a long-
term issue, even when we get to the other side of this and get 
inflation back in and interest rates back down. And 
homeownership is going to be under significant pressure going 
forward.
    So it is about supply in the near term, but I do think, 
longer run, we also have to think about ways to improve 
affordability for lower-income disadvantaged groups. And 
demand-side policies will become more important at that point 
in time. But in the here and now, the reduction of 
affordability is by design. The Fed is working to slow the 
economy's growth, and they are doing it by hitting the single-
family housing market very hard.
    Mrs. Maloney. But there would be other ways to address the 
inflation that is in our economy. I would venture to say that 
housing has not caused the inflation in our country, it is more 
caused by the war in Ukraine--
    Mr. Zandi. Absolutely.
    Mrs. Maloney. --or the war in Afghanistan, and the 
destruction of our supply chain. Why don't we address those 
causes as opposed to attacking housing and the affordability of 
housing?
    I am concerned about the impact it is going to have on my 
constituents and other Americans to be able to afford a home 
with these interest rates going so high. We have a 30-year 
mortgage. My question is, could we change our policy to have a 
50-year mortgage and possibly alleviate some of the pressures 
homeowners face in making their monthly payments?
    And I would add that this housing inflation affects renters 
too, because when the mortgage goes up, then the rent also goes 
up. So, I would like your take on changing it from a 30-year 
mortgage, which is really the standard that we have in America, 
to a 50-year mortgage, for 50 years, so that you could lower 
the rate and allow people who are confronting constrictions in 
their income to afford homeownership.
    Mr. Zandi. That is an interesting idea. I would say the 
United States is very unusual compared to every other country, 
except for the few exceptions, to having the 30-year fixed-rate 
loan. Most countries have much shorter mortgages. They adjust 
immediately if market interest rates are 2-year or 3-year or 5-
year. And that is because of Fannie Mae and Freddie Mac.
    Fannie Mae and Freddie Mac allow for the 30-year fixed-rate 
mortgage to be the bread-and-butter mortgage in the United 
States. And right now, that is insulating homeowners from this 
run-up in interest rates.
    I don't know that a 50-year mortgage would advance the 
ball, Congresswoman, only because the typical American 
household lives in their house for no more than 10 years. So, 
very, very few people would actually live in that house over 
that period of time.
    I would throw out another idea: Assumability of mortgages. 
Right? So, you get a mortgage at a lower mortgage rate, and 
when you move, you can take that mortgage with you. FHA has 
some mortgages like that. That might be an idea that would be 
very helpful in helping insulate the housing market and 
homeowners and improving affordability in the longer run.
    Mrs. Maloney. Thank you. My time has expired.
    Chairwoman Waters. Thank you very much. The gentlelady's 
time has expired.
    The gentleman from Missouri, Mr. Luetkemeyer, is now 
recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    Mr. Holtz-Eakin, the Administration is considering, under 
an FHA program, to have rent control put in place. According to 
a survey of our nation's economists, more than 8 in 10 of them 
believe that rent control ordinances would harm both the 
quality and quantity of affordable housing in areas where it is 
implemented.
    American economist Walter Williams once said, ``Short of 
aerial bombardment, the best way to destroy a city is through 
rent controls.'' Would you agree with that?
    Mr. Holtz-Eakin. I would. There is a track record of 
failure of rent control provisions in States and localities 
across the United States. It is not a theoretical issue. This 
is something that has not worked on the ground.
    Mr. Luetkemeyer. It is concerning. I think the discussion 
this morning is quite interesting from the standpoint that Mr. 
Sherman, a minute ago, was talking about trying to increase the 
supply. You have been talking about supply. Mr. Zandi has been 
talking about supply. And it seems as though the different 
communities try to constrict the supply through the amount of 
regulation they put out there.
    It has been a while, so I may be wrong on this figure, but 
it seems to me that I saw or heard a figure in this committee 
at one time that 25 percent of the cost in some communities is 
rules and regulations compliance. I don't know if it is that 
great or not, but that is significant. And Mr. Sherman made the 
point a minute ago about hundreds of thousands of dollars--and 
I have a relative who lives in California, so I know it is 
extremely high in California to try and build a house or build 
any sort of commercial building, just for the permits and all 
of the other things you have to go through. These are costs 
that drive the cost of the construction up, which means it has 
to be recouped through the rents that are charged for the 
occupants of that building. There has to be a way to control 
those and find a better way to do this. Don't you think so?
    Mr. Holtz-Eakin. Everyone who studies this problem comes to 
the conclusion that an enormous amount of it stems from 
decisions made at the local level, whether they are land use 
zoning restrictions or our construction codes, a variety of 
regulatory costs that raise the cost of housing. That has to be 
part of the solution.
    This committee, unfortunately, is not in every locality in 
the United States. And it always comes up, what can the Federal 
Government do? And those tools are far more limited. I think 
that is one of the reasons that historically, the Federal 
Government has always turned to demand subsidies. It is not 
that hard to do that at the Federal level. It is very hard to 
control these regulatory land-use decisions at the local level.
    Mr. Luetkemeyer. To take it to the extreme, one of my sons-
in-law is in the construction business, and part of it is he 
builds hotels. But he is in this business and understands 
building apartments and hotels and things like that. He lives 
in Colorado, and he was telling me about Boulder, where you 
can't even build a new apartment building in Boulder.
    So, how do you solve the housing problem whenever you have 
a community board there, the city council that would prohibit 
any new construction? They don't want people to come. This is 
crazy. And it is a college town where the demand is soaring. It 
makes no sense.
    I think we have to find a new way to address this from the 
standpoint of thinking differently about trying to address the 
problem instead of trying to constrict it and hope it goes 
away. It doesn't work.
    In part of the discussion this morning with regards to 
inflation--you and I have had this discussion offline, and in 
my Small Business Committee a couple of times, and I really 
appreciate your comments on it--it looks like inflation is fed 
by four different things: rules and regulations; energy; money 
supply; and the supply chain employee problems that we have 
talked about. And much of this can be done with the 
Administration without congressional action, when you look at 
rules and regulations.
    I think your entity, your association came up with a figure 
of $200 billion as what it cost last year for compliance. And 
it is over another $100 billion this year by this 
Administration just on compliance for new rules and 
regulations. This is crazy that it has to all be implemented 
and charged through rents and higher costs to the people who 
purchase products and services.
    Mr. Holtz-Eakin. That is exactly right. We do keep track of 
the burden placed on the private sector of every new final 
regulation in the Federal Government. And the Biden 
Administration finalized $200 billion of regulatory cost in its 
first year. That is the highest we have ever seen in our time 
doing this. It is well over a hundred this year. And those are 
costs that will have to be passed on to consumers and will show 
up as higher prices.
    Mr. Luetkemeyer. One more quick question. It seems like we 
have a Fed in contradiction to the Administration on the 
standpoint the Fed is trying to constrict your ability--the 
demand, and on the other side, when you throw millions and 
trillions of dollars into the economy, you are trying to 
increase demand and supply.
    I have never seen the Fed and the Administration at odds 
like this. Would you like to make a quick comment on that?
    Mr. Holtz-Eakin. There is nothing the Administration has 
done that has helped the Fed. They could relieve some tariffs, 
and those are bit costs, especially in the construction of 
homes. We did a calculation, and I would be happy to get it to 
you, that could do something with the regulatory costs. They 
could not forgive the student loans, which is basically a $420-
billion spending program. There is nothing about what the 
Administration has done that is aiding and abetting the Fed's 
efforts to fight inflation.
    Mr. Luetkemeyer. Thank you very much.
    Madam Chairwoman, my time is up, so I yield back.
    Chairwoman Waters. Thank you very much. You just hit upon 
an issue that I think we could work together on, and that is 
reducing the cost at the local levels from permitting one-stop 
shops. And in the Build Back Better Act, we had appropriations 
in there for those who deal with the zoning problems in 
producing affordable housing.
    Mr. Luetkemeyer. There is a lot of common ground, Madam 
Chairwoman.
    Chairwoman Waters. I think we can work together on that. 
Thank you.
    The gentleman from Texas, Mr. Green, who is also the Chair 
of our Subcommittee on Oversight and Investigations, is now 
recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman. And I thank the 
witnesses for appearing.
    Mr. Zandi, if we had not had a global pandemic which shut 
down the world's economy, and disrupted supply chains, if we 
hadn't had a war in Ukraine, would this be a different 
conversation that we are having today?
    Mr. Zandi. Oh, absolutely. Those two massive, unprecedented 
shocks to the supply side of the economy are the principal 
reasons for the very high inflation we are suffering through 
right now. And another person made the point earlier, one 
strong piece of evidence of that is this inflation that we are 
suffering through now is across the globe in all parts of the 
world. And it just drives home the point that these two supply 
shocks are difficult for any country to navigate through, and 
certainly, we are struggling as a result of it. There are other 
reasons, but those are the two key reasons for this high 
inflation.
    Mr. Green. I raise these issues because I defend President 
Biden. I think President Biden has done a pretty good job under 
the circumstances that he has had to negotiate. And I think 
that for us to just allow it to be said simply that these are 
Biden problems is an extortion of the facts; it is not just an 
exaggeration. It is unbelievable that we would try to pin all 
of this on a President who has been able to manage our 
situation such that we are better off than most of the 
economies in the world.
    Is this a true statement, Mr. Zandi? Are we better off than 
most of the economies in the world?
    Mr. Zandi. Yes, our economy is performing exceptionally 
well compared to the rest of the world. You can see that in the 
strong value of the U.S. dollar against all currencies. It is 
very, very high by historical standards, and that is because 
the U.S. economy is performing much, much better than other 
places in the world. So, yes, I think that is very much the 
case.
    Mr. Green. Let me add this as well, there is talk about not 
having had hearings on inflation. Well, Democrats have acted. 
We have not just had hearings, we have acted on this inflation. 
We have reduced the cost of pharmaceuticals for seniors. 
Inflation is all about paying for things at a high price. We 
have brought those prices down. We have reduced the cost of 
healthcare for seniors. I happen to care about seniors. Some 
people seem to think that if you only help seniors, you are not 
helping the economy. Seniors are a large part of the economy, 
and they need help too.
    We have also engaged in the passage of legislation to boost 
the manufacturing of semiconductors. This is a real problem for 
us, having semiconductors made abroad. And we can bring down 
the cost of cars by dealing with the cost of semiconductors.
    So, we have done our share. And it is time for my 
colleagues across the aisle to come up with the solutions and 
present them so that they too can have the opportunity to be 
perused closely and scrutinized even closer for what they are 
doing.
    Let's talk about people who live in the streets of life. It 
is my opinion that the greatness of a nation will not be 
measured by how we treat people who live in the suites of life, 
but rather how we treat people who live in the streets of life. 
People who have to sleep in their cars, asking us to imagine 
what it is like to sleep in a car? I appreciate the question, 
but I think that it is more like water on a duck. It just rolls 
off.
    I have never had to sleep in a car. We live in a different 
world. If people who sleep in cars were making these decisions, 
you would get different results. We live in a different world. 
We don't have to worry about healthcare. If we get sick, we 
just walk across over to the Capitol Building, where there is a 
doctor waiting on us right now.
    We live in a different world. We make hundreds of thousands 
a year. Our salaries are different. And I just resent and 
regret that you have to come begging and appealing to us with 
tears in your eyes, asking us to help.
    I stand with you, and I stand with poor people, regardless 
of their hues. White people need help too. I stand with you.
    And I yield back the balance of my time.
    Chairwoman Waters. Thank you very much, Mr. Green.
    The gentleman from Michigan, Mr. Huizenga, is now 
recognized for 5 minutes.
    Mr. Huizenga. I agree with my colleague, Mr. Green, that we 
do live in a different world.
    But, Ms. Eaddy, I want to address you first before I get 
into some of the arguments you may have heard. Well, let's just 
call them robust discussions. That is a more polite way.
    We have common goals. We have different paths for getting 
there. But I want to say thank you for sharing your very 
personal story. I want you to know I hear you, I see you, and I 
believe my colleagues see you and hear your story.
    I recently had a chance to, in my hometown, visit with an 
organization called Jubilee Ministries, that is working on 
trying to get at that workforce housing. And they had been 
running into, like all of us--my family is actually in 
construction--all of us have been running into on the 
development side the difficulty of maneuvering past local 
governmental regulations to allow for affordable housing to 
exist. It is density issues. It is various elements of sort of 
overengineering in a way. In fact, the National Association of 
Home Builders says that their estimate is $98,000 per house for 
the average added cost because of those local requirements.
    So, how have we attempted to get at that? I know my 
colleague, Mr. Barr from Kentucky, who has been on this issue 
for a long time as well, has a bill, the Housing PLUS Act. I 
have been involved in this issue for a long time as well. And 
we know that there have been burdens that have been put in 
place. Mr. Holtz-Eakin has talked about this, and Mr. Zandi and 
others have as well. Mr. Mitchell talked about that. We have 
some agreement here that we have to get at this.
    What we don't necessarily have agreement on is sort of the 
sources of inflation and what are some of the causes of that. I 
know, for example, in building houses, supply has gotten 
tighter and it has gotten more expensive. Labor has gotten 
tighter and is therefore more expensive. We know that 70 
percent of a barrel of oil, for example, is used for energy. 
But the other 30 percent goes into things like shingles and 
siding and PVC pipes. And when we are constraining that by 
choice here in the United States, by this Administration, we 
are then limiting the ability to have affordable materials 
there.
    By the way, I ran this little formula past Fed Chairman 
Powell the last time he was here, of how to explain inflation. 
And I estimate in various studies that we have looked at, about 
20 percent of the inflation that we are seeing today is due to 
supply chain, about 20 percent is due to labor, and about 20 
percent is due to energy. Now, those last two are governmental 
policy-driven. But 40 percent of that is monetary policy in 
spending. We have been flooding the zone, which has caused that 
pressure to go upwards in so many areas, whether it is in cars, 
as my colleague from Texas will tell you, or whether it is 
housing, whether it is groceries, whatever it might be. So, we 
know that record inflation continues to impact the lives of 
hardworking Americans.
    I am going to quickly move through--I know there is a 
number of well-intentioned things that the other side has done, 
but it does throw fuel on the fire. The University of Michigan 
Consumer Sentiment Index estimated that the American sentiment 
over the past 6 months is comparable to late 2008 and 2009, 
when the great financial crisis plunged our country into 
economic crisis.
    The impact of the COVID pandemic spared no one. In Michigan 
alone, some 32 percent of businesses reported government-
mandated shutdowns in 2020, and job recovery has been slow. 
Reckless spending, including more government investments and 
the overregulation will continue the current trajectory. But 
today, we are talking about housing. So, let's do that quickly.
    Michigan rental rates have increased 10.5 percent, 
outpacing the national average. In the Grand Rapids 
metropolitan area, the yearly change for a one-bedroom 
apartment is up 5 percent, while a two-bedroom is up 17 
percent. Home sales are down 17 percent Statewide. The average 
monthly payment on a $350,000 home in Zeeland, Michigan, will 
cost approximately $500 more than it did last year because of 
those interest rates. Gas prices in my hometown of Holland 
continue to be well above the national average. It is real 
money for people. It is real money.
    And Mr. Holtz-Eakin, I think we can agree that both 
monetary and fiscal policy will be key to delivering the 
elusive soft landing. I am just not sure it is possible. Do you 
believe that we can even achieve a soft landing?
    Mr. Holtz-Eakin. I think it is possible, but the historical 
record is very poor on that front. We have never had a soft 
landing when inflation has been up above 4 percent and 
unemployment below 5 percent. And that is where we find 
ourselves.
    Mr. Huizenga. Madam Chairwoman, I appreciate the 
opportunity. And I blew up my staff's direction that they 
wanted to go.
    But, Ms. Eaddy, I wanted you to know you are heard, we hear 
you, and we appreciate you.
    Chairwoman Waters. Thank you very much. And I hear you and 
I see you. And the proof of the pudding is in the eating. I 
will be looking forward to working with you on housing and 
getting affordable housing.
    With that, the gentleman from Missouri, Mr. Cleaver, who is 
also the Chair of our Subcommittee on Housing, Community 
Development, and Insurance, is now recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    Let me first of all express my appreciation for your 
emphasis on housing. I didn't grow up in a car. It was just a 
little bit better. We had two rooms with no heat. But I grew up 
in Texas, so it wasn't quite as bad as it would be here in D.C.
    I am obsessed with housing because I don't want a single 
kid to grow up like I did, not one. We have to keep working on 
it, and even if we have to debate, we have to do that. You can 
never really defeat a person on a cause that will never give 
up, give out, or give in. And on this issue of housing, we need 
to face it, we need to fight it, and we need to finish it.
    Madam Chairwoman, thank you.
    Let me ask Ms. Bailey and Dr. Zandi, there is in my 
congressional district in Kansas City one of the nation's first 
housing co-ops called Parade Park, which is now in distress. It 
is a massive 510-unit housing project. It is not public 
housing. It is a co-op. And this week, in fact, yesterday, 
Monday, HUD took management control of the property, and they 
are trying to preserve this affordable housing asset in my 
congressional district.
    Now, my greatest concern was and still is that if HUD had 
not taken it over, it would have eventually been condemned, 
foreclosed, and demolished. It is a huge tract of land. And my 
fear was that some corporate investor would come in, redevelop, 
raise the prices, and alter the community.
    So, Ms. Bailey, Dr. Zandi, what can Congress do to prevent 
the mass transfer of affordable housing from community 
ownership to these large profit-seeking corporations--I guess 
that may be redundant--but what can we do?
    Ms. Bailey. Thank you for the question. We can do something 
different. We can make sure we put the resources in the hands 
of owner-occupants. We have to do something different. Supply-
side strategies alone have not produced different outcomes. We 
need things like targeted first-generation down payment 
assistance so first-time millennial homebuyers can get to the 
table fast enough to have their offers actually considered. One 
out of seven homes in communities all over the country is being 
purchased by investors, pushing out millennial homebuyers of 
every hue. So, we have to make sure that those communities get 
the resources they need so that they can actually eat at the 
table.
    We know that student loan debt is one of the major barriers 
for these millennials. So passing the President's student loan 
debt, just allowing that to process forward could really help 
lift their debt-to-income ratios to make those families ready 
to actually participate and be at the table in a competitive 
way against these investors.
    Mr. Cleaver. Dr. Zandi?
    Mr. Zandi. It is a very difficult problem. I will mention 
two possible ways to address it. The first is around the cost 
of financing. In many cases, investors, particularly 
institutional investors in the housing space, have access to 
lots of capital, cheap capital, and they are able to use that 
to buy properties and win those properties when they are 
competing with other potential buyers.
    So, if a co-op--and I don't know the circumstances here, 
but I am just kind of thinking about this more broadly--was 
able to get access to capital more readily and more affordably, 
that might give them a better chance of holding on and winning 
out in that competition.
    And we have Fannie Mae, Freddie Mac, and the Federal Home 
Loan Banks. And there are other government institutions that 
can be involved in this to help make that come to reality.
    Second, and this is not specifically to the co-op, it is to 
single-family housing. One of the problems is when single-
family housing goes into default and foreclosure, then large 
investors--again, because they have access to cheap capital--
can come in and buy those properties and take ownership. I 
think--and this is one of the proposals the Biden 
Administration has recently made in its housing supply 
proposals is to make sure that philanthropies like CDFIs and 
others that are looking out for these communities have first 
opportunity at these foreclosed properties, these defaulted 
properties, before they actually go to institutional investors.
    So, two different markets, but a similar kind of problem. 
And I think we have some tools that we could use to help 
address this problem.
    Mr. Cleaver. Thank you very much. And thank you, Madam 
Chairwoman.
    Chairwoman Waters. Thank you.
    The gentleman from Kentucky, Mr. Barr, is now recognized 
for 5 minutes.
    Mr. Barr. Thank you, Madam Chaiworman.
    And let me join my colleagues in commending our witness, 
Ms. Eaddy, for your courage in coming before us and sharing 
your personal story. It shows a lot of fortitude to come before 
Congress and testify and share your personal story. It shows a 
lot of guts. And what it says about you and your character is 
that we know you and your husband can make it. You can do it. 
We appreciate your testimony. And we know that hope is 
available to you because of your strength that we see.
    My question to you is that, in addition to housing 
assistance that you are asking for, would it be helpful to also 
have an advocate for you, someone that you can talk to, in 
addition to housing, and help you with job counseling, 
financial literacy programming for you and your family? Would 
it be helpful if you also had some additional services that 
could connect you with other services in addition to the 
housing assistance?
    Ms. Eaddy. Thank you for your question, Mr. Barr. Anything 
that will be an asset for us to be able to come back into the 
community, to make sure that we can succeed in this, would be 
good. Of course, we want an advocate to be able to help us with 
our financials and job descriptions, or anything to do with 
that. Of course, we need advocates to speak up for us and teach 
us how to be literate with our finances and everything, 
anything that will help us be an asset to the community.
    Mr. Barr. And you are an asset to the community, and I can 
see that. And I am not saying this applies to you, but others 
who have difficulty with homelessness or living in their 
vehicles and not having a home, some of them have substance 
abuse challenges or mental illness issues--I'm not saying that 
applies to you--so do you think it would be helpful for them, 
in addition to housing, to connect them with mental health 
services or substance abuse counseling?
    Ms. Eaddy. Yes, it would be.
    Mr. Barr. Great. Let me ask Mr. Holtz-Eakin a question 
about Chairwoman Waters' Downpayment Toward Equity Act, which 
would spend $100 billion on essentially, no-strings-attached 
checks of $25,000 that potential homebuyers could use towards a 
down payment on a home. Let's analyze the effects that this 
would have on a macro level. Would legislation like this 
contribute to home price inflation?
    Mr. Holtz-Eakin. Yes.
    Mr. Barr. Let's talk about it in combination with Fed 
policy right now, the tightening program that the Fed is 
engaged in. As the Fed is actively trying to tamp down soaring 
home prices by increasing interest rates to reduce demand, 
would legislation like the Chair's work directly against the 
Fed's goal of reducing demand?
    Mr. Holtz-Eakin. Yes. And most likely what would happen is 
the Fed would be more aggressive. Overall home purchases would 
continue to decline, because that is the necessary objective 
for them. This might change the composition of who gets the 
house.
    Mr. Barr. So, demand-side subsidies would actually increase 
the likelihood that the Fed would have to be even more 
aggressive in raising interest rates and borrowing costs?
    Mr. Holtz-Eakin. Yes, absolutely.
    Mr. Barr. And would legislation like this result in a 
greater supply of housing or simply more demand for the same 
limited resource?
    Mr. Holtz-Eakin. The latter. It is not a supply-targeted 
policy.
    Mr. Barr. So while maybe not as flashy as handing out 
$25,000 taxpayer-funded checks so wealthy individuals can buy 
million-dollar homes, what are some of the serious proposals 
that Congress should be considering to actually increase our 
housing supply and address this affordability issue?
    Mr. Holtz-Eakin. As I mentioned earlier, the tax incentives 
to increase construction, I think, make sense over the long 
term. You want to have a predictable, reliable environment that 
provides supply at a lower cost, so lightening the regulatory 
burdens at the local level. If you have a way to influence 
that, do it. There are tariff policies in place from the 
Federal Government that are raising the cost of construction 
and construction goods. That will be a sensible thing that 
could be reduced. And the Low-Income Housing Tax Credit is not 
perfect, but it is a thing.
    Mr. Barr. Yes. And to your point, in my remaining time I 
will just point out that a 2021 study by the National 
Association of Home Builders found that basic regulatory costs 
add $93,800 to the price of a new home. Do you support Federal 
efforts to remove some of that regulatory burden to amplify the 
supply?
    Mr. Holtz-Eakin. I think that is a sensible idea. I don't 
know how you can do it, but I would be happy to work with you 
on that.
    Mr. Barr. Okay. My time has expired, so I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Connecticut, Mr. Himes, who is also the 
Chair of our Subcommittee on National Security, International 
Development and Monetary Policy, is now recognized for 5 
minutes.
    Mr. Himes. Thank you, Madam Chairwoman. And a big thank you 
to our panel, especially Ms. Eaddy.
    I have been doing this for a while, and I have seen 
witnesses who have lots of lawyers and days of preparation, and 
you have made a real impact with your story here. I chair the 
Select Committee on Economic Disparity and Fairness in Growth, 
and all over the country, we found people like you who could 
live their dreams and contribute to the workforce if they just 
had that platform, which is not an automobile. Thank you.
    I really care about this issue, because if we are going to 
address economic disparity, we are going to do a bunch of 
stuff, but housing may be first, second, or third in line. We 
are not spending nearly enough time this morning talking about 
the fundamental underlying issue, which is, by one estimate, 
3.8 million missing homes.
    Madam Chairwoman, I want to place into the record some work 
that was done by our former colleague, Denny Heck. It is a 
report called, ``Missing Millions of Homes,'' which talks about 
the supply--
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Himes. I want to devote my time to--we said we should 
look at it, we should focus on it, but what can we actually do? 
Now, by way of preface here, we are talking about the Federal 
Reserve. The Federal Reserve is damned if they do, and damned 
if they don't, as long as there are not 4 million units that we 
need out there.
    The work we did on my Committee on Economic Disparity 
showed two things: one, lots of interference with supply 
associated with local zoning regulations and all sorts of other 
issues; and also, a severe lack of supply in the workforce. 
Apparently, the construction workforce used to average 36 years 
of age in 1985, and today, it is 42 years of age. So, you have 
an aging workforce.
    I am going to start with Mr. Mitchell. But Mr. Mitchell, I 
am going to ask you to be really brief because I want to hear 
from our other witnesses. What specifically can the Congress of 
the United States do to address the supply--and let me say 
too--LIHTC, I get it. I worked with LIHTC. There is actually 
bipartisan support for increasing LIHTC. Two million units. 
That is good stuff.
    But apart from tax subsidies, what else can the Congress do 
to rapidly allow for the construction of some 4 million units 
in this country?
    Mr. Mitchell. Absolutely, Congressman. I think one of the 
most important things that Congress can do is to continue to 
make large public investments. I think things that have been 
targeted in the Build Back Better, specifically billions of 
dollars for the Housing Trust Fund, resources to renovate stock 
that is already available and make sure that it is quality and 
affordable would go a long way.
    Mr. Himes. Any programs there that you see as particularly 
effective?
    Mr. Mitchell. I would lift up, I think, the National 
Housing Trust Fund. That could be really critical.
    Mr. Himes. Thank you. I appreciate that.
    Let me go to Dr. Zandi on the supply question.
    Mr. Zandi. Yes. I think what would really be critical is 
providing financing for manufactured housing. If you really 
want to get a lot of units out there fast, make it easier for 
people to get loans for purchasing a manufactured home. Right 
now, they are chattel loans, and that is a fragmented market, 
very costly, and very difficult. This is something with which 
Fannie Mae and Freddie Mac could be very helpful in developing 
a more cost-efficient, homogeneous market for those loans.
    And if you can do that, then you take the manufactured 
housing market, which today produces 100,000 units a year, to 
something that is meaningfully higher than that, very 
affordable, and can be in any community across the country. So 
if I was looking for something that wasn't tax-related, I would 
be focused on that like a laser beam.
    Mr. Himes. Thank you. I appreciate the specificity.
    Let me open it up a little unfairly to Ms. Bailey and Mr. 
Holtz-Eakin. Local zoning--I have lots of small towns that are 
uninterested in being told by the Federal Government that they 
have to lighten up their zoning. So, we have a real problem 
without much of a lever.
    Let me start with Mr. Holtz-Eakin. If you would, leave a 
little bit of time for Ms. Bailey. But what leverage, if any, 
do we have to--I don't want to use the word, ``coerce,'' but to 
encourage a rethink of zoning and regulation?
    Mr. Holtz-Eakin. I think you framed it exactly right. Those 
regulations and zoning rules exist because they want them. And 
so, you are going to have to somehow have a lever that causes 
them to change their mind. Usually, that is financial and 
making Federal aid contingent upon the behavior at the local 
level. That is probably the lever that would be the one you 
want to try. And I am happy to yield to you the rest of the 
time. That is a hard question.
    Mr. Himes. It is a tough question, Ms. Bailey, but I would 
love to get your perspective.
    Ms. Bailey. Fully enforce our nation's robust fair lending 
laws and fair housing infrastructure. We actually have this 
unfounded association between race and risk that is really the 
root of a lot of those zoning ordinances and we are causing the 
economy to underperform. So if we fully enforce our nation's 
fair housing and lending laws, we would actually create 
equitable opportunities that could help us actually create 
jobs. Fair housing actually creates job.
    Mr. Himes. Thank you. That was perfection. My time just ran 
out. Thank you very much, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    The gentleman from Texas, Mr. Williams, is now recognized 
for 5 minutes.
    Mr. Williams of Texas. Thank you, Madam Chairwoman. And I 
thank everybody for being here today.
    And, Ms. Eaddy, I want to join in on thanking you for your 
testimony. It reminds me of a Bible passage. Luke 6:38 says, 
``A good measure, pressed down, shaken together and running 
over, will be poured into your lap. For with the measure you 
use, it will be measured to you.'' You are giving a lot today. 
And we appreciate it very much.
    I also want to just touch on what we have talked about. It 
has been a great hearing. I think we have a lot of common 
ground here, which is good to see. But I own some apartments, 
and I will tell you, everybody has touched on the fact that the 
biggest problem is not in the rates, but that the rates are 
based on interest, they are based on local jurisdiction, and 
they are based on inflation. We would love to charge less, so 
that is something we can work on. It looks like we all agree on 
that.
    American families and businesses have been feeling the 
impacts of runaway inflation for far too long. We have heard it 
today. Research of the Federal Reserve Bank of San Francisco 
confirms what Republicans have been warning about for the past 
2 years: Reckless government spending contributed to the price 
increases that we have. We are all experiencing it; it is a 
real problem. I am in the car business, so I can tell you all 
about that. It was irresponsible to think we could spend 
trillions of dollars and expect there to be no negative 
consequences.
    And rather than recognizing the ramifications of their 
policy decisions, my Democratic colleagues seem to have doubled 
down on their belief that inflation can be tamed with even more 
government spending. Simply look at the bills attached to this 
hearing. There are billions of dollars in new Federal programs 
that will make prices even worse off and higher. So let's be 
very clear, you can't spend your way out of this inflationary 
cycle.
    Mr. Holtz-Eakin, can you discuss how the policies attached 
to this hearing, including the entirety of the $3 trillion 
Build Back Better, which everybody has talked about, will 
further contribute to the inflation all Americans are currently 
facing?
    Mr. Holtz-Eakin. By and large, they continue the tradition 
of demand subsidies, especially in housing. There is a long 
tradition of that in the Federal budget. And yet, we are here 
with an enormous affordable housing crisis and large inflation. 
It seems to me that we should learn the lesson and try 
something else.
    Mr. Williams of Texas. Right. Now, the mismatch between 
housing supply and demand has been getting continually worse 
each year. And it is the total problem with everything. There 
is more demand than we have. I am in the car business; we don't 
have any vehicles to sell but there is a lot of demand, and 
that is ramping up inflation.
    This has driven home prices up to their recent highs and 
made homeownership unrealistic for many Americans. And when you 
hear people talk about a 50-year mortgage, that is pretty 
scary. As we look for solutions to this problem, we must focus 
on the supply side of this equation instead of on programs that 
will create more demand for housing and continue the 
inflationary cycle.
    If we incentivize the private sector--which is always 
good--to build new housing units, that will begin to alleviate 
the upward price pressure. Unfortunately, supply chain issues 
and labor shortages are making the numbers more challenging for 
the private sector to make these types of large investments. I 
believe the Tax Code can be used to help make the economics of 
these deals work.
    So, Mr. Zandi, you discussed some tax credits in your 
testimony that could help solve some of the problems. Could you 
elaborate on these suggestions and how they would allow the 
private sector, someone like me and others, to invest in new 
housing units?
    Mr. Zandi. Yes. At the end of the day, you want to incent 
builders to go out and build more homes as fast as possible, 
and we want them to build mostly affordable rental--we need 
housing across the housing stock, but the most acute problem is 
affordable rental property.
    I mentioned three different tax credits in my written 
testimony. We talked about LIHTC. That is tried and true and, I 
think, very effective.
    Another tax credit that I think we should do is the 
Neighborhood Homes Investment Act, which helps with 
rehabilitation. As you know, in many communities, both urban 
and rural, you can renovate; buy old property and renovate; buy 
old buildings and renovate, and the market value is too low to 
cover the cost of that renovation. So, this tax credit would 
help builders and others defray that cost until we get more 
renovation of this old housing stock that we have in different 
parts of the country.
    And the third is the New Markets Tax Credit. Again, tried 
and true, and there is a lot of bipartisan support for it. And 
that really is incredibly effective at building underserved 
communities. It helps not only with affordable housing, but it 
helps with healthcare centers and community centers and healthy 
food, all of the things that are critical to making housing 
work for a community.
    I think I focused on those three things. And, again, those 
programs are in place. They are very well-understood by 
everyone who is participating in them. I think we can just 
juice them up a little bit. And I think we can get a lot more 
housing supply here in the not-too-distant future.
    Mr. Williams of Texas. Okay. Thank you very much. I yield 
back.
    Chairwoman Waters. The gentleman from Illinois, Mr. Foster, 
who is also the Chair of our Task Force on Artificial 
Intelligence, is now recognized for 5 minutes.
    Mr. Foster. I guess this question is for Mr. Holtz-Eakin or 
Mr. Zandi. If you look at all of the different incentives that 
we tried to apply to get people in housing, both on the supply 
side and the demand side, has anyone systematically looked at 
what gets the most people into a house per unit of Federal 
expenditure?
    Mr. Holtz-Eakin. I don't know the answer to that. If 
someone does, it is Mark Zandi, so you should let him answer.
    Mr. Foster. Okay. Mark, you are up.
    Mr. Zandi. That is my buddy.
    Well, it depends on circumstance, Congressman, right? If 
you are saying on average through the business cycle on trend, 
and you are talking about homeownership, getting lower-income 
people into homeownership, those demand-side measures are 
critical. The down payment is the single-biggest barrier to 
homeownership.
    Now, I am not advocating that that is the appropriate 
policy at this point in time, but there will come a time in the 
not-too-distant future when we should be focused on that, 
because homeownership hasn't gone anywhere in 40 years. It has 
gone up, it has gone down, it has gone all around, but it is 
back to where it was 40 years ago. And if you kind of do the 
arithmetic here, it is headed south, not north, if we don't do 
something about it.
    I do think down payment assistance that is well-targeted 
and paid for--it needs to be paid for--would be very helpful 
here. And that is very, very effective. Not now. But when you 
look out 2, 3, 4 years from now, I think that will be a big 
bang for the buck, as they say, for that kind of policy.
    Mr. Foster. Yes. But I guess my question is, is there 
something--if it hasn't been done--that the Congress could 
commission that, let's have someone look systemically at all of 
the different things we try and try to figure out what is the 
most-effective use? Ms. Bailey, do you have a--
    Ms. Bailey. Thank you so much. Chairwoman Waters' 
Downpayment Toward Equity Act would invest over $100 billion in 
first-generation down payment assistance. It would create 5 
million net new homebuyers, of whom 1.7 million would be Black, 
1.32 million would be Latino, and 1.4 million would be White, 
because White people in rural communities are locked out by 
these same policies.
    We need creative, innovative, targeted solutions like that 
to bring in the very borrowers that the future system depends. 
We won't have a housing system if we don't put equity at the 
center. The market's future buyers, 7 out of 10 of them, will 
be people of color. If people of color are not able to overcome 
the barrier of down payments and get access to homeownership, 
our housing system tanks, which means the gross domestic 
product, of which housing accounts for nearly 20 percent, drags 
down the whole economy.
    Inclusive solutions are about bringing everyone along. We 
commend the chairwoman for her brilliant leadership. And it is 
not lost on any of us that one day her picture will hang on 
these walls. And families like Ms. Eaddy and her wonderful 
husband will not be in a position to have to do it on their own 
because the American way has been that we have never required 
families to do it on their own. Our public policies create 
opportunity for people. We have not done it in an equitable 
way. Now, COVID requires equity.
    Mr. Foster. The thing I am struggling with is, okay, we can 
also help her with housing vouchers, just a big expansion of 
the housing. But how do we look at that, with housing vouchers 
that will, over time, cause more people to build more units if 
we really expanded the housing voucher thing? It is one of the 
ways to get at the mismatch between the number of units 
available and the number that are needed. And I am just trying 
to understand how we most effectively use the subsidies that we 
will have available.
    Ms. Bailey. We can enforce our laws. Source-of-income 
discrimination is one of the primary barriers for why women 
with families cannot get access to those housing vouchers, 
because landlords are denying them those units. So, we have the 
tools. We have to have the courage.
    Mr. Foster. And just following up on Representative Himes' 
questions about the carrots and sticks that the Federal 
Government may have available to get rid of some of the local 
barriers, what would be the most cost-effective way in terms of 
changing the number of units available per expenditure of 
Federal dollars? And is there any, even a rough way, to 
calculate how effective those might be?
    Mr. Holtz-Eakin, do you want to take a swing at that? Or 
how we would even go about trying to understand whether that 
might be the most effective way to spend our money here.
    Mr. Holtz-Eakin. This sounds like the kind of thing on 
which the Congressional Budget Office (CBO) could be useful in 
helping you. They have a long history of looking at both 
Federal mandates on State and local governments, but also the 
responses of States and localities to Federal spending 
programs. And I think that is the place where you want to look 
at the track record and see what worked.
    Mr. Foster. Okay. And we will be following up for the 
record with Mr. Zandi on that.
    Thank you. I will yield back.
    Chairwoman Waters. The gentleman's time has expired.
    The gentleman from Arkansas, Mr. Hill, is now recognized 
for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman. And let me too start 
out with thanking all of you for your work for the committee 
today in expressing your views on this important topic. And I 
thank our chairwoman for her passion and commitment to housing 
as a public policy topic.
    I want to follow up too on Mr. Himes' comments, my good 
friend from Connecticut, talking about this gap, the supply-
side gap. I think that is important. He raises some really good 
issues.
    First, I have offered amendments consistently on the House 
Floor for 8 years that nonunion construction trades be approved 
DOL apprenticeships. And every year that bill is voted down by 
the Majority. But the DOL union-based apprenticeship program 
only produces about 88,000 construction trades, when we have a 
market demand of over 600,000 a year. So I think opening up and 
qualifying more people to fill that gap is an important labor 
component in the supply side on construction.
    Local zoning is also an important issue. And I was very 
pleased to see Ed Pinto's work at the American Enterprise 
Institute on walkable communities and how cities could develop 
best practices for increasing density, changing a lot of the 
rules, and making it cheaper and more affordable to come and do 
in-fill housing, which also brings with it quality grocery 
stores and things of that nature. We are doing that in Little 
Rock, and I have been impressed with some of the performance 
there.
    I agree with Mr. Zandi on New Markets Tax Credits. I was on 
the CDFI advisory board when President Bush was in office. And 
it is something that Congress has generally supported, but the 
numbers are so high, it is almost impractical in multifamily. 
And certainly impractical in low- to moderate-income affordable 
housing, I think, because the program really--if you can't 
spend $10 million in one location, it ends up not being 
competitive. So, perhaps Congress can look at that.
    And then, I support extending the Tax Cuts and Jobs Act 
Opportunity Zones and making a much more aggressive approach 
there on how we can have better Opportunity Zones that benefit 
low- to moderate-income housing opportunities.
    So those are some issues on the supply side, I think, that 
are very, very important.
    Chair Powell gave a speech at the Brookings Institution 
yesterday where he broke down core inflation to three 
components: goods; housing; and services other than housing. 
And he acknowledged housing services inflation, which measures 
the rise of all rents and rental equivalent costs in owner-
occupied housing. And in my view over, particularly over the 
last 2 years of this intense 40-year inflation, it is way 
understated, the Consumer Price Index. As many of you know, 30 
percent of the CPI and 40 percent of the CPI are based on both 
rental and housing.
    Mr. Chairman, I would like to put in the record the core 
CPI inflation index.
    Mr. Green. [presiding]. Without objection, it is so 
ordered.
    Mr. Hill. Thank you, my friend.
    Mr. Holtz-Eakin, would you agree that the method of 
calculating owner-occupied housing lags the market and 
understates the full picture of just how much housing prices 
and rents have gone up? We heard one of our witnesses talk 
about 22 percent rent increases. Is it understated?
    Mr. Holtz-Eakin. Yes, it is understated. It lags the 
market.
    Mr. Hill. So, it is really worse. What we are facing in 
rental increases and home price increases are worse than they 
have appeared in the trailing statistics?
    Mr. Holtz-Eakin. Yes.
    Mr. Hill. Yes. And I think that is something that is, 
again, frustrating that housing has taken such a big hit. But 
let me say that when we spend money in this Congress like 
drunken sailors, and keep accommodative monetary policy far too 
long at zero, we all pay the price, all of our families pay the 
price with these higher mortgage rates.
    I was looking at H.R. 4495, the Downpayment Toward Equity 
Act, and as I noted in my opening comments, it doesn't really 
address supply. It is a more demand-driven issue. And I will 
just give you some feedback that in Arkansas, we are one of, I 
think about 20 States, that uses the bond program and recycles 
that down payment assistance money. On top of HUD's HOME 
Program, and Community Development Block Grant (CDBG) Programs, 
we really have worked hard, including with the CARES Act money, 
to provide down payment assistance to people who are qualified. 
And we have a surplus every year, meaning we really have, I 
think, a good housing market in Arkansas.
    But I would like to see CBO or GAO tell us where the 
weaknesses are in down payment assistance. Because in my home 
State of Arkansas, I think we really have been helpful to 
everyone in that emerging equity.
    But I would love to hear more from you, Ms. Bailey. If you 
could submit to the record some comments on where you think it 
is adequate and where it is the most weak, that would help us.
    Thank you. I yield back.
    Mr. Green. The gentleman's time has expired.
    The Chair now recognizes the gentleman from California, Mr. 
Vargas, for 5 minutes.
    Mr. Vargas. Thank you very much, Mr. Chairman.
    First of all, I want to thank Chairwoman Waters. I agree 
with Ms. Bailey that she has been a champion for housing, and I 
think that she has been the lion of Los Angeles in trying to 
get more affordable housing, and I appreciate her very much.
    Mr. Chairman, I also appreciate you. You quoted the Bible, 
and I am sure you knew what you were doing, but you modernized 
it and called it the people in the street of life. But you were 
really quoting Matthew 25, which is the last judgment. And I 
want to read a little bit of this passage.
    ``For I was hungry and you gave me something to eat, I was 
thirsty and you gave me something to drink, I was a stranger 
and you invited me in, I was naked and you clothed me, I was 
ill and you comforted me, I was in prison and you came to visit 
me.''
    And, of course, they asked him, ``When did we do that?'' 
And he answered, ``When you did it for the least of my 
brothers.''
    Now, I have to say that I think both sides share that. I 
have many friends on the Republican side, and I have great 
respect for the gentleman who was sitting next to you, Mr. 
French Hill, who is a good friend of mine. I know that he wants 
to do that. And trying to get there, I think is the hard part, 
because we disagree on strategy, but hopefully we can come 
together a little bit more to get things done.
    I do want to ask about inflation because this has been 
brought up a number of times. Mr. Holtz-Eakin, you addressed 
inflation. What is the inflation rate in the EU?
    Mr. Holtz-Eakin. I don't know the exact rate right now, but 
they have very high inflation, especially since the onset of 
the--
    Mr. Vargas. Is it higher than ours?
    Mr. Holtz-Eakin. I'm sorry?
    Mr. Vargas. Is it higher than the United States?
    Mr. Holtz-Eakin. In some places, yes.
    Mr. Vargas. Okay. How about in the U.K.?
    Mr. Holtz-Eakin. Yes.
    Mr. Vargas. Have they implemented President Biden's 
policies?
    Mr. Holtz-Eakin. No. But I think if you look at the period 
when the policies I mentioned were most important, it is 2021, 
when we saw inflation get to nearly 7 percent on the Consumer 
Price Index year over year. European inflation was nothing like 
that. All of that preceded the invasion of Ukraine by Russia.
    So the period where the policy impacts, the excessive 
monetary stimulus, the excessive fiscal stimulus, was 2021. 
That produced--
    Mr. Vargas. Then, you don't think this is related to the 
pandemic?
    Mr. Holtz-Eakin. I think that European inflation went up 
about a percentage point a quarter in 2021, went from zero to 4 
percent. That was, by their standards, very high inflation. And 
that is a good metric of the impact of the pandemic on global 
supply changes. We were nearly double that. That was the 
additional monetary and fiscal stimulus that the U.S. 
undertook.
    Mr. Vargas. Yes. But the interesting thing is this they 
didn't implement our policies, and they are higher than us. It 
is an 11.5 percent inflation rate in the EU, and the U.K. is 11 
percent, much higher than we are.
    So this whole thing was used politically and, 
interestingly, didn't actually work. Americans are much smarter 
than I think some of my colleagues on the other side think, and 
they knew that it was political and it wasn't reality.
    But, anyway, let's move on. Because I do agree with a lot 
of what they have said today about regulations at the local 
level. I do believe that. However, I also think--and because no 
one wants poor people. That is the problem. Everyone wants 
density somewhere else, not in their own community. It is a 
real problem.
    But, Mr. Mitchell, I wanted to ask you this: In the Build 
Back Better, Chairwoman Waters and the rest of us were pushing, 
and especially she was, for $150 billion. What would that have 
done for affordable housing in the United States?
    Mr. Mitchell. Thank you, Congressman.
    I think there are two kind of horizons that we need to be 
thinking about the policies here. In the immediate future right 
now, given the rapid rise in rental prices, that is being able 
to make sure that renters in this moment have the support that 
they need to be able to afford rent or other folks being able 
to find housing, and there are significant investments in Build 
Back Better that would have allowed for that to happen.
    At the same time, there were also resources available to 
make sure that we have the housing supply in the long term that 
is either being upkept or renovated or putting more housing 
supply online. So, there are resources in Build Back Better to 
accomplish both of those goals.
    Mr. Vargas. And I agree with my colleagues, again, on the 
other side of the aisle. It is a big-time supply issue. We have 
to build more, and we have to figure out how to do that, 
hopefully together.
    I have 10 seconds left. So, again, I want to thank 
everyone, all of the witnesses here. And I yield back.
    Thank you.
    Mr. Green. The gentleman's time has expired.
    The gentleman from West Virginia, Mr. Mooney, is now 
recognized for 5 minutes.
    Mr. Mooney. Thank you, Mr. Chairman. Thank you for this 
hearing. I think it is important that we talk about these 
issues.
    My question is directed at Mr. Holtz-Eakin. Earlier this 
year, the Government-Sponsored Enterprises (GSEs) announced 
their plans for equitable housing finance at the direction of 
the Federal Housing Finance Agency (FHFA). The plans call for 
lower down payment requirements and reduced mortgage insurance 
costs for prospective minority homeowners, among many other 
things, many other changes disregarding considerations of risk 
and ability to pay. And increasing homeownership by encouraging 
riskier mortgages is exactly what led to the 2008 financial 
collapse, which actually disproportionately hurt the minority 
homeowners it was intended to help, yet it seems we learned 
nothing.
    Moreover, FHFA Director Sandra Thompson has refused to 
finalize a proposed rule that would have subjected these 
concerning changes to review in public comment. This 
Administration, frankly, has a habit of circumventing the 
traditional rulemaking process, from the Consumer Financial 
Protection Bureau (CFPB) making substantial changes to its 
examination manual, to the Department of Veterans Affairs 
issuing an interim final rule allowing for taxpayer-funded 
abortions in violation of Federal law.
    So, Mr. Holtz-Eakin, can you explain the dangers of the 
GSEs' equitable housing finance plans and why changes of this 
significance should be subject to public scrutiny?
    Mr. Holtz-Eakin. I mentioned the rule that you brought up 
in my written testimony. It is important that if the GSEs are 
going to roll out new products, they be subject to review, and 
I think it would be good to finalize that rule. Historically, 
this is the kind of slippery slope that got the GSEs in trouble 
and ultimately put them in the conservatorship and put the 
taxpayers at such risk.
    These are highly-risky loans. They are riskier than they 
otherwise would be because they couldn't get the conventional 
treatment, so they need special treatment to get them a loan, 
and they are more likely, as a result, to have financial 
problems down the line and for the taxpayer to be on the hook 
for the cost.
    And tragically, we have, in fact, seen the disproportional 
impact on minority communities that these efforts had. I was in 
the Bush Administration in the early 2000s when there was an 
enormous push for minority homeownership. And with the benefit 
of hindsight, all we did was wipe out the net worth of millions 
of families, and that was not a wise thing to do.
    So I am concerned about this initiative, not because it is, 
in and of itself, so large, but because it is indicative of the 
kinds of things that might be pursued going forward.
    Mr. Mooney. Thank you.
    And, again, I really worry this will harm the minority 
homeowners that it is intended to help. And I know my friends 
on the other side of the aisle are trying to help. I am trying 
to help. We all have good intentions, but it is not the 
intentions; it is the policies and the effects that we need to 
look at. And you don't want to do something, however well-
intended it may be, that has the opposite effect, which is what 
seems to be happening with a lot of these policies.
    What we should do is encourage savings and living within 
your means, both as a country, the United States of America, 
and as individuals and families. We already know how reckless 
spending policies were a leading cause of this inflation crisis 
we are in now.
    I can tell you as a Cuban American myself, I believe that 
increasing minority homeownership is a worthwhile goal. My 
mother fled Communist Cuba, where the government offers no 
freedoms and dictates every aspect of people's lives. The 
United States, a free market economy, welcomed her with open 
arms, as they do other immigrants.
    The solution to America's housing affordability challenges 
is to reduce government spending and regulation in the housing 
market. We should, instead, advance free market policies that 
increase opportunities for all Americans, regardless of race, 
ethnicity, or religion.
    I thank you, Mr. Chairman, and I yield back the balance of 
my time.
    Mr. Green. The gentleman yields back.
    The gentleman from Florida, Mr. Lawson, is now recognized 
for 5 minutes.
    Mr. Lawson. Thank you, Mr. Chairman, and a special thanks 
to Chairwoman Waters and Ranking Member McHenry for having this 
hearing today.
    Before I get started on my questions, I would just like to 
say I really appreciate Ms. Eaddy's testimony, which 
exemplifies the problem that we have in America. And if I had a 
magic wand, I would wave it and see if we could solve some of 
the problems. I would hope that all of us can come together, 
Democrats and Republicans, and do something to solve this 
housing issue.
    I was homeless, once. We lost everything in a fire, and had 
to move from time to time, and I know how difficult that is 
while raising a family. And I really applaud my father. I don't 
know how he got out of it over the years, but we made it every 
time some relatives would put us out. So, I know what that is 
like, and I know that we are fortunate today to have the 
opportunities that we have.
    But to Ms. Bailey, my home State of Florida has the largest 
homeless population in the United States, and we know 
homelessness has an adverse impact on people of color and 
lower-income communities. In your testimony, you discuss how 
the COVID-19 pandemic exacerbated the housing discrimination 
and the wealth gap. What are some considerations Congress 
should keep in mind to ensure that there is an equitable 
solution to address these issues?
    Ms. Bailey. Thank you so much for the question.
    As the descendent of formerly enslaved Africans, I have to 
say our nation's mortgage market was built on the bodies of 
enslaved Africans. The fact that we are here today talking 
about the housing system means we are talking about our 
ancestors. So, let me start there.
    We have to make sure we have equitable policies because for 
the entirety of our nation's history, our housing policies, 
Federal, State, and local, have been implemented in a way that 
cements and perpetuates residential segregation. There is an 
unfounded association between race and risk because of 
enslavement in these United States. It is not that we don't 
want Black people, Latino people, Asian American and Pacific 
Islander people, and Native communities from whom the land was 
forcefully dispossessed to have opportunity. We don't want the 
people--and we have to talk about this--in our communities. In 
our zoning ordinances, we are saying we don't want integration, 
when in fact, today in America we actually are seeing 
integrated communities. We have actually seen the Black 
homeownership rate go up, the Latino homeownership rate go up, 
and the Asian American homeownership rate go up because of 
inclusive policies.
    This committee's work on the American Rescue Plan Act to 
preserve homeownership with the Homeowner Assistance Fund and 
the Emergency Rental Assistance meant that we kept families 
housed during the time of a great COVID pandemic which 
disproportionately impacted the very same people that the Great 
Recession decimated.
    You want to talk about responsibility and personal 
opportunity? Let's talk about it. The Homestead Act created 20 
percent of the wealth that White Americans and families who got 
that benefit can point to. People of color were intentionally 
locked out of opportunity. We know inclusive policies work. Why 
in the world would we want to go back?
    Mr. Lawson. Thank you.
    Quickly, Dr. Zandi, you mentioned during Congressman 
Williams' testimony, I think, that one way to help the housing 
market is to increase the rental assistance program other than 
affordable housing.
    Can you comment on that, please?
    Mr. Zandi. Yes. Clearly, many households are unable to 
afford the current high rent, and so, we are seeing, obviously, 
higher homelessness and very fragile housing tenure.
    So I think, particularly at this point in time when rents 
are so high and are unlikely to come down in a meaningful way 
anytime soon until we can get more supply into the market, it 
is important to provide assistance for rent. So rental 
assistance is, I think, at this point particularly important 
for people who are really under a lot of stress.
    Mr. Lawson. Okay. Thank you.
    With that, Mr. Chairman, I yield back.
    Mr. Green. The gentleman yields back.
    The gentleman from Ohio, Mr. Davidson, is now recognized 
for 5 minutes.
    Mr. Davidson. Thank you, Mr. Chairman.
    And thank you to our witnesses. I appreciate you being 
here, and I appreciate the committee's emphasis on affordable 
housing.
    Frankly, compared to Washington, D.C., or California, or 
New York, pretty much everything in Ohio is affordable. But for 
people who live there, their income is based on Ohio, not on 
D.C., so, we all have our different challenges around the 
country, and we have a lot of Federal policies.
    Mr. Holtz-Eakin, I kind of want to explore some of the 
conversation that you have had about how the Federal Reserve 
has engaged in activities that have distorted the market.
    First and foremost, in 2020, it did provide essential 
stability in March and April when our markets were in freefall. 
We can only have a functioning market if there is eventually a 
buy side. There was no buy side. So, they intervened. They 
created some stability. They did some heroic stuff. But then 
almost right after that, they started doing truly market-
distorting stuff.
    One of the worst things related to this hearing is they 
were buying, for months and months and months, $40-billion 
worth of mortgage-backed securities and holding rates really 
low. That created an asset bubble, potentially. And you have 
emphasized that they needed to cool off demand.
    But people are going to need to live somewhere. So when you 
talk about demand, is that somehow that people start demanding 
a house? How does that play out for the average family in 
western Ohio when you have a Federal Reserve setting a price, 
now rates start going up, and you said cooling demand. How does 
that play out?
    Mr. Holtz-Eakin. First of all, I think it is a very good 
point that the Fed did a tremendous job in 2020 of stepping in 
and providing enormous amounts of liquidity and having 
financial markets stabilize fast. We don't think of 2020 as a 
year of a banking crisis or financial crisis. We had the 
pandemic.
    So they did a great job, but as part of that, they made a 
decision to buy the $30-billion worth of MBS, which is a clear 
subsidy to the mortgage market, without great discussion. And 
now that they are taking it back at an even greater amount, it 
is having an enormous impact on housing markets.
    So, their very blunt tools, raising rates across the 
economy on every class of credit, every maturity, and pulling 
back on this liquidity, are having a disproportionate impact on 
housing at a time when people need housing.
    And that, to me, says, number one, the Fed doesn't have 
fine tools that can target different sectors. It doesn't. And, 
number two, don't get yourself in the position where you have 
to fight inflation like this. Once you do, you have nothing but 
bad choices. You need to slow down the labor market, which 
means fewer jobs. You need to slow down retail sales, which 
means fewer sales. None of that is good news. And that is the 
position we now find ourselves in.
    Mr. Davidson. Yes. People sometimes say, don't fight the 
Fed, right? The Fed is moving things one way or the other. When 
you think about households, they have to find a place to live. 
Rates are going up. So fundamentally, that means what? They are 
not going to buy? That means somehow rents aren't going to go 
up? The people who own the property are going to have to have 
rents move where rates move, or where inflation moves.
    Can you highlight the dangers of this overzealous activity 
that the Federal Reserve has gotten themselves in? Because it 
really does limit their options without affecting the average 
American, doesn't it?
    Mr. Holtz-Eakin. I think the activities, again, are 
attributed to the earlier policy errors. There is no question 
they were excessively loose, and now they are trying to take it 
back as fast as possible. It is having, as I said, a really bad 
impact on the housing market, much stronger than, for example, 
the labor market, which continues to produce 100,000 jobs a 
month. It will show up in building, so home builders are 
clearly looking at a poor outlook. As a result, we will have 
fewer single-family homes, and the rental market will become 
much more heavily-contested, and rents are going to go up. I 
think that's where the rubber hits the road. And it is going to 
be a tough housing market for the foreseeable future.
    Mr. Davidson. Right. I just think there are a lot of 
consequences for the Fed's actions, and they can't take it 
back. They might feel bad--they don't really express it very 
well if they do--but there are big consequences for this.
    And I think the last thing I would say is, the reaction is 
to say, let's subsidize all of it. Well, what does that do? It 
increases government spending, and it pushes the Fed to print 
more money, which drives more inflation, which is why we have 
the problem that we have today.
    So, we should be careful about our own policy tools here in 
Congress.
    My time has expired, and I yield back.
    Mr. Green. The gentleman yields back.
    The gentlewoman from Massachusetts, Ms. Pressley, who is 
also the Vice Chair of our Subcommittee on Consumer Protection 
and Financial Institutions, is now recognized for 5 minutes.
    Ms. Pressley. Thank you, Mr. Chairman. And I thank our 
chairwoman for holding this critical hearing and consistently 
highlighting the urgent need in our country for fair and 
affordable housing.
    In my district, the Massachusetts 7th, housing is in 
devastatingly-short supply. My constituents, particularly those 
who are Black, Brown, and low income, are being priced out of 
their homes due to skyrocketing rent.
    And I want to highlight today just how urgent the need is 
for investments and policy solutions that meet the moment to 
address this housing crisis, especially for renters in 
districts like my own.
    Across Massachusetts, a quarter of all residents spend half 
their income or more on housing. Boston is now the second-most 
expensive city in the country to rent in, where the median rent 
for a one-bedroom apartment is just over $3,000.
    This is a crisis, and we must act swiftly. Housing is at 
the intersection of everything. We will never actualize 
economic justice, close the racial wealth gap, improve public 
health outcomes, recognizing that housing is a critical 
determinant of health, or meet our climate goals without 
addressing this affordable housing crisis.
    So, Congress must act simultaneously by investing in 
affordable housing supply as a long-term solution while also 
enacting policies in the immediate term to reduce costs in the 
here and now.
    Mr. Mitchell, experts agree the limited supply of 
affordable housing is the root cause of housing inflation. Can 
you explain why we must address it?
    Mr. Mitchell. Absolutely, Congresswoman.
    To your point, exactly what you said, many folks in the 
housing advocacy space say, ``The rent eats first.'' And what 
this means is that housing is the single-largest budget item 
for households, and for low-income families, it accounts for 
almost half of their budgets, which means that they have that 
much harder of a time when rents increase of making ends meet, 
and become that much closer to eviction and homelessness. And 
this is especially true for Black and Brown renters; last 
month, roughly one in five Black renters reported that their 
household was behind on rent payments.
    So, it is absolutely imperative that we address the housing 
affordability crisis.
    Ms. Pressley. Thank you. I certainly agree.
    And this committee, under Democratic leadership, has long 
supported bold investments in our housing supply, but even so, 
working families across our nation are struggling right now, 
and they cannot afford to wait years for housing supply to be 
built.
    There are 7 days in a week, and not one of them is called, 
``someday.'' We have to act now. We need to pair these longer-
term investments with short-term solutions that alleviate the 
financial pain that families are facing today.
    In past moments of crisis, when prices previously spiraled 
out of control, our country enacted price controls in housing 
to maintain stability.
    Mr. Mitchell, how would rent stabilization be effective in 
ensuring that folks are housed in the short term, helping 
working families across the country, while also avoiding 
homelessness?
    Mr. Mitchell. Again, given the immediate needs of renters 
and the outsized power of the landlords to significantly raise 
rents in this moment, rent stabilization policies offer a near-
term pathway of providing relief to renters and addressing the 
fundamental power imbalance that we are seeing right now.
    And we should note that rent control policies have evolved 
tremendously over time. Most modern rent stabilization efforts 
target specific property types within a city or locality, and 
they allow for more-controlled rent increases, which mitigates 
a lot of the negative concerns that people often associate with 
rent control policies.
    The research here is very clear: Rent control policies 
reduce rents for the tenants at whom they are targeted. They 
increase residential stability. They protect tenants from 
eviction. And more recent research suggests that these modest 
rent stabilization policies also do not deter new construction.
    So in some ways, you can see that pairing these rent 
stabilization policies then with the investments in putting new 
supply online can work well and work hand-in-hand together.
    Ms. Pressley. Thank you, Mr. Mitchell. I certainly agree.
    Housing is a human right. We have to be responsive to the 
pain that families are currently experiencing with a two-prong 
solution that pairs long-term investments in housing supply 
with immediate policy changes that ensure access to affordable 
housing. Everyone deserves more than shelter; they deserve to 
have a home.
    Thank you. And I yield back.
    Mr. Green. The gentlelady yields back.
    The gentleman from North Carolina, Mr. Budd, is now 
recognized for 5 minutes.
    Mr. Budd. Thank you, Mr. Chairman.
    I just want to begin with a couple of facts, a bit of a 
review.
    In 2021, we saw the average home price rise almost 20 
percent, which was the largest increase in the 34-year history 
of the Case-Shiller Index, which tracks average home prices. 
And when you couple that with historically-high inflation, you 
can see that we really have a recipe for economic pain.
    The average rate for a 30-year fixed-rate mortgage has 
doubled over the last year alone. It was at about the 3-percent 
range in March, and was over 7 percent in October.
    So, let's break that down. We take the average homebuyer 
looking for a basic FHFA-backed loan for a median-priced 
$430,000 home, and then you factor in national averages for 
property tax, home insurance, and a 20 percent down payment, at 
a 7 percent interest rate, that homebuyer's average monthly 
payment is going to be about $2,900.
    Now, compare that to a year ago when the rates were closer 
to 3 percent. That is about an $850 increase every single 
month. I don't think that working families have an extra 10,000 
bucks laying around.
    So, instead of addressing the root causes of high 
inflation, things like reckless runaway spending, we have seen 
the Democrats focus on the same old failed progressive 
policies. According to the National Association of Home 
Builders, 25 percent of all costs associated with a single-
family home and developments are directly attributed to 
regulations. That is a 25 percent tax that gets passed onto 
these homebuyers.
    So tell me, how is more spending and more regulation going 
to fix that problem? It is not.
    I think we would be a lot better off to find a better 
solution to address domestic supply-chain issues, and ease 
regulations, especially on the local level, not here in 
Washington, D.C. And we need to encourage reducing regulations 
here in Washington as well, but especially on the local level 
where most of those costs are incurred. We also need to 
encourage work. We need to cut runaway government spending. We 
need to support innovative free-market solutions to increase 
the housing supply in this country, which right now just can't 
keep up with demand.
    The hard truth is that the liberal ideology of the Biden 
Administration and Congressional Democrats and what they are 
doing just prevents them from solving this issue. They talk a 
good game, but in reality, their failed policies have made it 
worse for working families.
    So until we change course away from failed progressivism, 
which is really regressive, working families will find it 
harder and harder to afford their daily lives and it will keep 
them from becoming homeowners.
    I yield back.
    Mr. Green. The gentleman yields back.
    The gentleman from New York, Mr. Torres, is now recognized 
for 5 minutes.
    Mr. Torres. Thank you, Mr. Chairman.
    We are increasingly phasing out single-family-only zoning, 
which, to me, is a policy shift in the right direction, but as 
we reform zoning codes across America, we have to grapple with 
the following quandary: How do we reap the benefit of housing 
development without the cost of housing displacement? Land use 
reform is a necessary but insufficient condition for 
affordability.
    Ms. Bailey, what else can be done to ensure deep 
affordability in the new housing supply that land use reform 
would unlock?
    Ms. Bailey. Thank you for the question.
    We can create programs that are equitable for the frontline 
workers who actually risked their very lives to save the 
economy during COVID-19, families who, through no fault of 
their own, have been the hardest hit by COVID. So, things like 
first-generation down payment assistance that has already been 
discussed; support for voucher holders; support for people with 
disabilities; but also the Neighborhood Homes Investment Act. 
We could actually build 100,000 new units to help these 
homeowners who have been hardest hit by the Great Recession 
that robbed $1 trillion from Black and Latino communities.
    This is a tax credit subsidy. But what we have to do is 
make sure fair housing is embedded in it. For the entirety of 
these United States, what we have done is try to create 
affordable housing without censoring it in fairness. When we 
censor it in fairness, like we did with the American Rescue 
Plan Act's resources, we actually help the families who need 
the help the most, and who have been the most harmfully 
impacted by this crisis.
    Going into this crisis, our families were already 
struggling because of the devastating impact from the Great 
Recession. They are not equitably sharing in the recovery, and 
the Fed's efforts have exacerbated inequality to the point that 
the Black-White wealth gap right now is by $20 trillion added.
    Mr. Torres. To your point, homeownership is the foundation 
for wealth in our society. And contrary to popular opinion, the 
largest housing program is not LIHTC. It is not Section 8. It 
is not Section 9 public housing. It is the mortgage interest 
deduction by far, which disproportionately benefits wealthier, 
Whiter households.
    I have a question about homelessness. The size of the 
homeless population depends on the definition of homelessness 
that one adopts. Take New York City as an example. If you 
define the homeless population as those living on the streets 
or in a shelter, there are more than 60,000 homeless people in 
New York City. But if I define it more broadly to those 
doubling up and tripling up, there are more than 100,000 
homeless students in the New York City public school system, 
not to mention hundreds of thousands more who belong to the 
rest of the household.
    How should we define homelessness federally? And do you 
have a sense of how much larger the homeless population would 
be if we were to factor in those who are temporarily and 
unstably-housed?
    Anyone can answer that question.
    Ms. Bailey. I think we have to absolutely expand the 
definition, and we actually have to think about some of the 
solutions that worked and the policies that we created for 
homeless veterans, because we made a tremendous advancement in 
helping homeless veterans. And if we provided some of those 
same innovative approaches for families with children, we could 
actually increase resources and support to help those children 
and those families have more sustainability.
    Mr. Torres. And again, Mr. Zandi, I have colleagues who 
romanticize the free market. And the market has its place. The 
market is a powerful tool. But there are market failures. In 
your opinion, do you think that the free market is sufficient 
to create the affordable housing we need, at the level of 
affordability that we need, on the scale that we need?
    Mr. Zandi. No, I don't. I think that the market was 
significantly impaired in the wake of the housing bust and 
great financial crisis, and it struggled to get it back 
together to produce the kind of housing that we need as quickly 
as we need it.
    I do think it is important for lawmakers to focus on ways 
to try to help address the shortfalls and, thus, these ideas 
around tax credits and also on grants and other forms of 
subsidy to try to make it less expensive and cheaper for 
builders to put up more affordable--particularly affordable 
rental housing units.
    So, no, I don't think we should rely on the market by 
itself to be able to get us to where we need to go as quickly 
as we need to get there. This is a problem that has been in the 
making for over a decade. If we do nothing, it is going to be a 
problem that we are going to be grappling with for at least 
another decade, or perhaps a generation.
    So, I do think it is really important that lawmakers focus 
on this and try and address these market failures.
    Mr. Torres. And I will quickly note, anyone who is saying 
we can resolve the affordability crisis without Federal 
investment is living on a different planet.
    And I will leave it at that.
    Mr. Green. The gentleman yields back.
    The gentleman from Tennessee, Mr. Rose, is now recognized 
for 5 minutes.
    Mr. Rose. Thank you, Chairman Green. And thanks to 
Chairwoman Waters and Ranking Member McHenry for holding the 
hearing today. Thank you to all of our witnesses for being here 
and taking time to share your expertise with us.
    I was glad to see that the Majority has invited CFPB 
Director Chopra to testify later this month, and I would hope 
that the chairwoman would also invite SEC Chair Gensler to 
testify, perhaps in support of the upcoming FTX hearing.
    In the last 133 days, we have had only one hearing that 
included witnesses from the Biden Administration, which I 
believe is a dereliction of our duty as Members of Congress to 
conduct oversight. I hope that changes in a few weeks, and I am 
confident that it will and that we will be seeing a lot more 
government officials as witnesses before this committee.
    Since my time is limited, I want to dive straight into my 
questions.
    Dr. Holtz-Eakin, earlier this year we held a hearing on the 
Biden Administration's PAVE Task Force which was created based 
on anecdotal evidence to address discrimination in home 
appraisals. The task force did not conduct any new research. It 
also failed to include dissenting opinions on the subject about 
the contested and limited body of work on appraisal bias.
    Setting aside whether or not it is wise to make policy 
decisions based on anecdotal evidence, I am curious about your 
thoughts on one of the task force's recommendations, which is 
to require FHA lenders to track usage and outcomes of 
reconsiderations of value, and report it to the FHA so that HUD 
can evaluate the impact that reconsiderations of value might 
have on possible discrimination.
    Dr. Holtz-Eakin, would the costs of increased reporting 
requirements like this impact the cost of buying a new home?
    Mr. Holtz-Eakin. Certainly, those costs will get passed 
along. There is no question about that.
    Mr. Rose. Dr. Holtz-Eakin, the task force also wants to 
increase requirements for anti-bias fair housing and fair 
lending training for all appraisers. The industry itself has 
been exploring ways to improve diversity among the profession, 
but one of the barriers to entry as an appraiser that is 
commonly cited is the strict training requirements and long 
hours that it takes to become an appraiser.
    So, Dr. Holtz-Eakin, does increased training requirements 
make the profession more attractive to prospective appraisers?
    Mr. Holtz-Eakin. I will have to get back to you on that 
with a better answer. I don't really know that industry very 
well.
    Mr. Rose. Thank you. If you would, I would appreciate it 
and I would welcome your insights there.
    Dr. Holtz-Eakin, earlier this year, every single Democrat 
on this committee voted for a bill entitled, the Downpayment 
Toward Equity Act, which would allow even people who make more 
than $200,000 per year to receive government grants of nearly 
$100,000 to purchase a home.
    Setting aside the absurdity of giving individuals who make 
more than $200,000 in income, a six-figure government 
assistance check, and setting aside the $100-billion price tag 
of this legislation, Dr. Holtz-Eakin, does increasing the 
demand for something such as housing, leaving supply constant, 
reduce costs?
    Mr. Holtz-Eakin. No. It will just exacerbate the pricing 
problem we see already.
    Mr. Rose. I think so.
    Earlier, Representative Barr mentioned the conundrum of 
lowering the cost of regulatory assistance. And you said that 
is a pretty big task, and you weren't necessarily sure how we 
go about that. But if you might expand on that a little, I 
would appreciate it.
    Mr. Holtz-Eakin. I think this has come up a number of 
times, and localities have these land use restrictions and 
construction requirements for a reason. They value them for 
reasons both noble and not noble. And you are now going to have 
to have some appropriate Federal intervention into local 
decision-making in order to change that. How do you do that? 
You can try to do it by fiat, but it is awfully hard to tailor 
that to the circumstances across the country. You can make it a 
condition of financial assistance and have it as a carrot that 
they do that. But they could ignore that carrot and continue.
    I think it is a really difficult policy problem to have, 
the Federal Government trying to influence the decisions being 
made at local levels across the country.
    Mr. Rose. And is it futile, or do you think it is essential 
that we try to figure out how to influence those local 
decisions?
    Mr. Holtz-Eakin. All of the numbers that you have heard 
today are that this is one of the most-significant reasons to 
have an affordable housing problem in America. So, yes, it 
ought to be looked at.
    Mr. Rose. Thank you. I appreciate it.
    And I see my time has expired, so I yield back.
    Mr. Green. The gentleman yields back.
    The gentleman from Massachusetts, Mr. Lynch, who is also 
the Chair of our Task Force on Financial Technology, is now 
recognized for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman. And I want to thank all 
of the witnesses who are here today. Thank you very much, and 
the ones joining us online as well.
    I share the representation of the City of Boston, so my 
situation is quite similar--the same actually as Ms. Pressley 
outlined, where the median rent now is around $3,000 a month 
for a one-bedroom. I think the average housing cost right now 
for a single-family home is somewhere around $770,000, far 
above the national average.
    My own background is, I grew up in the Old Colony Housing 
Project in South Boston. At the time, it was among the poorest, 
predominantly-White Census tracts in the United States. So, we 
struggled. And my views on housing policy necessarily are 
shaped by that experience. I saw how my mom and dad struggled. 
I saw how they had a really hard time raising me and my five 
sisters, just trying to provide a safe place for all of us and 
a stable environment.
    And it seems like things have gotten worse. We were at the 
very bottom of the economic ladder, and we struggled for 
housing. But now, I see people who are working who would, I 
think, commonly be referred to as middle class, yet, because of 
the exorbitant prices of housing, they are being forced out.
    I think we had a good start with HOPE VI, and I know that 
Jack Kemp, a Republican, was one of the early architects of 
that program. Now, we have one program that was started by the 
Obama Administration called the Choice Neighborhoods Program 
that actually tries to build mixed-income housing. One of the 
problems that I have--and I represent a lot of people in public 
housing, including that same housing projects; it has been 
renamed The Anne M. Lynch Homes at Old Colony in memory of my 
mom. But we still have the same problem. People are struggling. 
And the new model tries to bring in private money to partner 
this Choice Neighborhood Program to build mixed income, so 
middle income or so-called workforce housing.
    And I am just wondering, Mr. Holtz-Eakin, we are struggling 
with this idea of rent control again. The mayor of Boston is 
looking at it because she doesn't have many options, and I 
understand that. But I am old enough to remember the previous 
iteration of rent control that was a disaster. It caused 
disinvestment and the lack of development of housing.
    I just wonder, Mr. Holtz-Eakin and Mr. Zandi, from an 
economic standpoint, is that the type of model that will 
succeed? If we can sort of get buy-in from middle-income people 
as well as those who want to help people at the bottom of the 
ladder, is that the model that will succeed in generating the 4 
million units of housing that we need to create?
    Mr. Holtz-Eakin. I feel pretty confident that a rent 
control approach won't solve the problem. I say that respectful 
of the testimony of Mr. Mitchell. You can probably write down 
on a blackboard a price stabilization approach that works, but 
I would be skeptical that we could make it work in every 
community in America.
    So, I would prefer to find ways to get private capital in 
to increase the access of that cheap capital. I will let Mark 
speak for himself, but he has talked about that on a number of 
occasions. And whether it is tax-based incentives that draw 
that capital in or others, I don't have an attachment to any of 
them. We need to get greater capital in to provide affordable 
housing. That is the key, yes.
    Mr. Lynch. Mr. Zandi?
    Mr. Zandi. Yes. In the long list of things that we can and 
should do to help these low-income households be able to afford 
a home, rent stabilization, rent control would be all the way 
at the bottom of the list. I would be very, very cautious about 
going down that path. It is very, very difficult to implement 
in a way that will end up resulting in more supply. And we need 
to be focused very carefully on increasing the supply of 
housing as fast as possible. And rent control, rent 
stabilization is pretty difficult to implement to make that 
effective.
    The other thing I would say is, there are a lot of 
landlords out there. There are the institutional landlords. But 
in many cases, the landlords we are talking about here for 
these kinds of kind of lower-income households in these 
communities we are trying to help are mom-and-pop landlords. 
They are middle-class households as well. You need to keep that 
in mind.
    So, I don't know that I would go down that path. I would go 
down these other paths before I went down the rent 
stabilization or rent control path.
    Mr. Green. The gentleman's time has expired.
    The gentleman from South Carolina, Mr. Timmons, is now 
recognized for 5 minutes.
    Mr. Timmons. Thank you, Mr. Chairman. I appreciate you 
having this hearing.
    I live in Greenville, South Carolina. I represent 
Greenville and Spartanburg. We have a major challenge with 
affordable housing. The city has grown so much. There have been 
so many people moving into the district, and rents have gone 
through the roof. The same problem is happening all over the 
country, but we have it twice as bad because we also have very 
poor public transportation.
    So, it really has become a major issue in my district. And 
I, like all of you, agree that market forces are not going to 
solve this problem. The government has to do something. The 
question then becomes, what? Is it to somehow incentivize the 
developers to invest in affordable units, or is it requiring 
them, as some cities have done? Is it creating a fund that will 
subsidize across-the-board using General Fund tax dollars? Is 
it de-restricting land to force developers to do it? There are 
all of these different tools in our toolbox, and the question 
is, how?
    And I think my view on this is that it is a problem when in 
one building, different units are subsidizing others. So if 
this is important to us--and it is important to us--it should 
be General Fund dollars. It should be money that the entire 
citizenry pays to facilitate affordable options in urban areas.
    But then, the other thing is public transportation. There 
are certain parts of our country that have grown so expensive 
that it is just not economical to even make the attempt. The 
question is, how do you allow people to move in and out, to 
have access to areas to work and enjoy that community?
    Those are the two kinds of variables that I see: government 
intervention to facilitate affordable housing; but also, public 
transportation.
    Mr. Holtz-Eakin, do you agree that those are two of the 
biggest kind of levers in this conversation?
    Mr. Holtz-Eakin. Yes. Those are central to this.
    I would really put the relentless focus on supply of 
affordable housing that Mark Zandi just mentioned at the 
forefront, because that will dictate the residential patterns 
that will be viable over the long term and, thus, dictate the 
transportation networks that you need to have to support those 
residential patterns.
    So, I think you have to get the housing piece right first 
before you start thinking about getting the transportation 
piece.
    Mr. Timmons. Do you think it is reasonable that the 
government should create incentives as opposed to requirements 
to essentially tell developers that we will make it easier for 
you to develop, whether it is putting your permit in the front 
of the line--right now, permitting is incredibly backed up in 
South Carolina, because we have so much development. That is 
going to slow with interest rates increasing. But there are all 
of these different tools. It is not a one-size-fits-all model, 
and every city is different.
    We can all agree that we need to have affordable housing. I 
guess the question becomes, what tool in the toolbox is the 
right tool to use to achieve that objective? And I guess it is 
very situation-specific. What works in Greenville, South 
Carolina, does not work in New York City.
    Mr. Holtz-Eakin. I think that is the right bottom line, 
that we shouldn't presume, sitting here in Washington, D.C., to 
understand the local conditions all around, and we should 
permit the flexible use of local tools to get to the 
objectives. But you do have, at the Federal level, the power to 
set the objectives and set the targets and try to make sure 
that we get the outcomes we want.
    Mr. Timmons. And I think there is a bigger question of rent 
versus own. D.C. has a very complicated system through which 
you get into the lottery, and then you purchase something, and 
you live there, and then you only get the benefit of the--I 
have looked at it extensively, and I promise you, I have no 
idea how it works, but it theoretically works.
    I think the other challenge is that everybody does it 
differently, and there is no best practice. Is that fair?
    Mr. Holtz-Eakin. In my opinion, I have never been able to 
get excited about rent versus own, and that somehow, we should 
get everybody into an owner-occupied home and--
    Mr. Timmons. We know how that went last time.
    Mr. Holtz-Eakin. We need more affordable housing, rental 
housing, owner-occupied housing, and people are going to decide 
whether they want to rent or own.
    I have both rented and owned in my life. I didn't think I 
was a worse citizen when I was a renter. I actually thought I 
continued to uphold my civic duties. I have never understood 
the magic whereby we want to pick one over the other, so I 
would like to just focus on the supply of affordable housing.
    Mr. Timmons. Sure. In the area that I live, we are having a 
challenge because the city is growing into an area that was low 
income, and they were all renters. And so the challenge 
becomes, is it reasonable to ask them to move? And I would say 
it is not. If they have been living somewhere for 20, 30 years, 
they have a right to continue to live there. It is a very 
complicated situation.
    I don't want to go over my time. Thank you so much.
    I yield back, Mr. Chairman.
    Mr. Green. The gentleman's time has expired.
    The gentlewoman from North Carolina, Ms. Adams, is now 
recognized for 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman. And I want to thank you 
for hosting today's hearing, and Chairwoman Waters. And to our 
witnesses, thank you as well.
    Ms. Bailey, this question is for you. In your testimony, 
one of the key points you make is that GSEs aren't meeting the 
expectations of their mandate to support affordable housing 
initiatives.
    First, can you specifically tell us more about how the GSEs 
could be doing better? And second, can you discuss what 
Congress can do to leverage the GSEs and the Federal Home Loan 
Banks to close the racial homeownership gap and the affordable 
housing crisis?
    Ms. Bailey. Thank you for the question.
    Absolutely, the GSEs continue to underserve all 
communities, despite a public interest mission to making sure 
that there is broad credit liquidity in every community at the 
same time.
    We support and are pleased with the Federal Housing Finance 
Agency's recent release of the GSEs' equitable housing finance 
codes. We have needed things like this for a very long time, 
because of our nation's history of housing discrimination, 
where we have created equitable opportunities, and in the first 
35 years of the FHA-insured program, $120 billion of that 
program mostly went to White Americans. Less than 2 percent of 
those FHA-insured mortgage loans went to families of color. So, 
White families had a head start.
    We need equitable programs because families of color don't 
have the resources built up from long-term homeownership that 
can be passed forward to successive generations. The equitable 
housing finance plans actually implement part of the Equal 
Credit Opportunity Act's--which has been in place for over 40 
years--special purpose credit programs. These are simply 
programs that allow for lenders to look at their own individual 
borrowing, and to see whom is it that they are underserving and 
then to just create a targeted plan to bring in those 
consumers, to make sure they have a fair chance because of the 
history of discrimination that those communities have faced.
    We also want to make sure that they affirmatively further 
fair housing, because we have never fully enforced our fair 
lending laws, and they have an explicit responsibility to 
affirmatively further fair housing.
    Ms. Adams. Okay. Great. Thank you so much.
    Ms. Bailey, can you briefly discuss how corporate ownership 
of housing units at this scale prevents first-time homebuyers 
from finding housing, and what Congress can do about this? In 
my community, the UNC Charlotte Urban Institute found that 
corporate landlords own over 11,000 housing units.
    Can you speak to this?
    Ms. Bailey. Sure. One out of seven homes is actually being 
purchased by investors in the communities hardest hit by the 
recession in the South and in the Midwest. So, we need things 
like targeted first-generation down payment assistance, which 
is so different from first-time down payment assistance. This 
down payment assistance actually targets the families that our 
former housing policies have kept out. Current first-time 
homebuyer programs are open and available to everyone, so even 
wealthier people in high-resource communities could have access 
to them.
    By targeting down payment assistance by first generation, 
we go to those communities that we have left behind, 
communities all across our country: 1.7 million of those 
borrowers would be Black; 1.32 million, Latino; and 1.4 million 
would be White, because, again, these are the very communities 
and rural communities that have been locked out of opportunity 
for some of the same reasons. And many of these borrowers, up 
to 88,000, would also be Asian American and from Pacific 
Islander and Native communities.
    So, equitable policies are good for our economy because 
they help us to bring in the very communities we left out, but 
they also help to create jobs. A targeted down payment 
assistance by first generation would help us to generate 
billions of dollars in both local revenues and thousands of 
jobs.
    Ms. Adams. Yes, ma'am. Thank you.
    Mr. Zandi, can you discuss why the investment in LIHTC is 
needed now more than ever before, because the funding in Build 
Back Better would have provided a lot of relief?
    Mr. Zandi. Yes, it would. And I know you have also worked 
very diligently on this in trying to make some changes in the 
funding related to the American Rescue Plan money to allow more 
LIHTC development. And I think that is the kind of thing we 
should be doing.
    The Federal Government is the single-largest funding source 
for affordable rental housing. That is the largest program that 
the Federal Government operates. It is very efficient. It is 
well-understood, and tried and true. And I think that is what 
we should be focused on.
    Ms. Adams. Thank you so much. I am out of time.
    Mr. Chairman, I yield back.
    Mr. Green. The gentlewoman's time has expired.
    The gentleman from Wisconsin, Mr. Steil, is now recognized 
for 5 minutes.
    Mr. Steil. Thank you very much, Mr. Chairman. And thank you 
all for being here for another hearing on housing.
    Mr. Holtz-Eakin, the Federal Housing Finance Authority 
(FHFA) announced this week that it is going to increase the 
maximum conforming loan limit to more than $1 million in high-
cost areas, and $726,000 in other parts of the country. In 
other words, the Federal Government is going to subsidize high-
cost, million-dollar home purchases.
    Can you kind of walk us through what impact expanding 
Federal support for jumbo mortgages might have, in particular 
on inflation?
    Mr. Holtz-Eakin. Certainly at this point, as we have 
discussed extensively, housing is a big part of the inflation 
story. And it will increase the demand for housing and 
especially expensive housing, jumbo mortgage-financed housing. 
And other things being the same, those increases in demand can 
exacerbate the inflation problem.
    My deep belief is that the Federal Reserve will simply undo 
it. And so, this will be an incredibly ineffective subsidy 
which will probably allow these fairly affluent borrowers to 
get financing, and someone else will get crowded out, because 
the Fed really can't allow the aggregate to increase.
    Mr. Steil. Let's follow up there. Somebody else is going to 
get crowded out.
    Mr. Holtz-Eakin. Yes.
    Mr. Steil. Who gets crowded out? Other rich people or 
lower-income people who are trying to buy a home?
    Mr. Holtz-Eakin. Probably the lower income. It will just 
move down the ladder, and they'll get credit out at the bottom.
    Mr. Steil. So, the policies put forward where the 
government comes in and intervenes actually hurt the lower-
income homebuyers buying homes, not at a $1-million price 
point, but the lower price point. That gives me a lot of pause.
    Let me ask you a follow-up question to that. Do you view 
that this move could increase the risk to the Federal 
Government, ultimately being the taxpayers?
    Mr. Holtz-Eakin. Oh, yes. I am deeply concerned that the 
GSEs, which were fundamentally involved in the last housing 
bubble and the financial crisis, remain unaltered to this day. 
They have been in conservatorship ever since the crisis. They 
are undercapitalized by their own assessments. And now, on a 
regular basis, they are expanding the credit box to allow 
riskier and riskier mortgages, which is simply a recipe for 
those mortgages to eventually fail, and for the taxpayer to 
have to step in on a large scale.
    Mr. Steil. Let's dig in on that deeper, because what we 
have seen over the past 2 years in the one-party Democratic 
control is aggressive new government spending, $6.8 trillion in 
new government spending on top of the current operations of the 
Federal Government. This reckless spending is, I think, one of 
the key drivers of the inflation we see. We also have a war on 
energy. We have labor policies that need to be reformed.
    But all of that piling in together is, at the same time, 
the Federal Reserve with blunt instruments of raising interest 
rates is trying to hit the brakes, while the fiscal policy 
coming out of Congress is exacerbating a problem that we are 
facing right now. On top of that, the Federal Reserve is 
engaged in quantitative tightening, pulling liquidity out of 
the market.
    How do you think that the quantitative tightening policies 
that the Fed has indicated they are planning to continue are 
going to have in particular as it relates to the housing 
market?
    Mr. Holtz-Eakin. I don't think we know the magnitude. We 
have never done quantitative tightening, so this is 
unprecedented, and I can't give you an interest rate 
equivalent.
    Mr. Steil. Right.
    Mr. Holtz-Eakin. But directionally, it is pretty clear that 
there will be other things the same, not as much mortgage 
capital available. To get that capital to have to offer higher 
returns means higher mortgages rights for everyone else. So, 
this will disproportionately hit the housing sector compared to 
the overall rate increases.
    Mr. Steil. At what point do you think we will have 
additional clarity as to the impact that these quantitative 
tightening policies are going to have? I agree with you, we saw 
quantitative easing one time in history. Now, we are unwinding 
this. The Ph.D. economists will say, ``Is it the reverse of 
quantitative easing?'' It seems like that is a rational 
analysis. We are seeing some directional indications here.
    What should policymakers be looking at as it relates to the 
interest rates, as it relates to housing as this quantitative 
tightening process continues down the road?
    Mr. Holtz-Eakin. Roughly speaking, you do rate increases, 
and you try to look at the impact on real economic activity, 
particularly business spending, Capital Expenditure (CapEx), 
things that would be indicators of a potential for a downturn. 
That is a general phenomenon. Compare that to the impact on the 
real economic activity, the home building and apartment 
building that goes on in the housing sector, and how quickly 
the ladder goes down and how much more deeply it goes down 
tells you the QT impact.
    Mr. Steil. Thank you very much. I appreciate your testimony 
here today.
    I look forward to 1 month and 2 days from today when we are 
going to be able to put a check on some of the reckless 
spending.
    Mr. Chairman, I yield back.
    Mr. Green. The gentleman yields back.
    The gentlewoman from Pennsylvania, Ms. Dean, is now 
recognized for 5 minutes.
    Ms. Dean. Thank you, Mr. Chairman. And I thank all of our 
witnesses for being here today. I hope you will excuse my 
absence. I think you know that we are involved in a 
reorganizational set of meetings as well, but I wanted to be 
sure to get here.
    I especially want to thank you, Mrs. Eaddy, for sharing 
your personal story with us today. I am sorry for what you and 
your husband have been through, but that is kind of hollow 
words. It is up to us to do better and to do more. And that is 
why I am so glad that our chairwoman focuses on affordable 
housing and homelessness as much as she does.
    It matters in my district. I have a district--from suburban 
Philadelphia out into rural Pennsylvania--where we struggle 
with homelessness and affordable housing. And so, I am very sad 
but pleased to have read your testimony.
    I want to follow up on something that Mr. Barr asked you 
earlier, and that it is the benefit of supportive services for 
people suffering from homelessness. You indicated that 
supportive services would be helpful for many, and I agree. But 
I want to follow up on a point that you alluded to in your 
testimony.
    Can you explain the importance of having stable, safe 
housing first as the foundation for your life, in order to make 
other improvements in your life? That is, can you talk about 
how harmful it can be to couple a demand for supportive 
services at the same time as trying to simply get safe housing? 
Why is it for you that it is foundational that first, you have 
to get in a safe place?
    Ms. Eaddy. Thank you for the question. To me, it brings 
stability for us. Just having a safe place to go to every 
single day without being worried about being harmed while we 
are homeless is something that I really just--it bothers me 
every single second of the day. The stability to me in having 
safe affordable housing, being able to be inside and know that 
we are safe, and that will give us more time.
    Because in the midst of all of this, my husband had a 
mental breakdown. To me, right there, him worrying that he has 
to progressively all the time go to work, go to work, but it is 
not enough money. Go to work, go to work, and maybe we will 
make enough to be able to afford the rent. So just being his 
back to try to make--not push him to, work harder, husband, you 
know what I am saying? But maybe we can do a little bit more. 
Maybe you can work a couple more hours, and then we can put the 
money towards this, to make us be more stable to get a place.
    To me, that is stability. Just having somewhere to live 
will make us be more stable, to make us be able to wake up 
every day and feel safe, and not have to worry about being 
outside. Now, we can get back into the life of things because 
we have a little bit of stability.
    Ms. Dean. Thank you for that real clarity. And you are 
absolutely right, it is not just a tax on your physical health, 
but what a challenge to mental health for any one of us. As you 
said, you don't know how good it is to have a knob to turn 
every evening to enter a space where you are safe and not in 
danger until it is taken away from you. You are absolutely 
right.
    You also said being homeless steals your identity. Well, it 
hasn't stolen yours, nor your husband's. So, I thank you for 
being here today.
    I wanted to use that point to pivot to monetary policy. I 
just have a quick question for two of our economists, and it is 
really about the Fed and overcorrection for inflation.
    I wonder, Dr. Zandi and Mr. Mitchell, could you just 
comment on where you think the Fed should go this month and 
moving forward in terms of interest rates as it impacts people 
who are struggling to find housing?
    Mr. Mitchell. Absolutely. I would actually say that the Fed 
should put a pause to interest rate hikes immediately. And I 
would say that in part because, as we talk about the underlying 
factors of inflation right now, none of those things are the 
things that the Fed can address by raising interest rates. As 
other people have mentioned, it is a blunt tool. And at this 
moment, it does more harm than good.
    Ms. Dean. I agree with you there, Mr. Mitchell.
    And quickly, Dr. Zandi?
    Mr. Zandi. I think the Federal Reserve has to lay out a 
path for another percentage point of rate increases. We are 
close to 4 percent on the funds rate, and we will be close to 5 
by the spring. That is what is embedded in stock prices. That 
is what is embedded in the current mortgage rate. That is what 
is embedded in the value of the dollar. They need to execute on 
that, and then they need to stop and take a look around and 
make sure that inflation is coming in and that everything is 
sticking to the script. But I think they need to follow through 
on the rate increases that they articulated they will do. If 
they don't, then we do run the risk of seeing inflation become 
more entrenched, embedded, and more of a problem.
    Ms. Dean. Thank you. And I know my time has expired.
    Mr. Green. The gentlelady's time has expired.
    The gentleman from Illinois, Mr. Garcia, is now recognized 
for 5 minutes.
    Mr. Garcia of Illinois. Thank you, Mr. Chairman. And, of 
course, I thank all of the witnesses for joining us today to 
discuss this crucial and timely topic.
    I represent a working-class district, a majority Latino 
community in Chicagoland. Most of my constituents are renters 
who have been suffering from rising rent costs over the last 5 
years. Rents have increased by almost 40 percent nationally, 
outpacing wage increases. Nearly half of renters, and over 80 
percent of extremely low-income renters pay more than 30 
percent of their income toward rent. And this crisis will only 
get worse if Congress does not act to address it.
    There are many reasons for the housing affordability 
crisis. I want to zoom in on one big one that doesn't get 
enough attention: Corporate greed. I recently led a letter 
asking the FTC and the DOJ to investigate RealPage for 
anticompetitive practices. RealPage is a multinational company 
that provides landlords with rent-setting software. It 
advertises that its customers, ``outperform the market by 3 to 
7 percent.'' And in some cases, recommends its clients accept 
lower occupancy rates in order to raise rents and make more 
money.
    Mr. Mitchell, can you tell us a bit about RealPage and its 
rent-setting software, YieldStar?
    Mr. Mitchell. Absolutely. As you mentioned, this is a real 
estate tech company that created a proprietary software called 
YieldStar. It takes rental market data from various firms, 
inputs it into this model, and then it spits out pricing 
strategies.
    I think what is most alarming here, and what is the reason 
that RealPage is now under a DOJ investigation, is that the 
software is possibly facilitating collusion in the rental 
market amongst landlords who, in theory, are supposed to be 
competitors. And this only exacerbates what is already a gross 
imbalance of power between landlords and renters.
    And I think the other important thing here to know about 
RealPage is that it acquired its own major competitor back in 
2017 in the space, giving it a lot of market concentration and 
further exacerbating the range of landlords that are using this 
software in any given locality.
    Mr. Garcia of Illinois. Yes. Thank you. And what impact do 
you think RealPage is having on the rental market, and what do 
you believe that lawmakers should do in response, if anything?
    Mr. Mitchell. I think you have lifted up some of the 
important things here. It eliminates the interaction between 
landlord and tenant. It takes, so to speak, the pricing 
decision offsite. It encourages landlords to prioritize high 
rents and profits over, say, reduced turnover or renter 
stability. And in certain instances, as you mentioned, it is 
taking unit stock offline to achieve higher profits. And in 
these instances, I think it is absolutely imperative that the 
relevant regulatory bodies are investigating to make sure that 
antitrust laws, profiteering laws are being adhered to, and 
that renters aren't at the mercy of colluding landlords.
    Mr. Garcia of Illinois. RealPage, I want to add, is owned 
by a private equity firm. And many of RealPage's clients are 
backed by private equity firms.
    What impact is private equity having on housing 
affordability, and what could Congress do about it?
    Mr. Mitchell. I think there are a few directions we can go 
here. First and foremost, when we talk about who owns rental 
property in this country, we oftentimes think of mom-and-pop 
landlords. And while that is true--and when we think of the 
actual properties, we think about units, we are seeing that 
institutional investors own a growing and now a majority share.
    In 2015, it was about 50/50 in terms of units between 
individual investors and institutional investors. In 2021, the 
latest data that we have, it is actually about two-thirds now 
institutional investors. And as that becomes the case, I think 
the super-charges trends that we have seen over the last few 
years in terms of the continued shift and the heightened 
prioritization of profits and shareholder return, and we can 
see this dynamic the earnings calls where large corporate 
landlords, many of them backed by private equity, are laser-
focused on taking every penny possible from renters and driving 
returns with no regard for the broader health or the stability 
in the broader rental market. So, I think that is really 
important to focus and understand.
    Mr. Garcia of Illinois. Thank you so much.
    I wanted to just acknowledge the presence of Ms. Eaddy. 
Thank you for your powerful testimony and for being with us 
today. Homeless service providers are on the front lines of 
ensuring that people receive support when they need it. These 
providers are often overworked, underpaid, and understaffed, 
which means that sometimes people don't get the help that they 
need. And your testimony here compels us to really think about 
what kind of services should be provided and funded. Thank you.
    Mr. Chairman, I yield back.
    Mr. Green. The gentleman's time has expired.
    The gentlewoman from Michigan, Ms. Tlaib, is now recognized 
for 5 minutes.
    Ms. Tlaib. Thank you so much, Mr. Chairman. And thank you 
to Ms. Margaret Eaddy for telling us what needs to be said, 
which is we need to move with the urgency that is needed for 
this crisis.
    I am also incredibly grateful--and Mr. Chairman knows 
this--that Chairwoman Waters from day one, from the first day I 
entered into Congress, has said that housing is infrastructure. 
And she reminds us of that every single day. So, I am really 
grateful for this hearing.
    I represent Michigan's 13th Congressional District. More 
than half of the owner-occupied single-family homes in my 
community are valued at less than $100,000. Our State lost more 
Black homeownership than any other State in the country over 
the last 2 decades.
    I know the Urban Institute has found that it is actually 
more difficult for borrowers to get an FHA mortgage for a home 
valued at less than $100,000 than for a loan larger than 
$100,000.
    Meanwhile, the Urban Institute has also found that 3 in 4 
homes priced at or below $100,000 are purchased by all-cash 
buyers and investors. So countless homebuyers, particularly 
first-time homebuyers, are being locked out of homeownership in 
the middle class. And this is hardly a problem exclusive to 
urban communities like the City of Detroit; the southeast, 
Texas, and the Great Plains are also seeing a huge impact.
    I worked with Chairwoman Waters and, of course, my amazing 
colleague, Representative Kaptur, on creating the Community 
Restoration and Revitalization Fund and the Build Back Better 
Act that directed Federal funds towards reinvestment in old or 
abandoned housing stock across the country and rehabbing them 
into affordable rental units.
    Ms. Bailey, can you talk a little bit about how the Federal 
down payment assistance or the creation of a Community 
Restoration and Revitalization Fund helps bridge the 
homeownership gap and reverse these trends?
    Ms. Bailey. Thank you for the question. Indeed, the program 
would establish a competitive grant program at HUD to support 
the creation of affordable housing and community redevelopment 
in neighborhoods that are experiencing blight.
    We talked earlier about how our communities, including 
communities like yours in Detroit, have not recovered from the 
Great Recession. This is why the GSE's Equitable Housing 
Finance Plans are critically important, because what they are 
doing is providing liquidity for small-dollar mortgage 
programs, those pilots that would allow people in your 
communities to get access to mortgage loans that are less than 
$100,000, the loans that our large-scale lenders are refusing 
to make despite getting deposits for reinsurance.
    We need these Equitable Housing Finance programs because 
whole regions of the country are credit-starved. We need to do 
everything that we can to make sure those Equitable Housing 
Finance Plans pass. But we also need the Build Back Better Act. 
It is a compromise; $150 billion of targeted assistance, 
including the Community Restoration and Revitalization Fund, 
would bring much-needed resources into communities all over the 
country that want to have a stake in an equitable recovery and 
for whom housing continues to be a challenge. It would generate 
thousands of jobs. So, marrying supply and demand together is 
the solution.
    Ms. Tlaib. Ms. Bailey, Mr. Mitchell, Mr. Zandi, do you have 
any other recommendations in regards to how I can help so many 
of my families--we are talking about particularly, homes valued 
less than $100,000. What are some policy recommendations that 
you may have for me, my colleagues, and the Administration?
    Ms. Bailey. First, continuing to make sure the Equitable 
Housing and Finance programs are implemented. The GSEs have to 
do them every 3 years. There needs to be accountability for 
those plans. We need to know how they are actually delivering. 
They have broad public interest mandates for the protections 
that they get to make sure credit availability is available in 
every market, not only Fannie Mae and Freddie Mac, but also the 
Federal Home Loan Banks.
    Ms. Tlaib. Yes, great. Mr. Zandi, really quickly, are you 
concerned about the possibility that the Fed's monetary policy 
will lead to an even larger homebuilding gap, increasing our 
shortage of housing and worsening some of the issues and crises 
that my families are going through in the 13th District?
    Mr. Zandi. Yes, it will. The higher rates obviously push 
people into--they can't buy a home because they can't afford 
it. So, they go into a rental property, which jacks up rents, 
all else being equal. It also affects lending rates for 
construction and development. And that affects the ability of 
multifamily developers to put up property. You have more 
demand, and you have less supply, so that pushes up rents, and, 
of course, that hurts everybody. It hurts the renters. They 
can't--
    Ms. Tlaib. Absolutely. I really think the Fed is taking, 
literally, a sledgehammer to the demand with so many sectors 
working on this issue, sectors of our economy, but especially 
housing.
    I really appreciate this hearing, and I yield back.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from Texas, Ms. Garcia, who is also the 
Vice Chair of our Subcommittee on Diversity and Inclusion, is 
now recognized for 5 minutes.
    Ms. Garcia of Texas. Thank you, Madam Chairwoman. And to 
all of the witnesses, I apologize that I was not here to hear 
your testimony. But like Ms. Dean mentioned earlier, we were 
all involved in some organizational leadership elections this 
morning and were called away.
    But I am just so glad we are doing this hearing because I, 
frankly, think that we can't really talk enough about the need 
for affordable housing, not just in the cities that you have 
mentioned, but really across America.
    And I want to first start by thanking you, Ms. Eaddy, for 
being here today, for having the courage, having the activism, 
and for having the voice that you have to speak up and work on 
these issues for so many people across America.
    I can tell you that I have been working on this issue since 
I was a young legal aid lawyer. I represented the Houston 
Welfare Rights Organization. And one of the planks we had then, 
and it continues today, is getting more affordable public 
housing. We focused a lot on that. And it was always helpful 
when we had clients like you who were active and engaged and 
could speak for others. So, thank you for being that voice. And 
please know that there are many of us in this room and others 
who support you and hear you and will continue our fight. And, 
of course, you can't find a better champion for all of that 
than our chairwoman, who has pushed and pushed on this issue 
for years. And the fight will continue, I am sure.
    I want to start with you, Ms. Bailey. I am from a Latino 
district, 77-percent Latino. And Latinos were probably the only 
ethnic sector that had an increased homeownership rate this 
last year, but it doesn't mean we are there yet either. And I 
think some of the issues for us are compounded when you include 
the unauthorized immigrant in the mix of Latino, which adds a 
different subset of issues, with some providers and landlords 
not wanting to lease or rent to people who are unauthorized in 
this country.
    Given that Latinos are positioned to be the largest group 
of homebuyers in the nation, I am concerned about a lot of the 
barriers to housing affordability that will block their 
process. Because we will continue to grow, we are here to stay. 
Please share your perspective on the potential that interest 
hikes that will hinder the progress for homebuyers of color, 
and particularly the Latino community, and how can 
affordability challenges widen the racial gap?
    Ms. Bailey. Thank you much so much for the question. As you 
said, Latinos are going to play a major role in the mortgage 
market. Seven out of ten future buyers are going to be people 
of color, with Latinos accounting for a large majority of those 
buyers, along with African Americans and Asian Americans and 
Native communities.
    One of the things that we need to do is to make sure the 
very buyers that the future system depends on have access to 
targeted first-generation down payment assistance as provided 
in the Downpayment Toward Equity Act that has been a part of 
the House-passed Build Back Better Act.
    That targeting of down payment assistance helps to overcome 
one of the biggest barriers, which is the lack of down payment 
because families have not had equitable opportunities to build 
homeownership over intergenerational times.
    I like to say that today's renters are tomorrow's 
homeowners. So, we have to do everything for homeowners to make 
sure they have equitable housing opportunities, including 
making sure there is real support for an increase in vouchers, 
and that HUD gets the resources that it needs to effectively 
implement its programs, because HUD has been gutted and doesn't 
have proper staffing to do the fair housing--
    Ms. Garcia of Texas. Right. Particularly the last 
Administration.
    Ms. Bailey. Yes.
    Ms. Garcia of Texas. Recently, our only newspaper in 
Houston, the Houston Chronicle, published an article in 
September highlighting the impacts of inflation on rent prices, 
demonstrating that prices in Houston are becoming troublingly-
unaffordable. The average apartment rents in the City have 
increased by 12 percent since 2019, to an average of $1,300 per 
month.
    Can you speak about the ways that high rent cost can hinder 
homeownership, and what is an important tool for building 
wealth, especially for low-income renters?
    Ms. Bailey. They actually stop families from being able to 
save. But another thing that happens is that, in credit 
scoring, which is typically one of the underwriting criterias, 
our current credit score models don't even factor in positive 
rental payment history.
    What we need to do is to make sure those credit score 
models actually become more inclusive and factor in that 
positive history. Because when we look at things like positive 
rental payment history, we actually see that we can expand the 
credit box for the more than 8 million mortgage-ready Latino 
and African-American consumers who are ready to enter into the 
homeownership space.
    Ms. Garcia of Texas. Thank you. Madam Chairwoman, I yield 
back.
    Chairwoman Waters. Thank you.
    The gentleman from Massachusetts, Mr. Auchincloss, who is 
also the Vice Chair of the committee, is now recognized for 5 
minutes.
    Mr. Auchincloss. Thank you, Madam Chairwoman, for this 
hearing, and also for your commitment to affordable housing.
    Mrs. Eaddy, let me begin by applauding your testimony and 
thanking you for humanizing this issue. In your words, I hear 
echoes of the thousands of constituents in the Massachusetts 
Fourth District, southeastern Massachusetts and Greater Boston 
who are in panic mode on a daily basis. Our office is inundated 
with phone calls--from senior citizens, young families, and 
everyone in between--because we are in a crisis right now in 
Massachusetts. The cost of housing is our biggest problem. And 
safe and affordable and dignified housing is a human right.
    Ms. Bailey and Mr. Mitchell, I want to ask you both a 
question, a deliberately-challenging question. We have two 
different threads in our housing policy debate in this country. 
One thread is housing as investment, and a means of building 
wealth, and transferring wealth across generations. The other 
is housing as affordability. We want housing to be cheaper. The 
challenge is a good investment goes up in price over time, and 
an affordable product goes down in price over time.
    Can we have both of these conversations at the same time? 
Can we talk about housing as an investment, and can we talk 
about affordable housing and be talking about the same thing, 
or are they inherently intentioned?
    Ms. Bailey. Thank you for the question. We can walk and 
chew gum at the exact same time. We need to do both here. This 
is an opportunity to use housing as a fundamental right to 
really stimulate economic growth and grow the economy for 
everyone.
    Targeted investments like the Neighborhood Homes Investment 
Act, with inclusion of fair housing protections and oversight, 
will help us to build those 100,000 affordable units in the 
communities that we have left behind.
    Mr. Auchincloss. But let me challenge you on that. And, Mr. 
Mitchell, you can jump in here too. If we add a lot more supply 
to the market, which I think everybody on this panel agrees 
that we need to do, wouldn't you expect that the aggregate 
price of the product is going to go down, or at the very least 
not go up as much as it has previously and, hence, make it a 
worse investment for wealth-building and intergenerational 
wealth transfer?
    Ms. Bailey. If I may just say one thing, homeownership is 
important because it allows families to lock in their monthly 
housing expenses. That is something that we are not talking 
about.
    Mr. Auchincloss. Okay.
    Ms. Bailey. It means that your landlord can't, in the next 
year, cause your rent to increase. So, that is one of the 
things that we have to factor in and pull people in for.
    Mr. Mitchell. I think more broadly, when we talk about 
these sorts of investments, what it allows for is for broader 
economic growth. So, if we look at the kind of investments that 
were made over the course of the pandemic and the ensuing 
recovery, we have seen as a result one of the strongest 
economic recoveries at post-recession in modern history.
    Because of those investments, we are seeing jobs growing 
back, and wage growth for the first time for a lot of folks in 
many decades. And that enables us to then focus on increasing 
capacity and productive capacity moving into the future.
    Mr. Auchincloss. I want to add another dimension here. 
Maybe, it is not so much clearly about return on investment 
(ROI), it is about the inclusivity of economic growth, and the 
stability, to your point, Ms. Bailey, as well. I appreciate 
those answers. Thank you.
    Mr. Holtz-Eakin, let me close with you. I have here a 
quotation from one of my favorite publications, Strong Towns. 
And it says, ``What we need to do is to improve affordability 
as something dramatically different. We need to allow the next 
increment of housing as a right, everywhere. We need to remove 
barriers to doing small-scale in-fills that we can get a 
thousand small projects from incremental neighborhood-based 
developers that proceed with very little fuss and with no 
organized, mobilized opposition. We need to invite a different 
kind of developer into the game.''
    That sounds like organic, bottoms-up community-driven 
development with the next increment, not these mega, mixed-use 
projects but ones that are more entrepreneurial and more 
incremental.
    You had mentioned carrots and sticks that the Federal 
Government might be able to use to incent this kind of 
development. Say more about those in our final minute, and if 
you could, add a little bit about parking regulations too, 
which to me are the antithesis of housing affordability, 
because we subsidize places for cars while making places for 
humans more expensive?
    Mr. Holtz-Eakin. That is broadly another strategy on 
increasing supply. And it is a dramatically different strategy. 
And I don't see any reason why we should limit the strategies 
we contemplate. The question is, how do you get there? And 
there is no reason why any city or locality couldn't just do 
that.
    Mr. Auchincloss. Yes, there is. Because people like talking 
about more housing in abstract, and don't like talking about 
more housing next to them. I was a city councilor for 5 years. 
I have seen it.
    Mr. Holtz-Eakin. I am going to agree with you. I am just 
saying that either the community is going to agree somehow that 
we are going to take this different strategy, our reservations 
notwithstanding, and then pursue it. Or when we have the 
conversation on this, the Federal Government is somehow going 
to provide a carrot or a stick and say, you have to do it.
    Mr. Auchincloss. We are out of time here. I want to invite 
you but also everybody else on the panel who may be interested 
in responding in writing to what specific carrots and sticks 
the Federal Government might be able to use to incent the kind 
of development I described.
    And I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    Without objection, I ask unanimous consent to introduce the 
following letters for the record: A coalition letter from 12 
real estate industry organizations, including the National 
Association of Home Builders, and the National Association of 
REALTORS; a letter from the National Low-Income Housing 
Coalition; and a letter from the National Community 
Reinvestment Coalition, all in support of today's hearing and 
the need for robust, affordable housing investments.
    I would like to thank our distinguished witnesses for their 
testimony here today. And let me just include in this closing 
that I am so thankful that all of you are here today, and for 
the time that you have spent with us helping this Congress to 
understand the need for housing.
    And, Ms. Eaddy, I want to thank you for sharing with us 
what has been happening to you and your family. And even though 
we will not be in charge of this committee--I will be the 
ranking member, I do believe--we will not forget that you came 
here today. And we are going to have a budget. And we are going 
to be traveling, and I hope that we will get to see you, maybe 
in your hometown. I don't know. But I thank you so very much.
    And I thank all of our expert witnesses who are here today. 
This has been very important. This is the last housing hearing 
that I will be holding. And, the Members on the opposite side 
of the aisle have indicated interest. One said, ``I see you, I 
hear you.'' Well, we are going to see if that is really what 
was meant.
    And so again, I can't tell you how much I appreciate 
everyone who was here today.
    The Chair notes that some Members may have additional 
questions for these witnesses, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    With that, this hearing is adjourned.
    [Whereupon, at 1:41 p.m., the hearing was adjourned.]

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