[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]





                  HOUSING AFFORDABILITY: GOVERNMENTAL
                  BARRIERS AND MARKET-BASED SOLUTIONS

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

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON HOUSING
                             AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________


                            DECEMBER 6, 2023

                               __________


       Printed for the use of the Committee on Financial Services

                           Serial No. 118-61





                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]






                               ______
                                 

                 U.S. GOVERNMENT PUBLISHING OFFICE

55-205 PDF                WASHINGTON : 2024










                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas, Vice          EMANUEL CLEAVER, Missouri
    Chairman                         JIM A. HIMES, Connecticut
TOM EMMER, Minnesota                 BILL FOSTER, Illinois
BARRY LOUDERMILK, Georgia            JOYCE BEATTY, Ohio
ALEXANDER X. MOONEY, West Virginia   JUAN VARGAS, California
WARREN DAVIDSON, Ohio                JOSH GOTTHEIMER, New Jersey
JOHN ROSE, Tennessee                 VICENTE GONZALEZ, Texas
BRYAN STEIL, Wisconsin               SEAN CASTEN, Illinois
WILLIAM TIMMONS, South Carolina      AYANNA PRESSLEY, Massachusetts
RALPH NORMAN, South Carolina         STEVEN HORSFORD, Nevada
DAN MEUSER, Pennsylvania             RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
ANDREW GARBARINO, New York           SYLVIA GARCIA, Texas
YOUNG KIM, California                NIKEMA WILLIAMS, Georgia
BYRON DONALDS, Florida               WILEY NICKEL, North Carolina
MIKE FLOOD, Nebraska                 BRITTANY PETTERSEN, Colorado
MIKE LAWLER, New York
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director












                 Subcommittee on Housing and Insurance

                    WARREN DAVIDSON, Ohio, Chairman

BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri, Ranking 
BLAINE LUETKEMEYER, Missouri             Member
RALPH NORMAN, South Carolina         NYDIA M. VELAZQUEZ, New York
SCOTT FITZGERALD, Wisconsin          RASHIDA TLAIB, Michigan
ANDREW GARBARINO, New York           RITCHIE TORRES, New York
MIKE FLOOD, Nebraska                 AYANNA PRESSLEY, Massachusetts
MIKE LAWLER, New York                SYLVIA GARCIA, Texas
MONICA DE LA CRUZ, Texas, Vice       NIKEMA WILLIAMS, Georgia
    Chairwoman                       STEVEN HORSFORD, Nevada
ERIN HOUCHIN, Indiana                BRITTANY PETTERSEN, Colorado










                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    December 6, 2023.............................................     1
Appendix:
    December 6, 2023.............................................    45

                               WITNESSES
                      Wednesday, December 6, 2023

Appleton, Seth D. President, U.S. Mortgage Insurers (USMI).......     4
Hamilton, Emily, Senior Research Fellow, Urbanity Project, the 
  Mercatus Center, George Mason University.......................     5
Michel, Norbert J., Vice President and Director, Center for 
  Monetary and Financial Alternatives, Cato Institute............     7
Royster, Arianna, President, Borger Residential, on behalf of the 
  National Apartment Association and the National Multifamily 
  Housing Council................................................     9
Yentel, Diane, President and CEO, National Low Income Housing 
  Coalition (NLIHC)..............................................    10

                                APPENDIX

Prepared statements:
    Appleton, Seth D.............................................    46
    Hamilton, Emily..............................................    56
    Michel, Norbert J............................................    59
    Royster, Arianna.............................................    73
    Yentel, Diane................................................    88

              Additional Material Submitted for the Record

Davidson, Hon. Warren:
    Written statement of Americans for Prosperity................   110
    Written statement of the Credit Union National Association 
      (CUNA) and the National Association of Federally-Insured 
      Credit Unions (NAFCU)......................................   112
    Written statement of the National Association of Residential 
      Property Managers (NARPM)..................................   115
    Written statement of various undersigned housing 
      organizations..............................................   118
    Written statement of the YIMBY Coalition.....................   120
Horsford, Hon. Steven:
    Poster, ``Days in Session: 118th Congress''..................   122
    Various housing posters displayed during the hearing.........   123
Appleton, Seth D.:
    Written responses to questions for the record from 
      Representative Garcia......................................   127
    Written responses to questions for the record from 
      Representative Waters......................................   129
Hamilton, Emily:
    Written responses to questions for the record from 
      Representative Garcia......................................   130
    Written responses to questions for the record from 
      Representative Waters......................................   133
Royster, Arianna:
    Written responses to questions for the record from 
      Representative Waters......................................   135
Yentel, Diane:
    Written responses to questions for the record from 
      Representative Garcia......................................   136
    Written responses to questions for the record from 
      Representative Waters......................................   137









 
                  HOUSING AFFORDABILITY: GOVERNMENTAL
                  BARRIERS AND MARKET-BASED SOLUTIONS

                              ----------                              


                      Wednesday, December 6, 2023

             U.S. House of Representatives,
                            Subcommittee on Housing
                                     and Insurance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:01 a.m., in 
room 2128, Rayburn House Office Building, Hon. Warren Davidson 
[chairman of the subcommittee] presiding.
    Members present: Representatives Davidson, Posey, 
Luetkemeyer, Norman, Fitzgerald, Garbarino, Flood, Lawler, De 
La Cruz, Houchin; Velazquez, Tlaib, Torres, Pressley, Williams 
of Georgia, Horsford, and Pettersen.
    Ex officio present: Representative Waters.
    Also present: Representatives Rose and Vargas.
    Chairman Davidson. The Subcommittee on Housing and 
Insurance will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Today's hearing is entitled, ``Housing Affordability: 
Governmental Barriers and Market-Based Solutions.''
    I now recognize myself for 5 minutes to give an opening 
statement. Today, this subcommittee will hold a hearing to 
discuss the lack of affordable housing in many communities 
across the country. In particular, we will examine governmental 
barriers, as well as market-based solutions to bring down the 
cost of housing. Americans spend more on housing than any other 
household expense, historically representing 33 percent of the 
family's budget . Families in many areas of the country would 
love to get back to that level. The rise in both home prices 
and rents has far exceeded the rate of wage growth.
    In Cincinnati, Ohio, a city once considered affordable, the 
median home price is now $270,000, which is approaching 4 times 
the annual median household income. And such unaffordability is 
spreading far beyond parts of the country known for their high 
cost of living, like New York, San Francisco, and Washington, 
D.C. Nationwide, median home prices are now nearly 6 times the 
median household income, where historically, the advice was to 
stay within 3 times of it. So, this is maybe one of the most 
emblematic markers on the lack of affordable housing.
    That is why the committee held multiple affordability 
hearings last spring on President Biden's misguided policy of 
increasing mortgage costs on creditworthy borrowers. That idea 
was an insult to affordability. The House responded by passing 
our Middle Class Borrower Protection Act to eliminate harmful 
costs, alhough the Senate has so far failed to act.
    The rental market is facing similar challenges. Renters are 
now more cost-burdened than they have been in over 2 decades. 
While rents have gone up in some areas by double-digit growth, 
median income for renter households actually went down between 
2019 and 2021. For many, housing is becoming unattainable 
across the country. One in three young adults, aged 18 to 34, 
still live with parents. This impacts their ability to start a 
family, build wealth, and contribute more intentionally to the 
national economy.
    And seniors, with fixed incomes and the burden of 
increasing healthcare costs, are even more cost-burdened than 
ever when it comes to housing. In rural areas where land is 
abundant, price pressures still exist, such as cost increases 
to rent and build manufactured or modular homes.
    As we confront these affordability challenges, what seems 
to get left out of conversation is that all of the expansive 
efforts of government have not solved this problem. In fact, 
they have added to it. The solutions we need are market-based 
solutions where we remove government barriers to the 
construction of housing and encourage greater private sector 
investment in housing.
    Of course, many of my colleagues, on the other side of the 
aisle in particular, will likely see things differently and 
suggest that we have more government, more rules, and more 
spending. Maybe, that is their measure of success. I hope we 
focus on affordability. These solutions have been pushed for 
years and interestingly, the same affordability they decry 
continues to get worse. So not only have those policies failed, 
but it seems the Biden Administration wants to avoid 
congressional accountability for the failure of their policies 
in oversight.
    Case in point, for almost a year now, the committee has 
requested that Housing and Urban Development Secretary Marcia 
Fudge appear to discuss the Biden Administration's housing 
affordability plan. In fact, since May, the committee has 
offered at least every month that the Secretary make an 
appearance here, only to have her repeatedly decline to testify 
or outright refuse to respond to numerous requests. Silence is 
a poor response to a crisis. The American people deserve 
greater transparency in how their government operates, 
especially when it has do with their ability to afford housing. 
Ensuring accountability is one of the fundamental purposes of 
this committee, and I hope that the Secretary will finally 
agree to appear before our committee next year.
    In the meantime, even without the Administration's input, 
the committee will continue to explore how government policies 
are contributing to the high cost of housing, and what private 
sector efforts can do to address this critical issue for those 
most in need.
    I yield back the balance of my time. And I now recognize 
the acting ranking member of the subcommittee, Ms. Pressley 
from Massachusetts, for 4 minutes for an opening statement.
    Ms. Pressley. Thank you.
    It shouldn't be news to anyone that we are in a housing 
crisis. Demand for housing is far outpacing supply. As a 
result, millions of Americans in urban, suburban, and rural 
neighborhoods are finding shelter to be increasingly 
unaffordable.
    Prospective homebuyers are facing record-high home prices, 
and millions of renter households are cost-burdened, spending 
elevated amounts of income on housing. Several factors 
influence the supply of affordable housing. Democrats and 
Republicans agree about the need to address State and local 
barriers to increasing home construction, but that is not 
enough.
    The Joint Center for Housing Studies at Harvard University 
testified before Congress that even if measures such as zoning 
reform and land use policies are adopted, they will not be 
sufficient to bring down the cost of housing levels to within 
reach of the lowest-income Americans.
    Central to the question of how to address the affordable 
housing crisis is answering the question: Affordable to whom? 
And to close the affordable housing gap for lower-income 
households, there needs to be assistance for both development 
and rental income over time. To put this clearly, expanded 
public subsidies will be needed to increase and preserve access 
to affordable housing for millions of Americans.
    I believe housing is infrastructure. We must adequately 
support and fund Federal programs that have been successful in 
expanding affordable housing access. It is vital to continue to 
strengthen and improve others. This includes federally-
subsidized housing. I also hear from my constituents in the 
Massachusetts Seventh District, and across Massachusetts, that 
a quarter of all residents spend half of their income or more 
on housing. Boston is now the second-most expensive city in the 
country to rent; the median rent for a one-bedroom apartment is 
just over $3,000. In East Boston, between 2011 and 2021, Warren 
Group data showed that the cost of a single-family home shot up 
226 percent, the sharpest hike of any Boston neighborhood.
    So, I hope that today we can have an honest conversation 
about the affordable housing crisis and the extent to which 
public, private, and public/private solutions are adequate to 
address these challenges. And I look forward to hearing from 
our witnesses today.
    I yield back the balance of my time.
    Chairman Davidson. Thank you.
    Today, we welcome the testimony of: Mr. Seth Appleton, the 
president of U.S. Mortgage Insurers; Dr. Emily Hamilton, a 
senior research fellow at the Urbanity Project at the Mercatus 
Center at George Mason University; Mr. Norbert Michel, the vice 
president and director of the Center for Monetary and Financial 
Alternatives at the Cato Institute; Ms. Arianna Royster, the 
president of Borger Residential, testifying today on behalf of 
the National Apartment Association and the National Multifamily 
Housing Council; and Ms. Diane Yentel, the president and CEO of 
the National Low Income Housing Coalition.
    We thank you all for taking the time to be here. You will 
each be recognized for 5 minutes for an oral summary of your 
testimony. And without objection, your written statements will 
be made a part of the record.
    Mr. Appleton, you are now recognized for 5 minutes to give 
your oral remarks.

    STATEMENT OF SETH D. APPLETON, PRESIDENT, U.S. MORTGAGE 
                        INSURERS (USMI)

    Mr. Appleton. Thank you. Chairman Davidson, Ranking Member 
Pressley, thank you for inviting me to testify today. It is 
also always good to see my longtime former boss, Mr. 
Luetkemeyer, on the subcommittee. Since leaving his staff, I 
have served in a variety of housing policy roles, including as 
Assistant Secretary of HUD, and now, as president of U.S. 
Mortgage Insurers (USMI).
    USMI's member companies are in the market every day 
deploying private capital to provide access to low-down-payment 
mortgage financing primarily to first-time and low- and 
moderate-income buyers, while simultaneously protecting 
taxpayers from credit risk. While we cannot solve for the 
scarcity of affordable housing supply or high interest rates, 
we can solve for what has been the primary impediment for many 
borrowers: the need for a large cash down payment.
    With private mortgage insurance (MI), homebuyers can put 
down as little as 3 percent and begin to build 
intergenerational wealth as homeowners. Private mortgage 
insurers are critical partners to the Government-Sponsored 
Enterprises (GSEs), lenders, State housing finance agencies, 
and others, on initiatives to sustainably expand access to 
homeownership.
    Today, more than $1.5 trillion in mortgages are backed by 
private MI, and while private MI provides borrowers access to 
affordable credit, it also protects lenders, the GSEs, and 
taxpayers from credit risk by deploying private capital in a 
first-loss position. One prominent example is the way private 
MI has helped de-risk the GSEs. Since they entered 
conservatorship, private mortgage insurers have paid nearly $60 
billion in claims. And every dollar paid by a private mortgage 
insurer is a dollar that neither the GSEs nor the taxpayers who 
stand behind them need to pay.
    Analysis from the Urban Institute found that the loss 
severity of GSE loans without private MI was 11.2 percent 
higher than the severity of losses for loans with it. To that 
end, if Congress takes up GSE reform, maintaining the 
congressional charter provision related to private MI and 
establishing standard coverage as a requirement would ensure 
private capital can continue to promote safety and soundness in 
the system.
    Now, I would like to talk briefly about additional steps 
policymakers could take to ensure that private MI can play an 
even more impactful role to support affordability. While 
conventional mortgages backed by private MI have been the most-
utilized option for low-down-payment borrowers since 2018, 
several U.S. Government agencies directly insure or guarantee 
low-down-payment loans, most notably, the Federal Housing 
Administration (FHA).
    USMI recognizes the targeted role of the FHA and the 
presence and depth of its taxpayer-funded backstop. It is an 
important complement to the work of private mortgage insurers, 
particularly in serving those who may not have access to the 
conventional market. But as a government agency fully backed by 
taxpayers, FHA's cost of capital and required capital levels 
are significantly different than those of the private sector. 
Policymakers should promote a clear, consistent, and 
coordinated approach to housing finance that prevents undue 
competition between government programs and the private sector. 
When private capital is needlessly crowded out of the 
marketplace by government-backed programs, it leads to 
increased risk for the taxpayer.
    In the conventional market, GSE pilot programs can also 
shift risks to the taxpayers that would otherwise be borne by 
private capital. USMI was pleased when FHA finalized a rule on 
prior approval of Enterprise products, in which members of this 
committee took an interest. We believe faithful implementation 
of this rule will result in proper oversight of GSE pilots in a 
more transparent and objective process for approving new 
products and activities.
    One other area of concern is the recently-proposed Basel 
III Endgame regulation. Consumer groups mortgage market 
participants, and members of the committee have rightly 
observed that the proposal would negatively impact the ability 
of certain banks to originate and hold high loan-to-value ratio 
mortgages in a portfolio.
    U.S. bank capital rules should recognize the risk-
mitigating benefits of private MI, and promote a level playing 
field among the GSE's, government programs, and bank portfolio 
executions.
    One other action Congress could take, although outside of 
this committee's jurisdiction, is to restore and make permanent 
the individual income tax deduction for MI premiums that was 
available for tax years 2007 to 2021. USMI thanks Congressmen 
Buchanan and Panetta for introducing legislation to do just 
that, the Middle Class Mortgage Insurance Premium Act, of which 
several members of this committee are cosponsors.
    I would also be remiss if I didn't also thank the members 
of the committee for their work to ensure that the SEC's 
recently-finalized conflict-of-interest rule did not impair the 
reinsurance transactions that USMI's members use to manage risk 
in capital. We greatly appreciate your engagement on this 
issue, too.
    To close, USMI encourages policymakers to continue to 
recognize the important role private MI plays for low-down-
payment homebuyers, the protection it affords to lenders, and 
the stability it contributes to the overall mortgage finance 
system.
    Thank you.
    [The prepared statement of Mr. Appleton can be found on 
page 46 of the appendix.]
    Chairman Davidson. Thank you, Mr. Appleton.
    Dr. Hamilton, you are now recognized for 5 minutes to give 
your oral remarks.

 STATEMENT OF EMILY HAMILTON, SENIOR RESEARCH FELLOW, URBANITY 
    PROJECT, THE MERCATUS CENTER AT GEORGE MASON UNIVERSITY

    Ms. Hamilton. Thank you, Chairman Davidson, Ranking Member 
Pressley, and members of the subcommittee.
    I am Emily Hamilton, a senior research fellow at the 
Mercatus Center at George Mason University, where I am co-
director of the Urbanity Project.
    Local governments have imposed numerous limits on what 
kinds of housing can be built and where. Zoning rules, 
including bans on multifamily housing, restrictions on 
manufactured housing, and requirements for minimum lot size 
limit how much housing the market can provide, and drive up the 
price of housing that does get built. These rules are 
contributing to deteriorating affordability, particularly for 
households that rent. While the share of households that rent 
has held quite steady since the 1960s, the share of income the 
median renter spends on housing has increased by more than 25 
percent since then.
    Private sector homebuilders can play the primary role in 
addressing this growing affordability problem, but only with 
zoning out of the way. I will provide three examples of places 
that have rolled back land use restrictions making it feasible 
to build more housing at lower prices: first, minimum lot size 
reduction in Houston; second, multifamily construction through 
transit-oriented development in the Washington, D.C., region; 
and third, legalization of accessory dwelling units (ADUs) in 
California.
    First, reducing minimum lot size requirements in Houston. 
In 1998, Houston policymakers reduced minimum lot size 
requirements from 5,000 square feet down to 1,400 square feet 
within the City's Inner Loop. Houston's reform set off a boom 
in small-lot, single-family construction. Based on success 
within the Inner Loop, policymakers expanded this reform to 
cover the entire City in 2013, and nearly 80,000 small-lot 
houses have been built since then.
    The median house price in Houston is lower than the 
national median, despite decades of higher population and 
economic growth than in the country as a whole. And that is, in 
part, due to this small construction.
    Second, allowing transit-oriented development in the 
Washington, D.C., region. I will be the first to say that the 
D.C. region has plenty of opportunities to reduce barriers to 
new housing construction. However, relative to most other high-
income coastal regions, here we excel in permitting multifamily 
construction, particularly along transit corridors.
    Beginning in the 1960s, officials in Arlington County, 
Virginia, began planning for multifamily construction in areas 
that were originally developed with low-rise commercial 
buildings. In part based on Arlington's success, policymakers 
in Montgomery County, Maryland, and Fairfax County, Virginia, 
have also embraced transit-oriented development in more limited 
areas. D.C. has followed suit, allowing new neighborhoods to be 
built in formerly industrial areas like NoMa and the Navy Yard.
    Among the regions where many of the country's highest-
paying jobs are located, including Boston, Los Angeles, New 
York, San Francisco, Seattle and Washington, Washington has the 
lowest median house price. And one reason is because it permits 
multifamily housing at double or more the rates of Boston, Los 
Angeles, New York, and San Francisco.
    And third, legalizing accessory dwelling units (ADUs) in 
California. Given the growing housing supply and affordability 
problems Americans are facing, State policymakers are beginning 
to set limits on localities' authority to curb housing 
construction. California, where these challenges are the most 
dire, has led the way. The State has been particularly 
successful in legalizing accessory dwelling units. These are 
typically small apartments located at the site of a single-
family house. In some parts of the State, most notably Los 
Angeles, ADU construction drastically accelerated following 
these reforms in 2017. Today, one in four residential permits 
in the City of Los Angeles is an ADU.
    To wrap up, local zoning rules are a key contributor to the 
U.S. housing affordability challenges. As I have shown, zoning 
rules limit housing construction, especially relatively low-
cost housing construction. Examples from across the country 
show that where policymakers have lowered these barriers, 
housing construction has increased. Places that are more open 
to housing construction see improved affordability compared to 
their peers with more barriers to new housing. The private 
market can improve access to housing and reduce house prices 
when and where it is allowed to do so.
    [The prepared statement of Dr. Hamilton can be found on 
page 56 of the appendix.]
    Chairman Davidson. Thank you, Dr. Hamilton.
    Mr. Michel, you are now recognized for 5 minutes to give 
your oral remarks.

 STATEMENT OF NORBERT J. MICHEL, VICE PRESIDENT AND DIRECTOR, 
 CENTER FOR MONETARY AND FINANCIAL ALTERNATIVES, CATO INSTITUTE

    Mr. Michel. Good morning, Chairman Davidson, Ranking Member 
Pressley, and members of the committee. Thank you for the 
opportunity to testify today. My name is Norbert Michel. I am 
vice president and director of the Center for Monetary and 
Financial Alternatives at the Cato Institute. The views that I 
express here today are my own, and should not be construed as 
representing any official position of the Cato Institute.
    In my testimony, I argue that the best way for the Federal 
Government to make housing more affordable is to reverse course 
on many longstanding Federal policies. It is true that home 
equity frequently represents a large portion of many Americans' 
wealth, but it does not follow that Federal policy should 
promote homeownership, or, especially, housing debt. In fact, 
home equity depends largely on home price appreciation, an 
attribute fundamentally at odds with affordable housing.
    And Federal policies undoubtedly make housing, as well as 
other goods and services less affordable, particularly because 
they artificially boost demand in inherently supply-constrained 
markets. Over approximately the last decade, home price growth 
rate was nearly double the income growth rate, as through much 
of the last several decades.
    I would like to highlight three particular problems with 
recent Federal policies. First, through only three 
institutions, Fannie Mae, Freddie Mac, and the FHA, the level 
of Federal involvement in housing has been escalating for 
decades, along with housing costs, a correlation that is no 
accident. Combined, just Fannie and Freddie stood behind more 
than half of outstanding mortgage debt for decades, in some 
years being responsible for a share of close to 70 percent of 
the market. From 2009 to 2020, Fannie and Freddie alone had an 
annual share of the mortgage-backed securities (MBS) market 
averaging 70 percent. If we include Ginnie Mae securities, 
backed by FHA mortgages, then, the Federal share of the MBS 
market averaged 92 percent per year over that period.
    Second, wasteful Federal spending since 2020 has only 
worsened the effects of these demand-inducing housing policies. 
Congress passed 5 massive spending bills starting in November 
of 2021, totaling $7.5 trillion. This spending spree worsened 
inflation and exacerbated both labor market problems and 
pandemic-related supply chain problems, thus leading to 
abnormally-high price increases that Americans continue to 
experience today.
    Third, the Federal Reserve has contributed to higher 
housing costs by continuing to support the MBS market, and 
therefore, fueling more leverage to buy homes. The Fed is 
guilty of this policy mistake, even in a low-interest-rate 
environment, when prices naturally tend to rise reflecting the 
lower rates.
    Prior to the 2008 crisis, the Fed rarely held any MBS on 
its balance sheet, but now acts as though it can't operate 
without holding massive quantities of those GSE securities. 
Between 2010 and 2022, the lowest amount it held was $827 
billion. From March of 2020 to March of 2022, the Fed went from 
holding $1.4 trillion to $2.7 trillion. And although the amount 
has declined a bit, it still stands at nearly $2.5 trillion. In 
the face of rapidly-rising price levels and steadily-rising 
home prices, this mortgage-backed security purchase policy made 
very little sense.
    More broadly, the problem with virtually all the Federal 
housing policies that we have is that they were geared toward 
increasing demand. And because housing markets are almost 
always supply-constrained, these policies constantly put upward 
pressure on both prices and rents. These policies include 
everything from supporting the GSEs, to providing housing 
allowances to military and other government employees, as well 
as providing Section 8 vouchers. The economic principles are 
exactly the same for both assistance and subsidies that pay for 
housing. They place upward pressure on prices because they 
increase the number of dollars chasing the same amount of 
housing.
    And they do nothing to address the broader economic or 
social issues that affect people's ability to earn higher 
income and build wealth. Nothing, that is, except put people 
into a riskier economic situation. Congress should start to 
pare back Federal involvement in housing markets.
    And I will close with three, what I call sensible changes: 
first, define and enforce the excessive use provisions that are 
in Fannie and Freddie's charters; second, narrow the GSE's 
focus to the financing of only primary homes, in other words, 
no more vacation home financing; and third, limit the loan loss 
coverage in the FHA mortgage insurance program to 50 percent, 
down from 100 percent.
    Thank you for your consideration. I am happy to answer any 
questions that you have.
    [The prepared statement of Mr. Michel can be found on page 
59 of the appendix.]
    Chairman Davidson. Thank you, Mr. Michel.
    Ms. Royster, you are now recognized for 5 minutes to give 
your oral remarks.

STATEMENT OF ARIANNA ROYSTER, PRESIDENT, BORGER RESIDENTIAL, ON 
 BEHALF OF THE NATIONAL APARTMENT ASSOCIATION AND THE NATIONAL 
                  MULTIFAMILY HOUSING COUNCIL

    Ms. Royster. Good morning, Chairman Davidson, Ranking 
Member Pressley, and members of the subcommittee. Thank you for 
the opportunity to testify today. My name is Arianna Royster. I 
am the president of Borger Residential, a locally-owned firm 
with about 10,000 multifamily units. I am pleased to testify 
today on behalf of the nearly 100,000 combined members of the 
National Apartment Association and the National Multifamily 
Housing Council.
    I would like to share with you today the housing provider 
perspective on the affordability challenge, some obstacles we 
face in meeting this challenge, and several potential 
solutions. My written statement contains greater detail in all 
of these areas.
    The nation's housing affordability challenge boils down to 
one simple fact: There are simply not enough rental units to 
meet the growing consumer demand. Decades of undersupply have 
set us back. The nation needs 4.3 million new apartment homes 
by 2035. At the same time, our members report that economic and 
regulatory challenges are causing them to cut back 
significantly on development activities, in some cases by as 
much as 50 percent. Making matters worse is the increasing 
challenges in operating apartments.
    Industry data shows that on average, expenses increased 9.3 
percent, with insurance and labor costs as leading 
contributors. Insurance is especially troubling as some 
multifamily property insurance premiums soared 26 percent year 
over year. Out of every dollar of rent collected, $0.93 is 
allocated towards operational expenses. With such a slim 
margin, rising operating costs impact the sustainability of 
rental housing, while placing additional upward pressures on 
rents.
    The expanding Federal regulatory environment is a growing 
challenge as well. State and local laws already heavily 
regulate the relationship between a rental housing provider and 
their residents. Adding Federal requirements increases market 
uncertainty, confuses residents and housing providers, and 
disincentivizes investment in housing.
    For example, the White House Blueprint for a Renters Bill 
of Rights, issued earlier this year, greatly concerns the 
rental housing industry. While well-intentioned, it 
contemplates sweeping changes to Federal housing policy, 
including significant reach by the Federal Government into the 
relationship between residents and housing providers, and even 
rent control for property backed by Fannie Mae and Freddie Mac.
    The most significant regulatory, administrative, and 
political barriers to the development of new rental housing are 
often imposed at the State and local levels of government. 
These must be addressed to expand access to housing. We urge 
Congress to consider several strategies to address the housing 
affordability challenge.
    First, redouble efforts to incentivize States and 
localities to remove or mitigate local barriers to development 
of rental housing by passing H.R. 3507, the Yes In My Back Yard 
(YIMBY) Act. The industry thanks Representatives Flood and 
Kilmer for their leadership on this important bill.
    Second, improve the Section 8 Housing Choice Voucher 
Program, which is the primary method for helping 2.1 million 
low-income households to pay their rent. Improvements are 
needed to encourage more voluntary private sector participation 
and to streamline regulation so that Federal dollars are used 
effectively and efficiently.
    The Choice in Affordable Housing Act, H.R. 4606, addresses 
many of these issues. We appreciate the leadership of Ranking 
Member Cleaver and Representative Chavez-DeRemer for their 
stewardship on the bill, and we urge the committee to consider 
this important legislation.
    Third, Congress and the Administration must keep the 
housing provider/resident relationship where it belongs, at the 
State and local level. One proactive step is to support a bill 
sponsored by Representative Loudermilk, H.R. 802, the Respect 
State Housing Laws Act, which ends the Coronavirus Aid, Relief, 
and Economic Security (CARES) Act's 30-day notice-to-vacate 
requirement, returning the eviction policy back to State and 
local levels where it belongs.
    Finally, both Congress and the Administration must reject 
rent control as a viable solution to housing affordability. 
Decades of research and real-world case study show that rent 
regulation devastates rental housing and harms affordability. 
Ensuring an adequate supply of quality housing is critical to 
continued economic prosperity and household stability for 
Americans nationwide. Federal policymakers should focus on 
sustainable solutions and avoid any new policies that further 
exacerbate existing challenges and inadvertently harm consumers 
in the process.
    I thank you for the opportunity to testify today, and I 
look forward to your questions.
    [The prepared statement of Ms. Royster can be found on page 
73 of the appendix.]
    Chairman Davidson. Thank you, Ms. Royster.
    Ms. Yentel, you are now recognized for 5 minutes to give 
your oral remarks.

  STATEMENT OF DIANE YENTEL, PRESIDENT AND CEO, NATIONAL LOW 
                INCOME HOUSING COALITION (NLIHC)

    Ms. Yentel. Thank you. Chairman Davidson, Ranking Member 
Pressley, and members of the subcommittee, thank you for the 
opportunity to testify today.
    Housing costs are out of reach for too many of the lowest-
income renters in America. In your districts and in your 
hometowns, rents are far higher than what the lowest-income and 
most-marginalized people, including seniors, people with 
disabilities, veterans, and working families can pay. As a 
result, 10 million of the lowest-income renter households pay 
at least half of their limited income on rent, leaving them 
without the resources they need to put food on the table, 
purchase needed medications, or otherwise make ends meet. 
Paying so much on rent leave the lowest-income families always 
one financial emergency or unexpected expense away from facing 
eviction, and in worst cases, homelessness.
    During the pandemic, policymakers responded to 
unprecedented need with historic protections and resources that 
cut evictions in half, kept millions of renters housed, and 
moved many people experiencing homelessness to safety. Many of 
these essential measures were bipartisan, and they 
significantly reduced housing instability and unnecessary 
suffering. During the pandemic, Congress showed that when it 
has the will, it can effectively and meaningfully help low-
income renters and people experiencing homelessness get access 
to stable housing. And Congress also showed that this can be 
done in a bipartisan way.
    Today, renters are struggling more than ever. Just as 
pandemic protections expired and emergency resources were 
depleted, renters reentered a brutal housing market with 
skyrocketing rents and high inflation. As rents have increased, 
so, too, has homelessness. The U.S. Government Accountability 
Office (GAO) has found that a $100-per-month median increase in 
rent is associated with a 9-percent increase in homelessness in 
that community. Over the last few years, rents increased by 
nearly $200-per-month. Even with the recent stabilization of 
rent costs, the rapid inflation during 2021 and the first half 
of 2022 has done significant damage to affordability, 
especially for the lowest-income renters. While reducing 
restrictive local zoning is necessary to ensure the market can 
respond adequately to housing demand in many communities, such 
improvements on their own won't make housing affordable to 
extremely-low-income households.
    The market, on its own, can't build and operate apartments 
that are affordable for households with the lowest incomes, 
because the rent such households can afford to pay doesn't 
cover the cost. This is a basic market failure that requires 
the Federal Government to fill in the gaps to protect tenants 
and prevent homelessness. This can be done through long-term 
investments to: one, make rental assistance universally 
available to all eligible households in need; two, preserve and 
expand the supply of homes affordable to people with the lowest 
incomes; three, provide ongoing resources to prevent evictions 
and homelessness; and four, strengthen and enforce rent 
protections.
    There are a number of bipartisan bills before this 
subcommittee that would advance these goals and have a 
measurable impact on the housing crisis. And I urge the 
committee to advance them. Bills such as the Family Stability 
and Opportunity Vouchers Act, the Eviction Crisis Act, and 
other bipartisan bills to improve and streamline existing 
housing programs, build housing for people with the lowest 
incomes, improve oversight of Federal disaster housing 
resources, and increase access to fair and affordable housing.
    I also urge this committee and Congress to advance 
comprehensive solutions, such as those in Representative 
Waters' two essential bills: the Housing Crisis Response Act; 
and the Ending Homelessness Act.
    The bottom line is this: Rents have skyrocketed, eviction 
filings are rising, and homelessness is increasing. The 
country's lowest-income people are struggling to stay housed. 
But there is a path forward. Congress can, just as it did 
during the pandemic, act in a bipartisan way to save lives, 
save money, and provide housing stability for many people.
    Thank you, again, for the opportunity to be here today. And 
I look forward to your questions.
    [The prepared statement of Ms. Yentel can be found on page 
88 of the appendix.]
    Chairman Davidson. Thank you, Ms. Yentel.
    The Chair now recognizes the ranking member of the full 
Financial Services Committee, Ms. Waters from California, for 1 
minute to give an opening statement.
    Ms. Waters. Thank you very much, Mr. Chairman.
    I would like to request the ability to take a moment of 
personal privilege to acknowledge the announcement that our 
Full Committee Chair, Chairman McHenry, will be retiring at the 
end of this term. Thank you very much.
    Again, I would like to take a moment of personal privilege 
to acknowledge the announcement that Chairman McHenry will be 
retiring at the end of this term. I can say that when 
Republicans took control early this year, many Democrats on 
this side, including me, were wondering what type of Chairman 
that Mr. McHenry would be. And two words that are often used 
are, ``fair'' and, ``respectful.'' He has run this committee in 
a way that respects the importance of debate. Although our side 
sometimes used the rules to extend that debate, he has ensured 
that all Members, Democrats and Republicans, have a chance to 
share their views.
    And while we don't agree on every policy, or many, for that 
matter, I have personally worked well with the Chair on many 
issues, from passing a national Emergency Rental Assistance 
Program and significant resources for Community Development 
Financial Institutions (CDFIs) during the pandemic, to 
reauthorizing the Terrorism Risk Insurance Act and the Export-
Import Bank. Well, eventually, we got to good on that one--he 
and I were up until 3 a.m. on that bill. And many of you may 
not know that we also worked closely together passing 
legislation before he rose to his leadership position, to 
improve crowdfunding rules and to enable angel investors to 
support small businesses.
    I will also say that I recognize that this decision to 
retire was likely not an easy one, but the American public 
appreciates the service that he and his family have given over 
the past 20 years. And I hope that the chairman knows that we 
still have work to do, because I know there are many other 
items that are possible for us to continue to prove to the 
American people that bipartisanship is still possible.
    With that, I will go on to my 1 minute, if I may.
    Chairman Davidson. So ordered.
    Ms. Waters. Thank you.
    From urban to rural America, there simply aren't enough 
affordable homes. And the gap between supply and demand 
continues to grow. During one of the worst housing and 
homelessness crises our nation has seen, House Republicans have 
put forward proposals that only exacerbate the problem. Namely, 
they want to slash Federal housing programs by 30 percent and 
hope the private sector fixes it.
    It is also telling that despite mortgage rates nearly 
quadrupling to 8 percent, and housing costs going up 47 percent 
since the pandemic, this is the first hearing that we have had 
that was focused on housing affordability. And so, I am hopeful 
this hearing finally means that my friends on the opposite side 
of the aisle are ready to join with Democrats and pass 
legislation to end the affordable housing and homelessness 
crisis.
    Thank you. And I yield back the balance of my time.
    Chairman Davidson. I thank the ranking member.
    We will now turn to Member questions, and I recognize 
myself for 5 minutes.
    Mr. Michel, I thought your testimony highlighted the 
consequences for some of our approach. We spend the money as if 
tax collection doesn't matter, as if deficits don't matter, and 
we rack up massive debt. We spend more money than we can 
collect in taxes. We have spent more money than we can even 
have people buy up in debt. So the Federal Reserve, as the 
lender of last resort, has monetized that debt, not just the 
$2.5 trillion of mortgage-backed securities, but they have 
loaded up on Treasuries back when they were really low.
    And we have shown, I think, that we can print money. That 
part of modern monetary theory is true. But we have shown that 
you can't necessarily buy the same amount of stuff with the 
money that you have printed. This is showing up in big ways in 
inflation. And the price distortions of the Federal Reserve's 
ongoing buying of mortgage-backed securities kind of 
exacerbates the problem of mortgage-backed securities. Also, 
the discovery of the right interest rate--frankly, we are not 
sure whether the rate is artificially high or artificially low 
because you can't get a true discovery of the price signal.
    I just wonder if you could tie together a little more the 
idea that this does inflate the price? And we are seeing across 
the country as much as 6 times the median income. Essentially, 
two incomes is the only way you can afford to purchase a house 
in this historic metric. Could you talk a little bit more about 
the price discovery with the demand side policies, and doesn't 
that lead to a problem where we need more supply?
    Mr. Michel. You are always going to have supply constraints 
in housing markets, whether it is the lack of available land 
where people want to live or whether it is the fact that it 
takes a little while to build a house or an apartment building. 
And then, layering on top of that everything that we do from a 
regulatory perspective to make it easier to get a loan.
    So, there is constant pressure to lower down payment 
requirements, to increase down payment assistance, and to relax 
underwriting restrictions, even, to make it easier to get a 
loan with a lower income than previously. All of those things 
take away any incentive for a seller to lower the price. They 
do the opposite. They increase an incentive to increase the 
price and that is what we have been seeing for decades and 
decades and decades. This has been going on for a long time.
    We sort of have short memories, but this happened with FHA 
in the late 1960s, we kind of took a break, and it came back 
again in the 2000s, and we are doing it again.
    Chairman Davidson. Thank you for that.
    I will just turn to Mr. Appleton. When you look at a 
situation where 82 percent of the market has an interest rate 
below 5 percent, and rates are closing on 8 percent, this is a 
dynamic that is affecting prices and availability and supply as 
well. Historically, people want their homes built, already have 
a home, they will go with new construction often and that turns 
into more affordable houses. What is that dynamic like right 
now in affecting affordability?
    Mr. Appleton. I think, to your point, there is a lock-in 
effect with those who have homes with historically-low interest 
rates, coupled with the fact that we have historically 
underbuilt supply since the great financial crisis, 
particularly entry-level supply for a lot of the reasons 
discussed earlier. That is why the private mortgage insurance 
industry is dedicated to deploying private capital to help 
creditworthy Americans, home-ready Americans access the 
mortgage market with less than a 20-percent down payment.
    Chairman Davidson. Thank you for that. And I appreciate the 
interest of the private sector there. But one of the things we 
are going to highlight extensively this morning is the need to 
increase the supply of housing to deal with affordability 
challenges. And one way we do that is through zoning reform, 
and mandating high-density housing is often something HUD wants 
to do; they want to reach past local.
    Dr. Hamilton, how do we strike this balance between efforts 
in Washington to have central planners say, no, we know right 
here you need high-density housing and the ability for local 
governments and local communities to make their own decisions 
about their planning and zoning?
    Ms. Hamilton. Thank you, Mr. Chairman.
    I do think this needs to be primarily an issue of State and 
local reform. Generally, the proposals that we hear from the 
Federal Government are to encourage localities to reform their 
land use restrictions through Federal spending programs. But 
there is a mismatch between this tool and the places where we 
most need to see reform. In general, the most-exclusionary 
localities are also the highest-income localities where Federal 
grants may mean the least. I do think there is absolutely a 
role for Members of Congress and other leaders in D.C. to use 
their bully pulpits to draw attention to this matter.
    Chairman Davidson. Thank you for that. My time has expired.
    And I now recognize the gentlewoman from Massachusetts, Ms. 
Pressley, for 5 minutes.
    Ms. Pressley. Thank you, Mr. Chairman. And thank you all 
for joining us for this critical hearing.
    I have been in Congress now for 5 years. The best advice I 
received in freshman orientation was that in the process of 
legislating and governing, it is very easy, on long days, to 
forget the plot. And the plot is the people. And I do believe 
that on the issue of housing, this committee has lost the plot. 
It has taken us 11 months to have one hearing on housing, when 
this is an issue of great consequence in determining health 
outcomes, and social and economic mobility. It is a 
transcendent issue. It is urban, it is rural. And when I am in 
my community--in fact, I had a town hall last night, a tele 
town hall, with thousands of my constituents, and housing 
dominated that discussion, how housing is a fundamental human 
right. But as home prices have risen and rents have 
skyrocketed, it is a right that has become less and less 
attainable for working families across our country, especially 
in the Massachusetts Seventh District. The cost of a single-
family home is 11 times greater than it was in 1980. For a 
family in the greater Boston area to purchase a single-family 
home, they would need an annual income of at least $300,000.
    We are pricing out an entire generation from homeownership. 
This is one of the greatest challenges of our time and we have 
to confront it and do so thoughtfully and with urgency. 
Inclusionary zoning laws are a major contributor to our housing 
shortage. For decades, inclusionary zoning laws have excluded 
people of color, immigrants, people with disabilities, and low-
income families from living in certain communities.
    Ms. Yentel, how has single-family zoning and the 
prohibition on building multifamily housing stifled the supply 
of housing and raised housing prices?
    Ms. Yentel. One of the challenges in our housing market is 
the supply of apartments not keeping up with the demand. So in 
many communities, there are literally not enough apartments for 
the people who live there or who want to move there. It is 
often restrictive local zoning that is to blame. These local 
laws often restrict the construction of any kind of apartments, 
and especially affordable apartments, which drives up costs for 
everyone, squeezing the lowest-income people the most.
    And these kind of restrictive local zoning laws often 
maintain and worsen segregation and racial inequities. So, the 
Federal Government should do all it can to incentivize or 
require States and localities to remove these restrictive local 
zoning laws, so that the market can build apartments for 
middle-income people.
    But even when that happens, the housing will not be 
affordable for extremely-low-income households. Because even if 
those restrictions aren't in place, the private market, on its 
own, can't build and operate apartments that are affordable to 
people with extremely low incomes, because the rent that they 
can pay doesn't cover the cost to operate and maintain it.
    For this kind of a market failure, government intervention, 
Federal Government intervention in the form of subsidies is 
necessary to make those apartments affordable for people with 
extremely low incomes.
    Ms. Pressley. Thank you.
    And in that our racial wealth gap continues to grow, I am 
also concerned about the reality of modern-day redlining.
    Mr. Chairman, I ask unanimous consent to enter a 2022 
article by WBUR entitled, ``Black and Hispanic People are More 
Likely to be Denied Mortgage Loans in Boston,'' into the 
record.
    Chairman Davidson. Without objection, it is so ordered.
    Ms. Pressley. This report found that in Boston, when White 
applicants applied for a mortgage, the denial rate was 
approximately 5 percent. But for Black and Latinx applicants, 
the denial rates were 15.3 percent, and 12.7 percent, 
respectively. This is modern-day redlining, period.
    Ms. Yentel, how does lending and housing discrimination 
impact the homeownership opportunities for communities of 
color? And what reforms do you recommend to curtail these 
unfair practices?
    Ms. Yentel. Discrimination in lending is against the law, 
but it absolutely continues in practice. And I would share some 
statistics from our colleagues at the National Fair Housing 
Alliance that have shown that fair housing complaints in 2022 
have been the highest on record, especially complaints around 
source-of-income discrimination, or discrimination for people 
experiencing domestic violence has been especially pronounced. 
And even with the filing rates being as high as they are, many 
more cases of discrimination go unreported, so the problem is 
pronounced.
    Chairman Davidson. The gentlelady's time has expired.
    The gentleman from Florida, Mr. Posey, is now recognized 
for 5 minutes.
    Mr. Posey. Thank you, Mr. Chairman. And I want to thank the 
witnesses here today. This may be one of the best panels that 
we have ever had on this subject. Usually, we just hear, send 
more money, and you all have brought forth some really good 
suggestions for improvements.
    Mr. Chairman, I do wish we could have also included the 
National Association of REALTORS on this. I think they have an 
impact on----
    Chairman Davidson. Duly noted.
    Mr. Posey. Next time, hopefully we will include them. You 
all are really good and I appreciate it. Your suggestions are 
very enlightening, much broader than usual.
    It was especially good to hear what some of the local and 
State Governments are now starting to actually do to take 
action to being part of the solution to that problem. But I 
wonder, if Congress could do just one thing to address the 
homeless problem, what would that one thing be? And I would 
like to ask each of you to answer that, starting with Mr. 
Appleton.
    Mr. Appleton. Yes, I think that if it could do one thing 
from a financing perspective, it would be to ensure that there 
is a clear, coordinated, and consistent housing financing 
policy so that we are not crowding out private capital. And 
then on the supply side, make sure that we are doing all we can 
to encourage the construction and development of entry-level 
housing. I think that is what we have been missing.
    Mr. Posey. Thank you.
    Ms. Hamilton. Thank you, Congressman.
    I think that there is an opportunity for the Federal 
Government to take a more active role in encouraging State or 
local zoning reform. But we haven't yet seen proposals that are 
designed right. Such programs should be designed as a race-to-
the-top program that rewards housing market outcomes, rather 
than reforms on paper that may not actually lead to more 
housing being built at lower prices.
    Mr. Posey. Thank you.
    Mr. Michel. I will take a slightly different tack there. I 
think perspective is important here, and I think that the 
politicians and Members of Congress have an important job in 
giving that perspective.
    In terms of homelessness, we have, according to HUD, 
roughly .1 percent of our population that is homeless. And I 
don't really consider that to be a housing crisis. You are 
talking about roughly half a million people in a nation of 333 
million. So that perspective, I think, is very important.
    Ms. Royster. Thank you. I would say if we could pass the 
Yes In My Backyard (YIMBY) Act, because, as we stated, supply 
is the major issue in terms of housing affordability. I think 
most of the panel has recognized that. And we need 4.3 million 
new multifamily units by 2035. Just lowering the barriers for 
housing development would be helpful.
    Mr. Posey. Thank you.
    Ms. Yentel. Thank you for the question, Mr. Posey.
    Ending homelessness requires that we make homes affordable 
to people with extremely low incomes. That requires subsidies 
in the forms of rental assistance, expanded section 8 vouchers, 
in terms of preserving and expanding our public housing 
programs and other affordable housing solutions for the lowest-
income people. And creating an access to this type of 
affordable housing with wraparound supportive services has been 
shown again and again in the research and the evidence to be 
highly effective at ending homelessness. And there are many 
communities in your district and your State that have 
effectively ended veterans' homelessness using this housing-
first approach.
    Mr. Posey. Very good. Again, I thank the witnesses, and I 
yield back, Mr. Chairman.
    Chairman Davidson. Thank you, Mr. Posey.
    The Chair now recognizes the ranking member of the Full 
Committee, Ms. Waters, for 5 minutes.
    Ms. Waters. Thank you very much.
    Mr. Chairman and members, while we sit here calmly talking 
about housing, I disagree with Mr. Michel. I don't know what 
you call a crisis, but 75,000 people on the ground in the 
greater Los Angeles area is a crisis, and 600,000 people in 
this country on the ground every night is a crisis. So I don't 
know how you define one, but we cannot have a hearing on 
affordable housing and not really talk about homelessness.
    I am so proud to say that last Congress, under my 
leadership, Committee Democrats secured critical new 
investments in housing through the American Rescue Plan Act, 
which helped re-house people experiencing homelessness and kept 
over 11 million struggling renters and homeowners housed. We 
have proven time and time again that when we invest Federal 
dollars into affordable housing, we can prevent homelessness 
and evictions. And we can save taxpayer dollars spent over the 
long run.
    But despite the progress we made to promote housing 
stability during the pandemic, the fact of the matter is that 
housing costs are too damn high, which is pushing more and more 
people out of their homes. Indeed, the Government 
Accountability Office found that with every $100 increase in 
median rent, there is a 9-percent increase in homelessness.
    Ms. Yentel, can you explain what the research tells us 
about the leading causes of homelessness? And what are some of 
the examples of cost-effective solutions? And whether or not 
you agree with me that there is a housing crisis?
    Ms. Yentel. There is absolutely a housing crisis, Ranking 
Member Waters. Thank you for the question.
    And housing costs are the primary driver of homelessness. 
The one thing that all people experiencing homelessness have in 
common is lack of access to a safe, stable, accessible, 
affordable home. And the research and the data and best 
practices show again and again that the best way to address 
homelessness and end homelessness is to provide access to an 
affordable home with needed, supportive, wraparound services. 
And there are many communities, including Los Angeles, that use 
this housing-first strategy to address homelessness. In the 
City of Los Angeles, every day, they are able to house about 
207 people who are experiencing homelessness, and get them into 
permanent housing. But on the same day in Los Angeles, about 
225 people become newly homeless.
    So, we are able to address individual homelessness. What 
communities aren't able to do is stem the tide of new people 
becoming homeless, because housing costs are so high. The 
primary challenge there is housing affordability. And bills 
like yours, the Housing Crisis Response Act, and the Ending 
Homelessness Act, would effectively end homelessness in the 
United States because they provide the level of resources and 
the proven solutions needed to end homelessness.
    Ms. Waters. Ms. Yentel, I understand that someone here said 
that the Federal Government is spending money, but they have 
not been able to solve the housing crisis. Can you explain why, 
whether it is inflation, or whether it is a loss of a job, or 
whether it is a COVID, or what have you, that no matter what 
money you have spent, you may have to spend more because there 
is a crisis?
    Ms. Yentel. It is all of those things combined. And the 
housing crisis impacts people differently but across-the-board, 
there is a severe shortage of homes affordable and available to 
the lowest-income people. Across the country, there is a 
shortage of 7.3 million homes, affordable and available to 
those low-income people. Another way of saying that number is 
for every 10 of the lowest-income households, there are fewer 
than 4 apartments that are affordable and available to them. 
So, the other 6 households are living doubled- or tripled-up, 
or they are paying 60, 70, or 80 percent of their very limited 
income to keep a roof over their heads. And when you spend so 
much of your limited income on your housing, you are always one 
financial shock, whether it is a broken-down car, a sick child, 
a missed day's work, or a pandemic, away from missing rent, and 
facing eviction and in the worst cases----
    Ms. Waters. Are we saying about this is a problem that 
could occur with any American family, that this is not just 
about urban living, it is not about rural, it is about 
everybody?
    Ms. Yentel. The shortage of housing for the lowest-income 
people is pervasive and it exists in rural, urban, and suburban 
communities alike.
    Ms. Waters. Thank you very much.
    I yield back.
    Chairman Davidson. I thank the ranking member.
    The gentleman from Missouri, Mr. Luetkemeyer, who is also 
the Chair of our Subcommittee on National Security, is now 
recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    One of the problematic features of previous rounds of the 
Basel count to requirements, in my mind, has always been the 
concept of importing a regulatory framework developed by 
international bureaucrats outside of the oversight of Congress 
and the American public. The Basel III Endgame proposed in July 
by the Federal Reserve, the OCC, and the FDIC is even more 
excessive than previous versions. It diverges from Basel, not 
by appropriately recognizing unique features of our American 
financial system in a particular housing market, but by 
ignoring what makes our country unique, and then gold-plating 
what was developed by bureaucrats in Switzerland.
    Mr. Appleton, would you care to comment on how the excesses 
of the Basel III Endgame will impact the housing market?
    Mr. Appleton. Sure. Thank you for the question.
    You are exactly right that the Basel III Endgame fails to 
recognize the uniqueness of our market and then adds excessive 
mortgage risk weights on top of it. One of its most significant 
failures is the lack of credit for private mortgage insurance, 
and the strength and resilience it brings to our housing 
finance system. It stands in stark contrast to FHFA's capital 
rule, it is recognizing its loss-absorbing benefits.
    At the end of the day, the Basel III Endgame as proposed 
will limit the ability of low-down-payment consumers to access 
credit from commercial banks, depriving them of options and 
shifting businesses to loans directly or indirectly backed by 
the Federal Government.
    Mr. Luetkemeyer. Thank you for your answer.
    One of the concerns I have is that there seems to be no 
cost-benefit analysis that was done on this rule. If you talk 
to the regulators who proposed this, they will admit that. I 
assume they haven't contacted your entity, your association, to 
see what kind of cost you would anticipate with the rule?
    Mr. Appleton. No, and in fact, the private mortgage 
insurance industry adopted a number of enhancements since the 
last round of bank capital regulations were implemented, and 
those regulations actually recognized private mortgage 
insurance. And we have enhanced the industry with robust 
capital and operational standards at the same time this new 
proposal provides zero credit for it. So, it is just totally 
disconnected from reality.
    Mr. Luetkemeyer. Yes, the rule itself is actually a bad 
deal from--there are so many bad things in it, that they need 
to start over with it, if they actually want to go down this 
road, in my opinion. Thank you for that.
    This morning, in The Wall Street, there is an article 
headlined, ``San Francisco developers tackle housing woes.'' 
And in there, it talks about a new 71-story rental tower that 
they want to build. But in here, it makes a comment, it says, 
``Elsewhere, 10 office-to-residential conversion plans have 
been submitted to the city.'' And later on, it says, ``Property 
developers say that the plans for the new projects reflect 
government efforts to reduce costs and eliminate red tape for 
new construction and conversion of office buildings to 
apartments.'' We talked a little bit here just a minute ago 
about increased costs.
    Dr. Hamilton, with this situation here, it points to the 
problem that we have, I think, in building housing at a cost 
that people can afford, and we have rules and regulations that 
in this situation are either being changed or waived to enable 
people to do this. Can you see this as a benefit, and can you 
give me an example of the percentage of rules and regulations 
as it is of the rent, or the cost, I guess I should say, the 
cost of rent or housing projects?
    Ms. Hamilton. Thank you, Congressman. That is a fantastic 
question. And, unfortunately----
    Mr. Luetkemeyer. I only ask fantastic questions.
    Ms. Hamilton. Access to data on the specifics of local 
land-use regulations has been a real barrier to economists 
producing solid estimates on the portion of housing costs that 
are due to zoning and other permitting process barriers. But 
one estimate that is now about 20-years-old finds that in the 
most expensive metros in the U.S., about half the cost of 
housing is due to land-use regulations.
    Mr. Luetkemeyer. Fifty percent of the cost. Now, each one 
of you this morning, I think, talked about rules and 
regulations and zoning as a cost, but you are quantifying it 
that about half the cost of a home and/or an apartment is 50 
percent due to rules, regulations, and zoning requirements?
    Ms. Hamilton. That is what one study from, again, about 20 
years ago found for the San Francisco Bay Area, the most 
regulated and----
    Mr. Luetkemeyer. That is a 20-year-old figure.
    Ms. Hamilton. That is right. And we know----
    Mr. Luetkemeyer. Oh, my gosh.
    Ms. Hamilton. ----it has gotten much worse.
    Mr. Luetkemeyer. Can somebody give me a figure or base of 
what percentage of an individual--the average income in this 
country, what percentage of that is used for housing? What 
percentage of an individual's income, for an average individual 
making whatever it is in this country, average rate, would go 
to housing?
    Ms. Yentel. Experts would say that no more than 30 percent 
of income should go towards housing costs.
    Mr. Luetkemeyer. I am not asking how much should go; I am 
asking what the figure is today? Does anybody know what the 
figure is today?
    Mr. Michel. It is more than half.
    Mr. Luetkemeyer. More than half. So today, the average 
individual is paying more than half of their income for 
housing. Is that what you just said? Okay. And we, in fact, 
have a rule here, where the rules and regulations cost almost 
half of what the cost is, so there is our problem.
    Thank you, Mr. Chairman. I yield back.
    Chairman Davidson. I thank the gentleman.
    The gentlewoman from New York, Ms. Velazquez, is now 
recognized for 5 minutes.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Ms. Royster, affordable housing communities across the 
country have faced a volatile insurance market for many years 
now. There is growing concern that insurance carriers are 
walking away from affordable and middle-income housing because 
liability, umbrella, and other lines of coverage have become 
out of reach for many property owners. Can you talk about what 
Congress can do to address this, and how we can ensure that 
affordable housing properties and renters are not being 
unfairly treated in the insurance markets?
    Ms. Royster. Thank you, Congresswoman Velazquez. We are 
looking at recent data that shows property owners faced 15 
percent in liability insurance increases, and 17 percent in 
umbrella coverage year over year, but it is also not uncommon 
to see triple-digit increases, especially in affordable housing 
communities. This was information that was reported by our 
members.
    But I will speak to you on my personal experience in terms 
of the rising insurance costs. We manage a number of 
properties. The majority of our portfolio is in Washington, 
D.C., and first, the costs have gone up for us from 15 to 32 
percent. But more important to note is that there are only a 
few carriers that will actually write policies in Washington, 
D.C., which makes the cost unaffordable. I will give you an 
example of the National Church Residences, that have seen their 
property insurance liability increase over 400 percent.
    Ms. Velazquez. Do you have any advice in terms of what 
Congress can do to address this issue?
    Ms. Royster. I think Congress should use its regulatory and 
oversight authority to monitor activity in the insurance 
market, while looking for ways to drive increased capacity in 
the insurance and reinsurance markets to bring the cost down.
    Ms. Velazquez. Thank you.
    Ms. Yentel, as you know, the housing affordability crisis 
requires Federal action, such as the collection of data. 
Unfortunately, there are significant data gaps impacting Puerto 
Rico, where the housing affordability crisis persists for over 
3.2 million American citizens.
    I recently urged HUD to include Puerto Rico in the American 
Housing Survey (AHS), which provides critical information about 
the nation's housing stock. Can you elaborate on how including 
Puerto Rico in this survey will help offset the housing 
challenges, including the lack of affordable housing?
    Ms. Yentel. The American Housing Survey is the only 
national representative survey that gives us information, not 
only on housing affordability, but on the quality of our 
nation's housing stock. The sample size for the AHS is small, 
so we are only able to get specific information on the 15 
largest metro areas and some States. It would certainly be 
useful if we were able to get information on Puerto Rico's 
housing stock quality, and having the AHS increase its sample 
size in order to get that information is important, but HUD 
would need additional resources in order to do that.
    Ms. Velazquez. Thank you.
    Ms. Yentel, it is no secret that low- and moderate-income 
(LMI) communities and communities of color are often the most 
impacted by devastating flooding and other climate-related 
events. We have seen this community's residence of affordable 
housing or more rental properties can be disproportionately 
impacted as Federal investment is often directed elsewhere. How 
can we leverage Federal resources and tools to drive better 
disaster and mitigation efforts toward the most vulnerable?
    Ms. Yentel. Lower-income communities and communities of 
color are often located in lower-lying areas, and they are also 
communities that historically haven't been given the level of 
infrastructure dollars needed in order to protect people from 
the subsequent flooding. This creates a vicious cycle of not 
only keeping people in harm's way, but increased costs then 
when it comes to emergency response and rebuilding.
    Codifying the Community Development Block Grant Disaster 
Recovery (CDBG-DR) program would be an important step in 
ensuring that people in these communities get the resources 
that they need, and that those precious few Federal resources 
for rebuilding and, in some cases, resilience, are targeted to 
the communities with the greatest----
    Ms. Velazquez. Thank you, Mr. Chairman. I yield back.
    Chairman Davidson. Thank you.
    The gentleman from South Carolina, Mr. Norman, is now 
recognized for 5 minutes.
    Mr. Norman. Thank you, Mr. Chairman.
    And I want to thank all the panelists for being here today.
    We talk about affordable, we talk about housing shortage, 
apartment shortage; this isn't that complicated. When you have 
anywhere from 23 to 28 percent regulatory and government 
compliance costs going into the cost of a $400,000 house, that 
is $92,000 to $112,000 that the homeowners are having to bear.
    When you see what I saw happen to the manufactured 
housing--you have bureaucrats trying to tell them how to make a 
home more energy-efficient, and mandating the ceiling joist, 
mandating the duct blaster test, and mandating carbon emissions 
from a manufactured house that is really one of the few 
affordable homes that can be built.
    When you see credit reports, there is an attempt to take 
away medical debt that is unpaid. It is insane. And it is very 
simple: You get government out of the way, you get Federal 
regulations out of the way, and politicians--I recently used a 
football analogy--I had a talk show host who was lecturing Nick 
Saban over what he needed to do to improve his team. I thought, 
that is how politicians are; a lot of times, we don't know what 
we don't know, but you get politicians out of the way, this has 
to be settled on the local level. If you want to increase 
demand, well, increase housing, make it so the eviction notices 
can go out. You have to get paid back. Somebody pays for this.
    The other thing--we talk about homelessness, but what about 
the 8 million people who are coming across this border? Where 
are they going to go? New York City is finding out. What are 
they going to do with them? So, get government out, stop this 
flow of people into this country who have not paid into the 
system, and get the regulators out of the way. You go to your 
experts. The person calling into Nick Saban, I think, is not 
the best one to tell him what to do. He is in it. So, go to the 
experts who actually do it and have their money invested.
    Ms. Yentel, let me ask you, since you you mentioned making 
housing affordable, two things: first, define what, 
``affordable,'' is; and second, you call for more rental 
assistance, more Federal subsidies, but does the Federal 
Government set the gold standard for financial accountability?
    Ms. Yentel. Affordability means a household doesn't pay 
more than 30 percent of their income towards rent.
    Mr. Norman. No, no, no. Give me, ``affordable.'' What is an 
affordable house, or an apartment? Give me what, in your 
terms--because I don't know what that is.
    Ms. Yentel. Oh, I just did. It depends on what a person's 
income is. Different people can afford different amounts 
towards their housing costs, but nobody should pay more than 30 
percent of their income towards rent or towards their mortgage.
    Mr. Norman. And the Federal Government is the answer for 
that?
    Ms. Yentel. For extremely-low-income households. When I am 
talking about households with extremely low incomes, I am 
talking about, in your district, for example, a single person 
who has a disability or is a senior, and is on an extremely 
limited fixed income of about $12,000 to $15,000 a year.
    Mr. Norman. I am running out of time. Get to the----
    Ms. Yentel. Or I am talking about a working family with a 
combined household income of no more than $25,000. For these 
households, the private market on its own--and you can ask any 
housing developer, whether they are for-profit or nonprofit, 
they will agree that they can't, on their own, make housing 
affordable----
    Mr. Norman. Okay. So, you make it affordable by----
    Ms. Yentel. ----for households with such low incomes.
    Mr. Norman. ----by having subsidies from the Federal 
Government. Is that what you are saying?
    Ms. Yentel. Suppliers and intervention from the Federal 
Government given the scale----
    Mr. Norman. And where is that money coming from?
    Ms. Yentel. ----in the form of subsidies.
    Mr. Norman. And where is that money coming from?
    Ms. Yentel. Outlays for housing assistance are about 1 
percent higher than----
    Mr. Norman. Yes, but where is the money coming from, on 
subsidies that you say the Federal Government--which I think is 
in the red to a tune of $36 trillion; where is it coming from?
    Ms. Yentel. I would say 1 percent of outlays----
    Mr. Norman. Okay, you are using percentages, but you are 
not answering my question. You really aren't. Just tell me, it 
is coming from the taxpayers.
    Ms. Yentel. Sure, we can absolutely increase taxes for 
corporations and for high-income earners in order to afford to 
have people have their----
    Mr. Norman. That is a utopian dream that you are talking 
about.
    Ms. Yentel. ----most basic need met, to keep a roof over 
their head.
    Mr. Norman. You are saying to put this country further--
hold on. Reclaiming my time, because I have 10 seconds left, 
putting this country further in debt on the number-one 
indicator of the economy, housing, is--the more Federal 
Government, that is the opposite that you want to do in the 
real world. I yield back.
    Chairman Davidson. I thank the gentleman.
    The gentleman from New York, Mr. Torres, is now recognized 
for 5 minutes.
    Mr. Torres. I am just curious, Ms. Yentel, do you think 
providing every child with an education is a utopian dream?
    Ms. Yentel. I don't.
    Mr. Torres. Do you believe providing every child with 
housing is a utopian dream?
    Ms. Yentel. No.
    Mr. Torres. And do you believe, like education, no one can 
be reasonably expected to succeed in America without access to 
safe and affordable housing?
    Ms. Yentel. Absolutely, and the research shows it again and 
again.
    Mr. Torres. And on a personal level, I would not be in 
Congress were it not for public housing and the stability and 
opportunity it gave me and my family. My own life journey, from 
public housing in the Bronx to the House of Representatives in 
Washington, D.C., is a product of public investment in 
affordable housing.
    My Republican colleagues would have you believe that there 
is excessive government intervention in housing. Now, I will 
concede that when it comes to land use, there is certainly 
exclusionary zoning, which has been a barrier to addressing the 
affordability crisis. But when it comes to funding, the 
Republican talking point could not be farther from the truth. 
The problem is not too much government investment in affordable 
housing; the problem is too little investment. There is 
insufficient housing supply and insufficient housing subsidy.
    What is the extent of the gap between the demand for 
affordable housing and the supply of affordable housing in the 
United States?
    Ms. Yentel. For households with the lowest incomes, there 
is a shortage of 7.3 million homes affordable and available to 
them. Another way of saying that same number is that for every 
10 of the lowest-income households throughout the country, 
there are fewer than 4 apartments that are affordable to them.
    And if I could just say that we talk a lot about the cost 
of providing housing to be affordable for extremely-low-income 
people, but we don't talk enough about the costs of inaction. 
It is not like if we are not providing housing for extremely-
low-income people, we are not paying. We are. We pay, as a 
country, to allow homelessness and housing poverty to persist, 
and we pay for it through lowered educational attainment, 
through health challenges for children and families and 
increased health costs as a result, and for families unable to 
obtain and retain well-paying jobs.
    There is a study from Children's HealthWatch that shows, 
over the next 10 years, we will pay $111 billion in avoidable 
healthcare costs because we allow homelessness to continue to 
persist. So, we are paying one way or another. I think a better 
use of funds is to invest in solutions to keep homes affordable 
for the lowest-income people.
    Mr. Torres. So, homelessness and housing insecurity are not 
only bad morals; it is bad economics.
    Ms. Yentel. That is right.
    Mr. Torres. During COVID, we saw essential workers, many of 
them earning minimum wage, put their lives at risk during the 
peak of the pandemic so that the white collar workforce could 
safely shelter in place and work from home. Is there a single 
county in America where an essential worker earning minimum 
wage could afford a one bedroom apartment?
    Ms. Yentel. There are very, very few communities throughout 
the country where that is possible.
    Mr. Torres. What about a two-bedroom apartment?
    Ms. Yentel. There is no community where that is possible.
    Mr. Torres. So out of 3,000 counties, there is not a single 
area in which an essential worker earning minimum wage could 
afford a two-bedroom apartment?
    Ms. Yentel. That is right.
    Mr. Torres. And do you believe it is wise for Congress to 
stand by idly while America becomes dangerously unaffordable to 
its essential workforce?
    Ms. Yentel. No. Housing is a basic human need, and as you 
said very well, people can't succeed in other areas of their 
lives if they don't have a home to go to at the end of the day. 
Children need a place to study. People need a place to unwind. 
All of us know the value of a home in our lives, and we need to 
provide that for our essential workers, and for everyone with 
extremely low incomes.
    Mr. Torres. I do have a number of colleagues who seem 
intent on substituting free market fundamentalism for evidence-
based policy. Is there any evidence at all that the free 
market, if left to its own devices, unaided by any government 
subsidy, can magically create the affordable housing that we 
need at the levels of affordability that we need?
    Ms. Yentel. No. In fact, the evidence very clearly says the 
opposite.
    Mr. Torres. Suppose there was no government intervention in 
the form of public housing. Would there be less or more housing 
insecurity and homelessness?
    Ms. Yentel. More.
    Mr. Torres. What if there was no Section 8?
    Ms. Yentel. More.
    Mr. Torres. What if there was no Low-Income Housing Tax 
Credit (LIHTC) or tax-exempt bond financing or Community 
Reinvestment Act (CRA) credits?
    Ms. Yentel. All of these are essential ways that the 
Federal Government provides resources to ensure that some 
people with extremely low incomes can stay stably housed. But 
the funding is far under the need. The Federal Government only 
provides funding for one in every four households who need 
housing assistance and is eligible to receive it. So, we have 
what is essentially a housing lottery system in our country 
where only the lucky 20 percent gets the help that they need.
    Mr. Torres. Thank you.
    Chairman Davidson. I thank the gentleman.
    The gentleman from Wisconsin, Mr. Fitzgerald, is now 
recognized for 5 minutes.
    Mr. Fitzgerald. Thank you, Mr. Chairman.
    I want to take the questioning in a different direction. 
Last month, I sent a letter with 16 of my colleagues on this 
committee to the banking regulators to raise concerns about the 
Basel Endgame proposed high-risk rates for residential 
mortgages. One of the major issues that the proposal removes is 
the ability of banks to use mortgage insurance to reduce the 
risk rates for low-down-payment mortgages, a departure from 
existing bank capital rules and the Federal Housing Finance 
Agency's (FHFA's) capital framework for the GSEs.
    Mr. Appleton, you mentioned in your testimony that private 
mortgage insurance has been around for 66 years. What the 
committee might not know is that this industry actually was 
created in, and has deep roots in my home State of Wisconsin. 
Why is it important for bank capital rules to recognize private 
mortgage insurance?
    Mr. Appleton. Thank you for the question, Congressman 
Fitzgerald, and thank you for sending that letter.
    By failing to recognize private mortgage insurance in the 
Endgame proposal, the bank regulators are making it more 
difficult for banks to serve low-down-payment borrowers, to 
service mortgages, or even to finance warehouse lines of credit 
for independent mortgage banks, limiting consumer choice and 
access to credit. The current rules, as you mentioned, were 
written before the mortgage insurance industry adopted 
significant enhancements to its capital and operational 
standards, allowing for a prudently-underwritten mortgage with 
mortgage insurance to receive a 50-percent risk rate. So, the 
new proposal that totally ignores this reality should be 
rescinded.
    For example, as of the third quarter, the industry already 
holds 169 percent of its required capital, and to your point, 
FHFA's own capital rule recognizes the risk and capital 
benefits of mortgage insurance. So, if anything, regulators 
should be recognizing the strength and resiliency of private 
mortgage insurance more not less.
    Mr. Fitzgerald. We have a situation--and this has come up 
in the committee before--where you have a lot of young adults, 
those who have attended school, put themselves in a position, 
many of them couples who find themselves in a situation of 
being unable to raise the money for a down payment on a minimal 
house, which is out of control as a result of the inflation 
that we have been experiencing across the nation. And they are 
just unable to come up with the money to make that down 
payment.
    The builders aren't incentivized to create enough starter 
homes. It doesn't exist. There are not two Americas out there. 
I wish my colleague from New York was still here. He would have 
everyone think that there's simply this one take on what is 
going on across the nation. It is happening everywhere right 
now.
    Ms. Hamilton, you have specifically discussed the need for 
housing with two to four units per building, which is becoming 
the norm right now for anyone that is developing anything close 
to a subdivision anywhere in America. And looking at the amount 
of housing that gets built in total right now, about 4 units 
per 100 people is being permitted across the country as a 
whole. It is the only option left for municipalities who know 
that once they put the infrastructure in the ground, the costs 
associated with any subdivision are going to be completely out 
of control.
    We are talking about modest communities that no longer can 
put a subdivision in place with housing that is any less than 
$500,000 per unit, which is clearly out of the reach of almost 
all Americans who find themselves trying to get their first 
mortgage. What is the reason for the drop in these types of 
housing, and is there any type of Federal solution that could 
help with that?
    Ms. Hamilton. Thank you, Congressman. You are absolutely 
right that permitting rates are way down from what we have seen 
relative to times when housing was more broadly affordable. And 
this is due, both to local zoning rules, the rules on the books 
that limit how much housing can be built and limit the 
availability of relatively low-cost types of housing, such as 
duplexes, triplexes, fourplexes, or small lot development, and 
it is also due to local permitting processes that really 
lengthen the time and add costs to the building of any type of 
new housing. I do think this needs to be addressed primarily at 
the State and local levels, although efforts to encourage this 
reform from Congress are more than welcome.
    Mr. Fitzgerald. Thank you, Mr. Chairman. I yield back.
    Chairman Davidson. Thank you.
    The gentleman from Nevada, Mr. Horsford, is now recognized 
for 5 minutes.
    Mr. Horsford. Mr. Chairman, Ranking Member, we are 122 
days, nearly a year into the 118th Congress, and we are finally 
having our first hearing on housing affordability. 
Congratulations.
    Chairman Davidson. Will the gentleman yield?
    Mr. Horsford. No, I will not, because during the previous 
Chair's leadership, Chair Waters, Committee Democrats held 55 
hearings on housing-related issues last Congress. That means I 
would have had 275 minutes to talk about the issue that is of 
prime importance to my constituents. I only have 5 minutes, so, 
no, I will not yield.
    We are in the middle of a housing affordability crisis that 
is crippling our country. There have been shocking 47-percent 
increases in national home prices since May of 2020, and that 
has driven many Americans even further away from the dream of 
homeownership. Far too many households are forced to continue 
to rent, and they face unique challenges of their own as our 
limited supply of housing simply cannot meet the ever-growing 
demand.
    The National Multifamily Housing Council estimates that we 
need to add nearly 3.7 million new apartment units a year to 
keep up with the demand--that is only to keep up. Even at that 
pace, we won't even begin to deal with the estimated 14 million 
unit shortfall that renters face today. For the 21.6 million 
American households that spend over 30 percent of their monthly 
income on rent, they simply can't afford to wait any longer, so 
this hearing is long overdue.
    My district in Las Vegas has been one of the hottest real 
estate markets in the country since the pandemic. And whether a 
family is looking to purchase a home or simply rent month-to-
month, they are seeing their costs increase through the roof. 
As you can see, since 2015, Zillow data shows that there has 
been a drastic 75-percent jump in the typical rent in Las 
Vegas, to over $1,800 a month. And with an average renter's 
household income at $51,000, the rent affordable at that income 
is well short of that, $1,286.
    When we look at the most-vulnerable and lowest-income 
renters, the statistics from the National Low Income Housing 
Coalition become even more alarming, with a staggering 90 
percent of these households facing a difficult cost burden. 
This should come as no surprise when home sales volume remains 
depressed, and the average household spends a burden of 29.6 
percent of their income on mortgage or rent.
    And we can see that most of these low-income households are 
severely cost-burdened, which means that they are spending over 
half of their income each month just to remain housed. These 
families are trapped, paying an outsized portion of their 
income on rent, which limits their ability to build up enough 
savings for a down payment, and then further perpetuates the 
racial homeownership gap.
    And yet, thus far, this subcommittee has been uninterested 
in advancing any meaningful housing policy during the first 
session of this Congress. I call foul. An all-of-the-government 
approach is required to address this crisis, and we need to 
look both at how to incentivize increases in our housing stock, 
and also how to ensure the homes we do have are sold to real 
families, households that will form the backbone of our 
economy.
    That is why earlier this year, I introduced the Housing 
Oversight and Mitigating Exploitation (HOME) Act, to give HUD 
the data necessary to understand the severity of our housing 
shortage, and to protect everyday Nevadans from being exploited 
by out-of-State corporate speculators. These massive 
corporations have been able to pay cash during this period of 
high interest rates, which has allowed them to purchase almost 
a third of the homes sold in certain ZIP Codes, one in three. 
And it is unlikely that the homes that they purchase will ever 
appear on the housing market again.
    So, I am deeply concerned by reports, corroborated by 
Redfin data, that these corporate speculators predominantly 
target neighborhoods of color and single mothers. The HOME Act 
would give HUD the tools necessary to investigate these 
allegations. Not only will HUD be able to collect the necessary 
data on who these speculators are targeting, but it also gives 
HUD the tools necessary to ensure that we have a level playing 
field.
    I know my time is concluding, and I want the American 
people to know that we only get 5 minutes. And this is the 
first hearing. Had we had 55 hearings, I would have had 295 
minutes to make my case, but because House Republicans don't 
want to talk about this issue, we don't have the time to 
advance the policies that matter to the American people. I am 
mad, I am pissed, the American people are pissed, and my 
constituents are pissed that we don't make housing more of a 
priority in this Congress. I will yield back now.
    Chairman Davidson. The gentleman's time has expired. The 
gentleman's time has thoroughly expired.
    And the gentleman from New York, Mr. Garbarino, is 
recognized for 5 minutes.
    Mr. Garbarino. Thank you, Mr. Chairman.
    There is no sugar-coating the fact that our nation is 
facing a housing shortage, with housing affordability at 
historic lows for both homeowners and renters. My district in 
Long Island is no different. Just a little over a month ago, 
the median home price in Suffolk County reached a record 
$600,000, an increase of over 9 percent compared to a year ago.
    When combined with the fact that the average interest rate 
for a 30-year loan is still well above the sub-4 percent rate 
that homebuyers were used to seeing just a couple of years ago, 
it is no surprise that many first-time homebuyers struggle to 
enter the market. Additionally, for many people, saving a down 
payment of 20 percent can also be a significant barrier to 
buying a home. I couldn't even do it, and now, in Long Island, 
it is about $120,000.
    Given these roadblocks, there are a number of market-based 
solutions that can play an important role in helping first-time 
homebuyers. One of those solutions is private mortgage 
insurance--which I took advantage of when I bought my house--
which has put homeownership in reach for millions of qualified 
borrowers for 60 years.
    Mr. Appleton, can you explain how private mortgage 
insurance benefits homebuyers, taxpayers, and investors?
    Mr. Appleton. Thank you for your question, Congressman.
    Private MI benefits homebuyers by eliminating the need to 
come to the closing table with tens, or even hundreds of 
thousands of dollars in cash for a down payment, it benefits 
taxpayers by standing in a first-loss position ahead of the 
GSEs and the taxpayers who ultimately stand behind them, and it 
benefits investors by promoting safety and soundness in the 
overall housing finance system.
    Mr. Garbarino. Are there government barriers to private 
mortgage insurance serving a broader role in the market?
    Mr. Appleton. I think that is a great question. First, 
establishing a clear, consistent, and coordinated housing 
finance policy would ensure that private capital is not 
unnecessarily crowded out of the marketplace by programs fully 
backed by taxpayers. Second, we should ensure faithful 
implementation of the prior approval of Enterprise products 
rule to prevent the GSEs from engaging in inappropriate pilot 
programs that would cause the Enterprises to participate in the 
primary market, compete with the private sector, and shift 
risks to taxpayers.
    Mr. Garbarino. I appreciate that, and as I said, if it 
wasn't for private mortgage insurance (PMI), I wouldn't be able 
to own my home now; I wouldn't have been able to buy it, and I 
wouldn't be able to afford the increases that we have seen over 
the past couple of years, so I thank PMI for its existence.
    Mr. Michel, while we have discussed one longstanding option 
for homebuyers to take advantage of in order to make 
homeownership more obtainable, there are still a number of 
other regulatory barriers that hamper the private market. 
Reducing the number and scope of some of these regulations 
could do a lot to lower costs of homeownership in the United 
States.
    However, given how highly regulated the housing mortgage 
markets are, I want to focus for 1 minute on the flip side of 
the issue: What proactive actions could the FHFA take in order 
to pave the way for more private-market innovation and options 
for consumers as we seek to reduce the cost of home buying and 
homeownership, not just for Long Islanders, but for people all 
over the country, whether we are talking about the construction 
space or even the mortgage insurance space, do you agree that 
additional innovation and competition and more choices would 
benefit consumers?
    Mr. Michel. Yes, they would, and you are not going to have 
that unless or if you keep crowding out--I don't mean you--if 
the government keeps crowding out the private sector. Reducing 
conforming loan limits is one way. The original charters of 
Fannie Mae and Freddie Mac have an excessive-use provision; it 
was never meant to replace the entire market, it was meant to 
supplement the market. And it hasn't ever done that. It has 
always increased until it has dominated. That provision has 
never been defined, and it has never been enforced, so those 
would be two ways right off the top.
    Mr. Garbarino. I appreciate that. I was in private 
practice, and I did a lot of closings, and just the 
conventional home mortgage market as well as PMI really helped 
people with homeownership. I saw the problems under certain 
issues--if you got an FHA loan, it really costs a lot to a 
consumer, and PMI and home mortgage really do work with 
consumers, and I think help them get the best deal and help 
them not just buy a home, but keep it.
    I just want to make a quick statement in support of the 
Low-Income Housing Tax Credit before I close out today. I would 
like to raise one other solution that is outside this 
committee's jurisdiction, but would help address our nation's 
housing shortage, the affordable housing tax credit.
    Since President Reagan, the housing credit has been a 
successful public/private partnership that leverages the 
capital we need to develop more affordable homes for seniors, 
disabled veterans, and working people. And nowhere is this more 
evident than in Long Island, where the demand for affordable 
housing aggressively outstrips supply. That is why we need to 
expand this credit by enacting H.R. 3238, the Affordable 
Housing Credit Improvement Act, on a bipartisan basis.
    And I would like to yield to the Chair my remaining time.
    Chairman Davidson. I thank the gentleman
    I will point out this is our fourth hearing on housing, and 
while that doesn't quite keep pace with 13, I will note that 13 
didn't fix the housing crisis
    The gentlewoman from Colorado, Ms. Pettersen, is now 
recognized for 5 minutes.
    Ms. Pettersen. Thank you, Mr. Chairman.
    And thank you all for your time and expertise. I really 
appreciate being here and having the opportunity to hear from 
all of you
    I represent Colorado's Seventh Congressional District. I am 
very lucky to have been born in Colorado, and what we have seen 
in the time that I have lived there--it is actually my 
birthday, so that's 42 years of living in Colorado--we have 
seen an exponential increase in the value of homes, and when I 
think back to when I bought my first house, housing has tripled 
in just a short amount of time
    It is really the perfect storm, and I know we have talked 
at length about this today, but when we think about the housing 
crisis in 2008, that took out many homebuilders, and we still 
haven't recovered from that. We also saw our economy expand 
with the investments to keep our economy afloat during the 
pandemic, but unfortunately, our supply chain was decimated as 
well as with the increase with our economy booming, with the 
workforce shortage across industries, it has significantly 
impacted the housing market.
    One of the very easy ways that we could help address that 
issue is actually coming together on legal pathways for people 
to work here, and it is what I hear from the construction 
industry constantly, but this is something that really hits 
home for me. I think that far too often, people in Congress 
haven't had the personal experiences with which so many people 
are struggling.
    I grew up in a home where my dad lost his house and faced 
homelessness. My mom was one of the very lucky people who 
actually qualified for Section 8, which saved her life. I have 
also seen family members who were forced to live on the streets 
because there was a lack of access to housing and substance use 
disorder treatment.
    And so, when we talk about, if we don't pay the upfront 
costs of actually investing in this, it comes on the back end 
tenfold to our local, State, and Federal Government dollars. I 
want to thank you for highlighting that, Ms. Yentel, and I want 
to just bring it back to specific policy ideas, since we have 
limited time.
    The YIMBY Act, Ms. Royster, thank you for calling that out 
as an important first step forward on actually having our local 
and State Governments look at their restrictive land-use 
policies, but what in addition to this should we be doing? We 
talked about restricting their ability to actually have these 
policies at the local level, trying to bring some carrots to 
incentivize them to move in the right direction, but for all of 
you, what can we do at the Federal level beyond just general 
ideas to help support ones that use local investments?
    Ms. Yentel. I am glad to give the first response to that. 
Happy birthday, by the way. We support the YIMBY Act, it is an 
important piece of legislation, and we think it should be 
enacted. We also think we can go further on requiring local 
communities to do more to remove restrictive local zoning, and 
we can do that by tying those requirements, or incentives, to 
Federal dollars. And we should look outside of the housing 
dollars to big infrastructure dollars, the kind of dollars that 
more-exclusive communities want to receive, and would be more 
willing to make changes in order to do so.
    But also, we need to expand subsidies to make homes 
affordable to extremely-low-income people, and we should do 
that through expanding rental assistance to make it universally 
available to all households in need. We should preserve and 
build more housing that is affordable to extremely-low-income 
people through programs like the National Housing Trust Fund. 
We should continue highly-effective programs, like Emergency 
Rental Assistance, to prevent evictions, prevent homelessness, 
and we should put forward and then enforce robust tenant 
protections to keep people stably housed.
    Ms. Pettersen. Thank you
    I know we don't have a lot of time to get into this, Mr. 
Appleton, but I wanted to ask you about what you all are doing 
to make sure that people know, and that you are advertising 
access to loans without a 20-percent down payment that is 
really restrictive while people are actually saving to make 
that investment they are once again far out of reach of being 
able to qualify for.
    Mr. Appleton. Yes, thank you for that. It would take the 
average household, earning the national median income, 35 years 
to save the down payment for the average, national median-
priced house. So, we were active in local communities with 
homebuyer education resources, spreading the word that you do 
not need 20 percent to become a homeowner right now
    Ms. Pettersen. Thank you, I yield back.
    Chairman Davidson. The gentlelady's time has expired.
    The gentleman from New York, Mr. Lawler, is recognized for 
5 minutes.
    Mr. Lawler. Thank you, Mr. Chairman.
    Apparently, my colleagues seem to think that the number of 
hearings we hold translates to actual legislation passing. In 
the last Congress, there were roughly 55 hearings on housing 
and housing affordability, and yet, zero bills were enacted 
into law under Build Back Better, or the Inflation Reduction 
Act that the former Chair of this committee was pushing for; 
these bills were so bad that even the Biden Administration 
rejected them.
    And yet now, we are dealing with a 20-year record high on 
mortgage interest rates. New York City has 50,000 vacant units, 
in part, because of its draconian rent control laws, and the 
laws passed by the State legislature that require these units 
to be brought up to code. Taxes go up, energy costs go up, and 
yet, they are arbitrarily capped at what they can charge for 
rent. So, what happens? They choose to leave it vacant, and 
take the tax write-off instead. Bang up job. Good policies. 
These are really working out well.
    We have 6 million units underbuilt. How do you meet the 
supply need when the cost of living is through the roof, the 
cost of doing business is through the roof, the cost of goods 
and cost of construction, and the cost of energy, all driven by 
horrifically bad policies when Democrats had complete control 
of Washington, complete control in Albany, complete control in 
New York City. And yet, they are shocked that we have a housing 
crisis and that we have an affordability crisis.
    Maybe, we should consider changing our policies. Maybe, we 
should look at how to reduce the cost of living; reduce the 
cost of construction; reduce the cost of doing business. I 
don't know, maybe actually increase domestic production of 
energy. That might help. No, why would we think about this 
logically? So, when I hear my colleagues complain about the 
number of hearings, my God, stop worrying about the number of 
hearings and start worrying about the actual damn laws that we 
are passing. That is a better idea.
    Housing affordability is a persistent challenge. With 
mortgage rates at multi-decade highs, limited supply, and 
continued supply-chain and construction issues, for many, it is 
the most difficult time to purchase a home in a generation.
    The market is further complicated by the extraordinary 
circumstances of many homeowners unable to sell their home for 
fear of losing their low-fixed-rate mortgages obtained prior to 
the rapid increase in interest rates
    These among other factors have forced many potential 
homebuyers into the rental market, driving up rental demand and 
prices with it. In Rockland and Westchester Counties in my 
district, according to the National Association of REALTORS, 
the monthly cost of a mortgage is $1,000 more today than it was 
last year. And in Putnam and Dutchess Counties, it is at least 
$800 more per month.
    In both instances, these are additional housing costs of 
almost $10,000 or more a year. For many families, it is totally 
unsustainable.
    This topic is critical, which is why last month, I held a 
comprehensive roundtable discussion in my district on the 
housing issues that have significantly affected the local area, 
and which included a diverse group of stakeholders, elected 
officials, government agencies, nonprofit organizations, and 
key figures from the real estate industry, including developers 
and REALTORS.
    While there are some existing efforts that should be 
improved and expanded upon such as the Affordable Housing Tax 
Credit, we need to be working to remove the governmental 
barriers that drag approvals out for years, drive up costs, and 
disincentivize the investment and participation our 
constituents need. It has been mentioned a number of times the 
impact of regulation on the cost of housing, and the 
disincentivization of building, and the flawed attempts of 
government to intervene on this topic.
    This has been at the forefront of New York in the last few 
years, where we have seen a blend of heavy regulation with ham-
fisted attempts by the Governor to circumvent regulation with 
unrealistic arbitrary mandates to build housing in areas that 
don't have the requisite situation to do so, including a lack 
of infrastructure. We have to look at this holistically, and we 
need to change course. These policies are not working.
    With that, I yield back
    Chairman Davidson. I thank the gentleman.
    The gentlewoman from Michigan, Ms. Tlaib, is now recognized 
for 5 minutes.
    Ms. Tlaib. Thank you all so much for being here. We already 
know the average renter now pays over 30 percent of their 
income on rent. I know in the Detroit metro area, in my 
communities, there are 3 extremely-low-income renter households 
for each unit that is both available and affordable.
    So, the housing crisis is real. That is something, I guess, 
we can all agree on. But what I find very, very questionable is 
the assertions motivating today's hearing. It strikes me as odd 
to hear criticism of, ``An outsized government presence 
distorting housing markets by supporting low-income families, 
when the billions of dollars in benefits provided by mortgage 
interest deduction to wealthy households go unquestioned 
completely.''
    Moreover, before government intervention, many of the 
foundational elements of our housing finance system, like the 
secondary mortgage market, simply didn't exist.
    Ms. Yentel, when did the long-term fixed-rate mortgage 
option become widespread? Who created it?
    Ms. Yentel. It was under the New Deal that we started to 
have longer-term mortgage rates of----
    Ms. Tlaib. That is right.
    Ms. Yentel. ----15 years, and then it increased steadily.
    Ms. Tlaib. That is right. Before the New Deal era reforms, 
our typical mortgage had variable rates and came due in 3 to 5 
years. Fixed-rate long-term mortgages were virtually 
nonexistent. This is just one of many examples demonstrating 
the limits of what we call private market solutions.
    Ms. Yentel, even if we eliminated all regulatory barriers 
today holding back our housing markets, would market-rate 
housing be affordable for all families?
    Ms. Yentel. No, it wouldn't be affordable for extremely-
low-income households.
    Ms. Tlaib. As you stated in your testimony, our Federal 
subsidies are, ``necessary to fill the gap between what the 
lowest-income people can afford to pay and the cost of 
developing operational rental homes.'' Why?
    Ms. Yentel. Because private operators can't build and 
operate housing on their own without subsidies, and make those 
homes affordable for the lowest-income people. We have heard 
today several Republicans talk about the importance of the Low-
Income Housing Tax Credit program, which is an important 
program that can be further improved to serve the lowest-income 
people. But I believe that is a helpful recognition that 
Federal subsidies and intervention are necessary to make homes 
affordable.
    Ms. Tlaib. Yes, I believe government interventions are not 
without any shortcomings. I agree on that. But historically, 
our housing policies, in particular, have been undermined by 
racial exclusion, and bias, really, towards working families in 
my community. And some Federal policies, like the Faircloth 
Amendment, for instance, are an obstacle to building more 
affordable housing; we know this. But when Congress provides 
housing assistance to only one out of four eligible households, 
while saddling public housing with a $70-billion capital 
backlog, we must be honest with ourselves about where the 
problem lies.
    Another example of the limits of a private market relates 
to providing small-dollar mortgages. And I talked to the 
Secretary of HUD about this. For a bank, the fixed costs are 
the same to originate a small loan versus a big loan, which 
makes small loans less profitable.
    So, Ms. Yentel, what policy levers are available for the 
Federal Government to increase support for small-dollar 
mortgages? In my community, in some communities, over 30 
percent of mortgages are less than $100,000, but they are not 
getting access to these mortgages.
    Ms. Yentel. That is a question on which I would be glad to 
get back to you with further information.
    Ms. Tlaib. Are there Federal subsidies right now that can 
be provided for loan origination and servicing?
    Ms. Yentel. That is outside my area of expertise.
    Ms. Tlaib. I know millions of Americans and families are 
struggling right now. But it is access to small-dollar 
mortgages. It is the fact that we have some of these amendments 
and policies in place that really cause these barriers. But 
what I don't like is the fact that we think the private market 
is going to fix its own. And I have seen it, again, in my own 
community when we see over and over again that banks and other 
institutions have policies in place that are geared towards one 
community over another.
    I see it where Michigan lost more Black homeownership than 
any other State in the country, and I really believe it is 
because of the weakened CRA. It is because we are not enforcing 
the Fair Housing Act like we should be. And this is where we 
come in as a committee to talk about those real obstacles; 
there is nothing wrong with saying, hey, we have to do better.
    You should literally talk about where you function in Wayne 
County if over 50 percent of the housing market is less than 
$100,000 worth--the home is worth, or being put out for sale. 
Then, why aren't we saying to our banks, we will help, let's 
get these loans out, let's get homeownership increased?
    Thank you so much. I yield back.
    Chairman Davidson. I thank the gentlewoman.
    The gentleman from Nebraska, Mr. Flood, is now recognized 
for 5 minutes.
    Mr. Flood. Thank you, Mr. Chairman
    And happy birthday to our colleague from Colorado this 
morning.
    Housing affordability has become the number-one issue in 
Nebraska, and I am pleased that we are focusing on the problems 
at hand in this committee. When we talk about housing 
affordability, we need to have a conversation that is really 
focused on, what is driving the cause in my home State, which, 
unlike my colleague from New York, is a lack of supply of 
housing in the marketplace. We can subsidize all the housing we 
want at the Federal level, but regardless of how much money the 
Federal Government spends, if housing stock doesn't increase, 
the problem persists. If you want to make housing more 
affordable, you increase supply. If you want to make it more 
expensive, pour money into vouchers and subsidies.
    Before jumping into a conversation about zoning 
restrictions, I want to briefly mention manufactured housing. 
Manufactured housing has the potential to be an affordable 
alternative that lowers the cost of housing overall for single-
family units, and I am pleased to see that manufactured housing 
is part of the discussion today, and that there is some hope 
that there is legislation attached to the hearing on that 
topic.
    Now, back to zoning. I am the proud Republican lead on the 
Yes In My Backyard (YIMBY) Act with Congressman Kilmer. This 
bill would require Community Development Block Grant recipients 
to report on the policies they use related to zoning 
restrictions. Once we have comprehensive and comparable metrics 
for zoning restrictions across different jurisdictions, it will 
be easier to identify the full impact these policies will have 
on housing costs.
    Our witnesses come from all different unique perspectives, 
and I have enjoyed hearing from some of them on this important 
bill.
    Ms. Royster, could you please explain how zoning 
restrictions can impede the development of rental housing?
    Ms. Royster. Thank you, Congressman. I will give you 
examples where barriers were lowered and it increased 
development in rental housing. In 2023, several States and 
localities enacted YIMBY-related legislation to spur housing 
development. California has passed reforms to allow faith 
groups to build affordable housing on their property. And 
legislators in Montana passed a series of bills which would 
allow for backyard accessory dwelling units (ADUs), and allow 
apartments in commercial areas.
    And on the other coast, Vermont bundled zoning reform into 
a single sweeping bill which will take effect next year, 
dropping lot sizes, legalizing duplexes and fourplexes, and 
limiting minimum parking requirements. These are just a few 
States which have begun to recognize the important nexus 
between the discriminatory land-use practices, and undersupply 
of housing. As these and other land use reforms take effect, we 
will see an increase in housing supply.
    Mr. Flood. Thank you, Ms. Royster. I appreciate that.
    Ms. Yentel, can you explain the National Low Income Housing 
Coalition's support for the Yes In My Backyard Act?
    Ms. Yentel. Yes, thank you. We do support the bill. It is 
an important way for communities to have more resources and 
increased incentives to address restrictive local zoning, which 
is a part of the puzzle that needs to be solved. So, we are 
supportive of the YIMBY Act.
    Mr. Flood. Thank you, Ms. Yentel.
    Dr. Hamilton, you included some examples of localities that 
cut land-use regulations in your testimony. Can you walk 
through some of those examples for us? What were the resulting 
effects of those policy decisions?
    Ms. Hamilton. What we see is that in places that reduce 
barriers to housing construction, the market responds by 
providing more housing, at more reasonable prices, and 
accessible to more households. Thank you for your attention on 
manufactured housing as one piece of getting the rules right to 
facilitate broadly-accessible housing.
    Nebraska is one of the few States that requires its 
localities to allow manufactured housing to be sited anywhere 
that a site-built house would be allowed, and Congress could go 
further by removing the permanent steel chassis requirement on 
manufactured housing to make this type of housing more 
flexible, and able to serve a wider variety of households.
    Mr. Flood. Thank you very much.
    Mr. Michel, you also mentioned zoning restrictions in your 
testimony. Would you care to add your perspective on how 
government restrictions decrease housing supply? And you only 
have 30 seconds, so, I'm sorry.
    Mr. Michel. I am in agreement with Dr. Hamilton, and I 
don't necessarily think that it is a particularly, or mainly a 
Federal problem, but but they are real, and they matter.
    Mr. Flood. Right. Our witnesses today, to the chairman's 
credit, represent a wide range of players in the housing space. 
Let the record show that we have extensive support on the Yes 
In My Backyard Act from our witnesses today. I appreciate all 
of your testimony and your time. And with that, I yield back.
    Chairman Davidson. I thank the gentleman.
    The gentlewoman from Georgia, Ms. Williams, is now 
recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you, Chairman Davidson.
    And thank you to all our witnesses for joining us today for 
this very important conversation.
    I represent Georgia's Fifth Congressional District, 
centered in my home City of Atlanta. It is no secret that my 
district has one of the largest racial wealth gaps in the 
country. Affordable housing lays the foundation for financial 
stability, economic mobility, and wealth-building. Without it, 
the racial wealth gap will continue to grow.
    Over 2,000 Atlantans are experiencing homelessness due to 
the lack of affordable housing, while nearly half of Atlanta's 
renters are cost-burdened. But despite these pressing 
challenges, Atlanta is short more than 130,000 affordable 
housing units--130,000. And some that we do have, have been 
deemed uninhabitable.
    Last year, all of the residents of Forest Cove, an 
affordable housing complex in my district, were forced to 
relocate because of excessive mold, broken windows, burned 
buildings, and other issues that made the complex unlivable. 
And this is unacceptable. ``Affordable'' is not a synonym for 
poor, low quality, or unsanitary. Affordable means inexpensive 
and reasonably priced to meet people's budgets, to build their 
lives and have the opportunity to build wealth. My constituents 
need affordable housing that is also safe and comfortable, and 
yes, even desirable.
    Ms. Yentel, what can we expect to happen if Congress 
continues to kick the can down the road on this housing crisis, 
if Republicans are successful in slashing the Federal housing 
budget, and if there is continued finger pointing at States and 
local governments to do the work alone?
    Ms. Yentel. The housing crisis will worsen, and already, by 
nearly all measures, the shortage of housing for the lowest-
income people and the lack of affordability is worse than it 
has been on record. And the issue that you raised about Forest 
Cove is very important, and it points to the fact that we not 
only need to be providing new subsidies for more families to 
have housing that is affordable to them, but we have to focus 
on preservation of existing affordable housing stock.
    And in the public housing, the public housing capital needs 
are beyond $70 billion just to fix up the existing public 
housing infrastructure to make it safe and sanitary and 
habitable for the people who live there today, and to preserve 
it for future generations. Because we so woefully underfunded, 
preservation of public housing and also Project-Based Rental 
Assistance and other types of affordable housing, we are losing 
10,000 to 15,000 units a year of public housing to obsolescence 
or decay. So by not further investing in maintaining our 
critical affordable housing infrastructure, we are worsening 
the shortage of homes for the lowest-income people.
    Ms. Williams of Georgia. Thank you, Ms. Yentel. And I am 
glad that you, as well as one of my colleagues, brought up 
inventory, because the inventory plays a crucial role in 
housing affordability. When complexes like Forest Cove are 
unlivable, it forces families to find more-expensive places to 
live, uprooting lives, and putting even more strain on our 
limited supply of affordable housing.
    And as if dwindling inventories of affordable housing 
weren't enough, too many families in my district and across the 
country are facing outside competition from massive investment 
firms. When they think they are ready to make the leap to 
buying a home, they are cut off at their ankles by investment 
firms. Families are being outbid by investment companies which 
are buying up single-family homes at astonishing rates. Just in 
Atlanta, large institutional investors own nearly 72,000 
single-family properties, according to the Urban Institute.
    Yesterday, I co-led the introduction of Congressman Adam 
Smith's End Hedge Fund Control of American Homes Act, to put an 
end to this and make sure that families who have the means and 
the ability to purchase a home are able do so. Over a 10-year 
period, this important legislation would reduce the number of 
single-family homes owned by hedge funds, putting the power to 
purchase back in the hands of families, so that they can start 
building equity, and more importantly, building their lives and 
helping to close the racial wealth gap.
    Ms. Yentel, how has the rapid entrance of hedge funds and 
other institutional investors into the single-family housing 
market impacted the ability of low- and middle-income families 
to buy a home?
    Ms. Yentel. In many of the ways that you raised. And I 
would add that it also creates challenges for the people who 
rent those single-family homes that are owned by institutional 
investors. In general, institutional investors are among the 
worst actors in the housing field when it comes to landlord/
tenant relations. And the research and the data show that those 
institutional----
    Ms. Williams of Georgia. Ms. Yentel, unfortunately I am out 
of time. I have more questions that I will submit for the 
record.
    Thank you, Mr. Chairman. And I yield back.
    Chairman Davidson. I thank the gentlewoman.
    The gentlewoman from Texas, Ms. De La Cruz, is now 
recognized for 5 minutes.
    Ms. De La Cruz. Thank you, Mr. Chairman, for holding this 
hearing today. And I thank our witnesses for appearing before 
us.
    This is an issue that is close to me, as I believe that 
people in south Texas, Americans, understand the very real 
impact of rising housing costs. More and more Americans 
continue to see their housing expenses rise as their single-
most expensive monthly cost. Inflationary pressures have pushed 
interest rates up, and added premiums which are unaffordable to 
some would-be homebuyers. And since the pandemic, Washington 
has only made this issue worse by pumping trillion of dollars 
of Democrat-sponsored spending into the economy.
    Mr. Appleton, as you know, there are several factors in the 
mortgage market simultaneously hindering an increase in the 
housing supply. Our current high-interest rate environment both 
increases costs to borrowers, and also, disincentivizes 
existing home sales from homeowners locked into lower rates. We 
now also see the potential for the Basel III proposal to 
dramatically increase capital requirements, and in turn, 
potentially increase the risk weighting of single-family 
mortgages. My question is this: Can you elaborate on the 
negative impact that this would have on mortgage affordability 
and mortgage availability?
    Mr. Appleton. Thank you for your question, Congresswoman. 
If finalized, the proposed Basel III Endgame would limit the 
ability for certain banks to provide access to credit for low-
down-payment borrowers, including many first-time low- and 
moderate-income and minority borrowers. The rule should 
recognize the loss-absorbing benefits of private mortgage 
insurance in determining the loan-to-value ratio-based risk 
weights, but it doesn't. So, restoring that recognition would 
encourage innovation in portfolio lending and level the playing 
field to ensure consumers have access to a broad array of low-
down-payment financing options across bank portfolio products, 
GSEs and government agency executions.
    Ms. De La Cruz. Absolutely. And I am going to have you 
repeat this: You said that the Basel III would have a 
significant impact on minorities? Is that correct?
    Mr. Appleton. Communities of color and minorities are less 
likely to have the intergenerational wealth to bring a large 
down payment to the closing table. And by Basel's risk weights 
and lack of recognition for private mortgage insurance, it is 
going to make it uneconomical and very difficult for banks to 
engage in that type of lending.
    Ms. De La Cruz. So, where we have my colleagues on the 
other side of the aisle who say that Basel III is actually 
going to help minorities, what I am hearing from you is that it 
is actually going to hinder minorities in their dream of owning 
a home. Is that correct?
    Mr. Appleton. Yes. I think there has largely been alignment 
among consumer groups, mortgage market participants, and 
members of this committee on both sides of the aisle that Basel 
III is going to be negative for low-down-payment borrowers, 
including low- and moderate-income and minority borrowers.
    Ms. De La Cruz. So, now that we are all in agreement that 
housing affordability is at historic lows, is now the right 
time for regulators to further restrict access to capital?
    Mr. Appleton. Absolutely not.
    Ms. De La Cruz. Mr. Michel, along the same lines of 
government intervention impacting the housing market, we also 
saw that President Biden and my colleagues on the other side 
pumped trillions of dollars into the economy these past few 
years. Of course, that led to inflationary pressure, and it 
continues to impact and is the reason why we're here right now. 
Given this high-interest-rate environment, would you say that--
or I am going to ask what market-based recommendations do you 
have to bring down the cost of housing?
    Mr. Michel. Again, I think this is largely a crowding-out 
sort of problem, so I have several recommendations alluded to 
in my testimony that would start down that path. But you have 
roughly 90 percent or more of the mortgage-backed securities 
market dominated by the Federal Government. That is one way. 
You have to start paring that back. The excessive-use provision 
is one thing that could be defined and enforced. Reducing FHA 
insurance to match VA insurance would be another.
    Ms. De La Cruz. Thank you.
    Chairman Davidson. I thank the gentlelady.
    The gentleman from California, Mr. Vargas, is recognized 
for 5 minutes.
    Mr. Vargas. Thank you very much, Mr. Chairman.
    First of all, I would like to thank you and the ranking 
member for the courtesy of allowing me to sit in on this 
subcommittee. I waived on for the day.
    Chairman Davidson. Thanks for the interest.
    Mr. Vargas. Thank you.
    And I would like to also associate myself with what our 
ranking member said about Chairman McHenry. I think he is a 
very honorable, very fair person, as I think you are, too. And 
again, I appreciate the opportunity.
    According to the October 2023 Consumer Price Index, housing 
costs remain the key driver of inflation in our country. Since 
2020, home prices have skyrocketed by 47 percent. As of 2023, 
the average renter is now rent-burdened, paying significantly 
over 30 percent of their income on rent, as we have heard here 
today. All of our constituents are feeling this.
    And I have to say that we all have our personal stories. 
The situation with me was that my mom and dad worked themselves 
to the bone to make sure that they had a house. And that little 
house financed nine undergraduate degrees, numerous advanced 
degrees, and scores of law books, engineering books, finance 
books, and social services books. And ultimately, it really was 
the ability to take money out of that house and really the 
generosity of my parents that enabled all of my brothers and 
sisters and I to get a decent education. I went to Harvard, so 
it is not real grit, but it is okay.
    But, again, it was that house that gave that opportunity. 
It really was. And they worked hard for that. So, I was a 
little intrigued with the provocative statements that you were 
making, Mr. Michel, saying that Federal policy should not 
encourage homeownership. I don't want to put words in your 
mouth, but I believe that is what you said. Would others agree 
to that? It seems to me that that is somewhat wrong-headed. I 
see someone is anxious to go--would you like to comment? I saw 
you going towards the microphone.
    Mr. Appleton. Sure. Look, I think that the Federal Reserve 
survey of consumer finances has found that the average net 
worth of a homeowner is 40 times the average net worth of a 
renter. I think that we need to make sure we have consistent, 
coordinated, and clear housing finance policy to make sure that 
private capital is not crowded out of the market unnecessarily 
by government programs. But I think that homeownership, when 
done sustainably and responsibly, is an excellent mechanism for 
wealth-building.
    Mr. Vargas. I don't agree with everything you said, but I 
agree with a lot of what you have said. I do think that the 
government should be involved for those who can't afford it. 
The down payment is really what kills a lot of people. They 
can't afford it. And I am not against private mortgage 
insurance. I used it when I bought my first home.
    As for manufactured housing, people are going to favor it. 
I am not against it. But I do think the Federal Government has 
to be involved because there are some people who make very 
little money. And by the way, for a lot of people, they won't 
be able to own a home because they don't make much money, and 
that is why I think the Federal Government has a 
responsibility. And having all of these people on the streets, 
whether it is .001 percent or whatever it is, there seems to be 
a huge amount of people on the street, living in a way that is 
disgraceful. It is awful.
    I travel significantly around the world and you don't even 
see this in developing countries. It really is awful and we 
have to do something about it. But I do think that the 
restrictive laws that we have on zoning are problematic, but I 
also understand a lot of people don't want to change the 
character of their neighborhood. I think that is why we have to 
encourage homeownership, but also in a way that the 
neighborhood will accept, and that means you have to tell 
people that stacking homes is okay, and making the lot smaller 
is okay. All of these things are important.
    And then, subsidizing--for those who need subsidies, we 
should do that. Who can disagree? I know, Mr. Michel, you 
disagree with that. And I should actually give you some time to 
react to that. Go ahead, sir. I don't have much time.
    Mr. Michel. Sure. Renting is often economical. I have 
rented all my adult life; I still do. I advised the colleague 
sitting behind me that she should rent and not buy a house, but 
I don't think she is going to listen to me.
    Mr. Vargas. Reclaiming my time, I think that is a bad idea.
    In 1976, I bought my first home. And in 1993, I paid 
$176,000. I just put it in the U.S. inflation calculator, and 
that home, if it followed inflation today, would be $373,000. A 
home just down the street from mine, exactly the same size, 
sold for $1.85 million. So, I would say that was a very good 
investment.
    Mr. Michel. Yes. But that is not an affordable home at that 
point.
    Mr. Vargas. That is right. It is not an affordable home, 
but it is a house that certainly benefited me and my family, as 
the house that my parents bought didn't increase significantly 
like this one did. That is why I think to argue against 
homeownership, the American Dream, is provocative to say the 
least, but----
    Mr. Michel. That is the equivalent of saying that we should 
encourage high-leverage investment.
    Mr. Vargas. No, no.
    Mr. Michel. It is.
    Mr. Vargas. But we should encourage homeownership. It is 
the American Dream to come home to a house that you own.
    Mr. Michel. That is the way we have been doing it.
    Mr. Vargas. My time is up. But again, I thank you for the 
courtesy, sir.
    Chairman Davidson. I thank the gentleman.
    And the gentleman from Tennessee, Mr. Rose, is now 
recognized for 5 minutes.
    Mr. Rose. Thank you, Chairman Davidson, and Ranking Member 
Cleaver, for holding this hearing. And thank you to our 
witnesses for being here. I would also like to thank this 
subcommittee for the opportunity to waive on to today's 
hearing.
    The growing scarcity of affordable housing in this country 
for both homeowners and renters is a serious crisis. Helping to 
alleviate this crisis will require, as our hearing title 
suggests, knocking down government barriers that are standing 
in the way of helping to supply more affordable housing. One 
such government barrier--and Ms. Hamilton has already made 
reference to this--to more affordable housing is HUD's outdated 
requirement that manufactured housing be built on a permanent 
chassis. A permanent chassis allows manufactured housing to be 
more easily transported. This is helpful if a manufactured home 
will be moved multiple times during its lifetime.
    However, as I think most people are aware, many 
manufactured homes are now built with the intention of being 
permanently placed in one location, and thus do not need to be 
built with a permanent chassis. Eliminating the permanent 
chassis requirement for manufactured housing from the Federal 
construction code, administered by HUD, will help to 
potentially save thousands of dollars on new manufactured homes 
made without a permanent chassis.
    I am proud to have introduced a bipartisan bill, H.R. 5198, 
the Expansion of Attainable Homeownership Through Manufactured 
Housing Act of 2023, along with my colleague, Congressman 
Correa of California, that will eliminate this outdated 
requirement. I thank the subcommittee for attaching the bill to 
today's hearing, and I look forward to working with my 
colleagues to advance this important piece of legislation.
    Ms. Hamilton, I know you have already spoken about this 
today to some extent, but the latest figures show America is 
short 3.9 million homes. This shortage is especially severe 
among starter homes for first-time homebuyers. Meanwhile, a 
manufactured home could be built for 20 to 50 percent less than 
an equivalent site-built home. Can you expand on how the 
current statutorily-required permanent steel chassis for every 
HUD code manufactured home prevents broader adoption of this 
cost-efficient building choice?
    Ms. Hamilton. Thank you, Congressman.
    Yes, manufactured housing is the most cost-effective way to 
deliver a new unit of housing in the U.S. today. And that is, 
in large part, due to the HUD code's focus on affordability 
over other types of policy priorities. The permanent steel 
chassis requirement, as you said, is intended for manufactured 
housing that will be moved from site to site, when that is 
often not the case, particularly in rural communities where 
manufactured housing is a very important source of relatively 
low-cost housing.
    Eliminating the steel chassis requirement could also open 
up new opportunities for manufactured housing to serve as 
accessory dwelling units. We are seeing many States and 
localities pursuing accessory dwelling unit reform as a 
relatively low-cost way to provide new housing. And eliminating 
that requirement means that different types and different sizes 
of units can be produced under the HUD code, creating a policy 
that can work hand in hand with State and local accessory 
dwelling unit reform.
    Mr. Rose. Thank you. I appreciate that.
    As I see time winding down, I think anyone who has had the 
opportunity to tour or be present at one of the manufacturing 
facilities where manufactured housing is produced will 
understand what I am trying to get at here. And that is, we all 
know there is a shortage today of skilled tradesmen in our 
country necessary for building a home. My wife and I are 
renovating a home on our farm that we hope to move into; it is 
supposed to be ready in August. I apparently forgot to tell the 
builder which year we wanted to be in, in August. But there is 
a shortage of trades. So, I am wondering if you might just 
expand in the few seconds we have left here on how the adoption 
of manufactured and modular homes helps to fix this problem in 
rural America.
    Ms. Hamilton. Thank you. That is right. Manufactured 
housing allows a unit of housing to be built in a different 
location than where it will be sited. And opening up 
opportunities for housing in California, for example, to be 
built in a lower-cost place is a very positive outcome.
    Mr. Rose. Thank you. And I yield back, Mr. Chairman.
    Chairman Davidson. I thank the gentleman.
    I would like to thank our witnesses for their testimony 
today. We greatly appreciate it and it was very helpful.
    The Chair notes that some Members may have additional 
questions for this panel, 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.
    I ask our witnesses to please respond as promptly as you 
are able.
    And this hearing is now adjourned.
    [Whereupon, at 12:17 p.m., the hearing was adjourned.]

                            A P P E N D I X



                            December 6, 2023



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