Nature

Reviews | When it comes to inflation, we should focus on the cost of housing

As CEO of Habitat for Humanity International, I have seen how rising housing prices are making it increasingly difficult for hard-working families to make ends meet. For decades house prices have exceeded household incomes and now we see an entire generation robbed of the promise of home ownership. Soaring house prices have also left millions of families struggling to keep a roof over their heads while affording basic necessities, such as food and medicine.

Housing costs account for a third of the consumer price index – the most widely followed indicator of inflation. Even before the pandemic began, 1 in 7 American households spent half or more of their income on housing. Housing inflation is eroding families’ ability to save, pushing many landlords and renters to the brink of eviction and foreclosure – and squeezing potential new buyers out of the market. In 2021, a median-priced home was unaffordable for two-thirds of potential first-time buyers in the nation’s top 100 metropolitan areas.

We cannot curb housing inflation until we address the systemic housing shortage in our country, especially our insufficient supply of decent and affordable housing. This severe shortage is underpinned by a decades-long decline in the construction of modest homes, which affects all major regions of the country and has an outsized impact on marginalized communities in particular.

So even as the Fed takes center stage in Washington’s efforts to fight inflation, Congress has a chance to protect Americans from the onslaught of inflationary pressures by accelerating the construction of new affordable housing. And if lawmakers are serious about building a more equitable and resilient economy, they must also aim directly at dismantling the policies that for decades have kept millions of households from accessing the quintessential American dream of homeownership. .

Here are three ways Congress can act:

Enact zoning reforms to increase the supply of building land

Restrictive zoning and land use policies continue to impede the growth of our nation’s safe and affordable housing supply. According to a national study of US cities, 75% of residential land is off-limits for building duplexes, townhouses, or anything other than detached single-family homes. We need congressional zoning reforms that allow for attached and multi-family housing, reduced building costs, and simplified permitting processes.

In California, recent changes to zoning laws that made it easier to build smaller “secondary suites” tripled the number of affordable homes built between 2018 and 2019. These reforms can be a real boon to local economies by attracting workers, employers and new business development. Congress should give serious consideration to the recently proposed Unlocking Possibilities program, which pushes for zoning reforms to address the chronic shortage of building land for affordable housing.

Establish tax credits to encourage the construction of entry-level homes

Curbing housing inflation will also require targeted tax credits that incentivize builders to rehabilitate and expand the supply of low-cost housing. This is exactly what the Neighborhood Homes Investment Act would do. Using these new tax credits, it is estimated that every billion dollars invested would result in the construction or rehabilitation of 25,000 homes, over 33,000 jobs in construction and construction-related industries, and $1.25 billion in federal, state and local tax revenue.

Just as the Low-Income Housing Tax Credit has been a key driver of affordable rental housing construction, these new real estate investment tax credits would help promote the preservation and restoration of affordable housing while stimulating reinvestment in struggling communities. Over time, initiatives like these will not only help create intergenerational wealth in communities of color long excluded from homeownership opportunities, but will also generate economic growth that benefits all Americans.

Create Competitive Grants for Building Nonprofit Homes

Finally, competitive grants will help experienced nonprofit homebuilders expand the supply of affordable housing for those who need it most. Congress should create a Community Restoration and Revitalization Fund, which would provide competitively awarded federal grants to nonprofit-led partnerships to build low-cost homes in distressed and gentrifying communities. By funding such grants, Congress can put homeownership within reach of first-time buyers and expand access to affordable rental housing for families struggling to stabilize their housing costs and replenish their savings accounts. .

Expanding our country’s supply of affordable housing is critical to America’s long-term recovery from the pandemic. This is how we control headline inflation, reduce systemic racial gaps in home ownership, and create fairer economic opportunities for all. Families cannot build a better future if they cannot find safe and affordable housing. As one of the wealthiest nations in the world, we can and must do better. Now is the time to seize the momentum of historic change and commit to a future in which every American can afford a place they are proud to call home.


Politico

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button