Stop the Presses! A Good Housing Bill Passed Both Chambers!

It's a bill that has a good chance of moving the boiling pot of our affordable housing shortage to the front burner.

Given that this ‘Stack rarely fails to point out the failures of our current political system, it’s important to note when it gets something right. Which it just did with what is probably the top item on the Affordability Agenda: the lack of affordable housing. Large majorities in both chambers voted for the bill (358-32 in the House(!!)), and while you never know with this guy, Trump is expected to sign it any day now.

No bill is perfect, and housing is a complex space, involving thousands of local districts, each with their own rules, financing challenges, the costs of land, labor, materials, and the particularly challenging fact that productivity in the construction sector has been awful for a very long time.

I’m talking about the 21st Century ROAD to Housing Act. And yes, it’s confusing to name a housing act after an infrastructure target (roads), but that’s a minor annoyance. The scope and targeting of the bill, particularly its focus on improving the supply-side constraints of the housing market, are extremely welcomed. It doesn’t go far enough, and it devotes little funding to the problem. But it’s still packed with dozens of changes that have to potential to push out housing supply curves across the land.

The bill itself is a bit of a beast, with 12 Titles (Sections) that are efficiently described in this Bipartisan Policy Committee doc from which I quote below. I’ll just site a few highlights, but I urge you to look up the details.

Title 1: Opportunities for Housing

As the Abundance Bros taught anyone willing to listen, there’s no affordable housing reform without permitting reform, including re-examining safety requirements that now serve less to protect people than to add sludge to the building process. In this spirit, I applaud a section in this title that directs HUD (federal gov’t housing agency) to establish new guidelines for residential buildings that allow for a single internal stairway for up to five stories, including grants for pilot projects that test “the safety, feasibility, or effectiveness of single-stair multifamily buildings.”

Title 1 also directs the FHA to set up a pilot program (there are a lot of pilots in here, which is one reason the cost is so low) that allows them to fund low-dollar mortgages that the private credit system ignores. HUD is directed to “publish guidelines and best practice frameworks for state and local zoning and land-use policies.”

There’s a global issue here. This bill demands a level of expertise, persistence, and creativity from HUD that hasn’t been there for a while, even pre-Trump. That’s not a critique of the many excellent housing experts employed there; it’s a reflection on the extent to which the agency has been ignored and defunded. Thus, a pre-requisite for the success of the ROAD Act is a revitalized HUD. That won’t happen in this admin, but it must happen in the next one. IMHO, the next Sec’y of Housing should not be thought of as a b-list sec’y of little consequence. It should be an exemplary administrator, and I’ve got great names in mind.

Title 2: Building More in America

This one contains dozens of changes designed to unlock supply. It is well understood that NIMBYism has successfully harnessed environment reviews to block building. This title pushes back on this by providing HUD with new authority to apply exemptions to the relevant regs. It also allows broader financing from community block grant programs and creates another pilot that awards grants to convert abandoned commercial and industrial buildings into affordable housing. To be clear, the bill sets aside fewer resources than would be needed to make a big dent in supply from this measure, but that’s what pilots do.

One part of this title is something for which I’ve long advocated, and one we included in our CAP housing plan. As is often the case when the fed gov’t fails to address a serious problem, sub-national gov’ts go to work. There are now many effective supply-expansion programs in states both blue and red, but they’re often undercapitalized. The bill creates “a $200 million annual competitive grant program for local governments and tribes that demonstrate measurable increases in housing supply, incentivizing reforms such as streamlined permitting, density bonuses, and zoning changes.”

If that’s as effective an idea as I hope it will be, we’ll need to scale up its price tag, but this is a fine start. Remember, the feds need to rebuild our human-housing-policy capital after the Trump/DOGE madness.

Title III: Manufactured Housing for America

I’m also excited about this title, as it has the potential to finally tackle a critical angle of the productivity problem pictured above. The production and dissemination of both manufactured and modular housing has been blocked by pass-their-sell-by-date regs that this title goes after.

First, note that many of today’s manufactured homes both nice homes and non-mobile, like this:

But current regs require such homes to be built on a permanent chassis, which allows them to be transported. Not only is this requirement antiquated, but it has negative financing and zoning implications that the ROAD Act eliminates while establishing HUD as “the primary authority on construction and safety standards for manufactured homes.” That’s a great e.g. of wrestling back local control in a case where the status quo delivers consequential, productivity-killing market failures.

The title makes similar efforts to pave the way for more modular housing by starting a process to standardize the code in ways that obviate tweaking the design for every distinct district.

Title 4 cuts through some permitting sludge, e.g., by speeding up property inspections, and loosens some financing constraints. Title 5 reforms and improves existing programs, notably the HOME Investments Partnerships Program, a block grant to states that supports building and maintaining affordable rental and owner-occupied housing. Importantly, the bill significantly raises HOME’s income eligibility threshold. The Low Income Housing Tax Credit is also expanded by increasing the cap on private financing (which could prompt billions more in financing) and reducing administrative blockages for LIHTC voucher holders.

Title 6 helps our veterans, targeting both affordability and homelessness. Truth be told, it takes a relatively small whack at this big problem, e.g., it “excludes disability benefits received by veterans for the purpose of determining income eligibility” for a veterans program that provides housing assistance and case management services. But again, it’s the right start.

Then there are a few titles strengthening oversight and accountability. You know how the Fed chair has to testify in Congress a few times a year on monetary policy? How about the HUD sec’y has to do so re housing affordability? In fact, the body language of the ROAD Act is very much in this spirit, moving the boiling pot of our affordable housing shortage to the front burner.

One of the bigger dust-ups when the bill was in process had to do with blocking investors from buying up homes and properties, raising costs and out-competing regular folks with much shallower pockets. That can definitely be problematic, but this part of the original bill cast the net too wide, including measures that likely would have significantly reduced the supply of built-to-rent (aka workforce) housing, most notably the "disposal requirement." As originally written, this requirement would have discouraged development of this much needed form of housing, but the amendments fix this problem. Note that the National Low Income Housing Coalition, a group with a long, strong track record of affordable housing advocacy, wrote "NLIHC welcomes the release of the House’s amended version of the “21st Century ROAD to Housing Act” as a positive step towards enacting a final bipartisan housing supply bill and urges the House to pass the amended bill as quickly as possible."

Title 11, ftr, is awful, dumb, and a reminder that these people can’t help but be bought off in destructive ways, even when they’re otherwise on the right track. It prohibits the Federal Reserve from developing a central-bank-digital-currency (CBDC), one that would help to put the crypto scammers out of business (49 countries have either launched CBDCs or are planning to do so; China’s is in the pilot stage). But their lobby managed to jam this prohibition in a housing bill.

That’s more than enough for now, but I won’t stop there, with that bad taste in our mouths, so let me say that the ROAD Act points the way forward. It’s an all-too-rare e.g. of Congress doing what they’re paid to do: analyze a critical, national problem and craft data and research-based policies to ameliorate it. Sounds simple, but it never happens these days.

While the bill is sweeping in its many components, it’s small in terms of funding (millions, not billions) and replete with pilots, which, by definition tend to be small bore. And, yes, solving our affordable housing shortfall will take real money, which we don’t see here. The fact is that, in today’s markets, especially those where most people want to live, building affordable housing—multifamily or owner-occupied—doesn’t pencil out for developers looking for ROIs. Such building must be subsidized, and it is (LIHTC, e.g., costs around $15 billion/year). Just not particularly effectively.

But you’ve got to walk before you can run, and walking down this ROAD is a solid step in the right direction, not to mention a reminder that useful Congressional action is not extinct. I don’t expect this admin to do much in this housing space, but once we in the electorate kick their butts outta here, we will have a lot of new, smart options to get to work helping Americans afford this most basic need.