The Trump Administration and members of Congress on both sides of the aisle are now signaling that they understand how vital it is to address one of the most serious needs of America’s families and our economy: the ability to afford a home, which provides the foundation for Americans to reach their full potential.
Now the challenge is turning this understanding into action by the Administration and Congress through legislation to increase the supply of homes that are affordable in communities nationwide.
U.S. Department of Housing and Urban Development Secretary Ben Carson noted that the Administration “considers housing a significant part of infrastructure in our country. And as such, the infrastructure bill that’s being worked on has a significant inclusion of housing in it.” This is a powerful statement as the bill would come at a critical time, when there’s a growing shortage of affordable homes which is projected to get worse in the coming decade.
Meanwhile, Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) recently introduced the Affordable Housing Credit Improvement Act to expand and strengthen the Low-Income Housing Tax Credit (Housing Credit), which finances virtually all affordable rental homes nationwide. Over the next decade, this expansion would create an additional 400,000 affordable homes and support nearly 500,000 jobs in communities across the country. Companion legislation in the House of Representatives introduced by Representative Pat Tiberi (R-OH-12) and Ways and Means Committee Ranking Member Richard Neal (D-MA-1) would also strengthen this important program.
These bipartisan efforts are informed by a growing body of research which affirms the importance of stable and affordable homes for people’s health, education and potential for economic mobility. But unless our country can create more well-designed homes made affordable and connected to quality healthcare, schools, jobs and transit, the growing number of families struggling to afford a roof overhead will continue to fall short of their potential. As a result, so will our country.
Rising rents and flat wages have left one in four renters nationwide—11.4 million households—paying at least 50 percent of their income on homes. After securing their basic need for shelter, families are left with too few dollars for other necessities like healthy food and medicine, let alone for pursuing opportunities like education or job training to improve their financial situation for the long term.
At the heart of the Administration and Congress’ efforts to address housing affordability must be the Housing Credit. It is essentially the only tool we have to encourage private investment in affordable housing. The strong bipartisan support for the Housing Credit in Congress, in the Administration, and across state and local governments is a testament to its thirty-year track record of success. Since President Reagan signed it into law in 1986 as part of the last major tax reform, the Housing Credit has financed roughly three million affordable apartments, which have provided homes that low-income veterans, seniors, working families and people with special needs can afford. It also supports 100,000 jobs per year, primarily in small businesses, who reinvest that money in their communities.
A model public-private partnership, the Housing Credit enables the federal government to harness our nation’s entrepreneurial spirit, generating more than $165 billion in private investment since 1986. Individual states administer the Housing Credit, providing local control over how best to meet their specific housing challenges in urban, suburban and rural communities.
And, the Housing Credit’s structure in the tax code ensures accountability and results. Investors receive credits only after properties are up and running as homes to income-eligible families at affordable rents. In other words, private investors, not taxpayers, bear the financial risk of development.
The Administration and Congress can also support the effectiveness of the Housing Credit by continuing to provide flexible housing funds to states and local governments through programs like HUD’s HOME Investment Partnerships program and Community Development Block Grants, which provide critical financing to many Housing Credit developments.
For the millions of families struggling to afford a home, reaching their full potential can seem as impossible a climb as Mt. Everest. When they have a home, they are not the only ones who benefit. The rest of the country does too: from parents who have more money to add to the economy, from children who are more ready to learn thanks to stability at home, from communities that have more jobs.
Addressing our country’s growing affordable housing challenges through smart, proven policies represents a historic opportunity to strengthen our economy and communities. By seizing it, the administration and Congress will begin to lay the necessary foundation for our nation to realize its full potential.