In an effort to address the country’s lack of affordable housing, Congress passed a sizable housing bill, but experts say it’s unclear how much it will actually lower home prices for buyers and renters.The Housing for the 21st Century Act, a bipartisan bill that aims to expand the supply of affordable housing, was passed by the House of Representatives this past week.
This development prepares the ground for future political negotiations. Previously, in October, the Senate passed its own bipartisan legislation as part of a broader package, but that was removed from the final bill. The ROAD to Housing Act is a stand-alone bill that the Senate is currently debating.
According to Fast Company, both chambers must ultimately reach a consensus on a final draft of a housing bill that will also have the backing of President Donald Trump.
The legislation addresses a major concern for Americans. According to a survey conducted by the Pew Research Center in late January, over 62% of adults are “very” concerned about the cost of housing, which ranks just behind the cost of healthcare (71%) and the price of food and consumer goods (66%).
According to David M. Dworkin, president and CEO of the National Housing Conference, a nonprofit organization dedicated to affordable housing, the House’s legislation is a major step forward, but it won’t immediately resolve a crisis that has developed over time and will need a gradual resolution.
In a statement commemorating the legislation’s passage, Dworkin stated, “We got into this crisis one unit at a time, and we will get out of it the same way—one unit at a time—through a range of coordinated strategies that expand supply, reduce costs, and improve access to affordable homes.”
Its provisions include grants for infrastructure supporting new residential construction, financing for affordable housing developments, and changes intended to encourage private investment in housing markets. Changes aimed at promoting denser, mixed-use development in areas long constrained by zoning regulations were also included by legislators.
Additionally, by expediting the review process required by the National Environmental Policy Act (NEPA), the House bill seeks to address potential obstacles in construction activities. It creates categorical exclusions for smaller-scale projects by specifically exempting some housing-related projects from drawn-out reviews.
“Finally, the bill envisions a future of more manufactured housing by again changing some of the requirements related to this type of construction that might address the availability of affordable housing,” Fast Company reported. The bill also eliminates redundant environmental assessments, allowing housing projects that have already received approval through one federal assistance program to avoid another review, provided that the project’s scope, scale, and location remain largely unchanged.
The bill’s supporters contend that it could eventually lessen the upward pressure on prices and rents by increasing the total supply of housing and lowering regulatory obstacles.
However, analysts and observers of the housing market warn that the impact on home prices might be uneven and gradual. Housing economists note that national median home prices have been driven higher by a combination of low inventory, strong demand, rising construction costs, and state and local land-use policies that limit development. They claim that although the new federal initiative might ease some restrictions, it doesn’t directly lower the cost of labor, materials, or land, all of which contribute significantly to housing costs.
Additionally, some experts note that price changes may happen at different rates in different places due to the significant regional variations in housing markets. Compared to markets with accessible land and more lenient regulations, urban areas with stringent zoning and high demand may experience slower changes.
Although supporters of the bill admit that it is not a “quick fix,” they claim it is a long-term plan to increase housing affordability. How well the law accomplishes its objectives will be largely dependent on how federal agencies implement it and collaborate with state and local governments.
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