A Housing Plan for the Nation

This article has been adapted from the Penn IUR brief “A Housing Plan Both Parties Can Support.”

Thanks to Massachusetts Senator Elizabeth Warren, plans are again an “in” thing. This includes housing plans. So far, 11 past and current candidates for the Democratic Presidential nomination as well as President Trump have released some type of national housing plan. Some are more thoughtful than others—Senator Warren’s and South Bend Mayor Pete Buttigieg’s are especially worth a look—but, predictably, each skews toward its sponsor’s political base. These partial plans all raise the question of what a truly national housing plan should look like. This short piece identifies five housing policy areas where federal leadership could improve the housing circumstances of all Americans, including homeowners, renters, those currently living in poverty or with disabilities, as well as the 10+ million new households projected to be legally added to the U.S. population during the next ten years.

1. Expand Minority Homeownership within a Revamped Fannie Mae and Freddie Mac: Becoming a homeowner is still the most effective path to wealth-building in America, but with Black homeownership rates at just over half those for Whites, efforts to lift more African-American households out of poverty have largely stalled. As discussions in Washington proceed about whether and how to reprivatize Fannie and Freddie, it is essential that Congress forcefully reassert the two agencies’ roles in promoting minority homeownership. This could be done in a number of ways that would not violate the Fair Housing Act, including making loans with lower down payment requirements and income qualifying ratios available to first-time homebuyers who purchase homes in distressed neighborhoods.

2. Incentivize Smart and Equitable Infill Housing Construction: Not long ago, city officials were intensely worried about population decline and urban disinvestment. Today, the hot-button topic is gentrification: the imbalance between a growing demand and limited supply of urban housing that has expressed itself as the sudden influx of higher-income residents and corresponding rise in housing prices in previously low-income neighborhoods leading, in extreme cases, to significant displacement and homelessness.

The federal government has historically stayed out of local housing construction battles, preferring to keep mortgage rates low to encourage housing production on a national level. Recent efforts by Congress and the Trump Administration to promote new investment in urban neighborhoods have focused solely on giving tax breaks to investors.

It is now time to even the equity scales by creating a modestly sized Smart & Equitable Growth Fund to provide housing and infrastructure funding to cities that, with appropriate community involvement, proactively up-zone locations with good public transportation access while also adopting meaningful inclusionary housing programs. This something-for-everyone strategy would enable cities to build needed market-rate housing while also expanding the supply of affordable housing. This additional funding would not end all community growth and gentrification battles—many of which are really more about community control than affordable housing—but would help communities actively trying to promote equitable growth but unable to make the budgetary numbers work.

3. Integrate Homeless Reduction and Economic Mobility Goals into Existing Low-income Renter Assistance Programs: The nation’s two largest rental housing assistance programs, the Housing Choice Voucher (HCV) program and the Low-income Housing Tax Credit (LIHTC) program, together help 5.9 million low-income households meet their everyday needs for good-quality affordable housing. Both programs have long track records of success but are facing new challenges, and both could better anticipate critical housing needs and promote greater economic mobility.

Both programs should be amended to:

• put greater emphasis on steering recipient households and projects to neighborhoods with more educational and workforce development opportunities, Recent research by Raj Chetty and his associates at Harvard University has demonstrated how the HCV program could better direct vouchers to neighborhoods with more opportunities. Similar research at the University of Pennsylvania has focused on the tensions within the LIHTC program between meeting immediate affordable housing needs and promoting upward economic mobility.
• be more attractive to the private sector. For the HCV program, landlords willing to negotiate longer contracts could receive bigger vouchers. For the LIHTC program, the time limit for receiving tax credits should be extended.
• significantly expand the supply of HCV and LIHTC funding in states with large homeless populations. Additional funds should be earmarked for landlords and project sponsors willing to enter into two-year rental agreements with currently homeless individuals and families.

4. Develop Equity Mobility Plans for Urban Livability: Livable cities require connections among neighborhoods via multiple, reliable, and affordable transportation options. Unfortunately, today’s transportation funding formulas are oriented toward single-mode projects (like highway additions) that do not necessarily maximize mobility, which is especially problematic in poor neighborhoods where transit service is infrequent, walking is discouraged, and many lack access to a car. When coupled with a shortage of affordable housing, this lack of mobility contributes to an already oppressive sense of social and economic isolation.

The U.S. Department of Transportation should require metropolitan planning organizations to work with local transit providers, state highway departments, and community organizations to develop corridor and neighborhood-based Equity Mobility Plans, or EMPs. EMPs would focus on the full range of daily trips people take, maximizing access to shopping, personal business, family, medical, and recreation trips. And, because so much travel happens across cities, EMPs could better match housing and transportation opportunities at a metropolitan as well as local scale.

5. Low-interest Loans for Residential Energy Conservation and Climate Change Mitigation: The typical home built in the 1960s uses between 20 and 30 percent more energy per square foot than a similarly located home built after 2000. Regardless of what happens in Washington, DC to limit greenhouse gas emissions, state and local governments can require older homes and apartments to comply with today’s best practices for residential energy conservation. According to some estimates, doing so would reduce 2030 greenhouse gas emissions in U.S. metropolitan areas by as much as 6 percent over 2010 levels.

Unfortunately, the costs of such a policy mostly occur upfront and to the building owner, while the benefits, which include reduced electric and heating bills as well as lower emissions, can take several years to accrue. A federal 1-percent loan program of up to $20,000 per unit to help building owners pay for retrofitting their properties would help solve this cost-benefit timing mismatch problem. This program would be much less expensive than building new energy-generating facilities. For owners of subsidized units, some or all of the loan could be forgiven, enabling them to pass the cost savings on to tenants.

Unlike the plans being offered by today’s presidential candidates, these five initiatives are all eminently affordable and would not cost hundreds of billions of dollars to implement. They each build on existing programs known to be effective in responding to today’s market realities and community needs. Most importantly, they would actively create new housing and mobility opportunities for those currently denied them. Nothing could be more American or more bipartisan.

John Landis is Crossways Professor of City and Regional Planning in the University of Pennsylvania’s Weitzman School of Design and a Penn IUR Faculty Fellow.