The housing shortage stalemate

On Thursday, the U.S. Senate recessed for Memorial Day—leaving some of President Donald Trump’s stated priorities on the table. The Senate left early in response to Trump’s decision to create a nearly $1.8 billion fund to compensate individuals who had reportedly been unfairly targeted by government agencies.

One of the first casualties of the fallout had nothing to do with the fund. The senators left without finalizing the 21st Century ROAD to Housing Act, a measure Trump had earlier insisted Congress pass to “save the American dream of homeownership.”

The day before the Senate left Washington, the House of Representatives approved one version of the act with an overwhelming amount of bipartisan support in a 396-13 vote. Earlier this year, the U.S. Senate voted 89-10 in favor of a different version of the same bill in another widely bipartisan vote. But that bipartisan support doesn’t promise the bill an easy path to becoming law.

“Usually in Congress, in D.C., you see a lot of partisan polarization. In this case, it’s much more so a case of difference between the chambers,” said Francis Torres, director of the Bipartisan Policy Center’s housing and infrastructure projects. “It’s just an interesting case of bicameral tension rather than partisan tension.”

Experts are divided on whether the bill would strengthen the American housing market. Some say it could improve the situation of renters and homeowners across the country, while others say it follows a seen-before playbook for government intervention that only makes matters worse. But for the bill to pass, both chambers of Congress need to reconcile their different—even if bipartisan—visions of the future of the American housing market.

Roughly 89% of Americans say that Congress should make housing more affordable, according to research from the Bipartisan Policy Center. The study found that 57% of Americans say that paying for housing makes it difficult for them to meet their other financial obligations. Roughly 80% of Americans say paying for housing is one of the biggest expenses in their budgets.

The 21st Century ROAD to Housing Act arose out of different iterations of the same bill that previously graced the halls of the Capitol, Torres explained. Those included the Housing for the 21st Century Act and the Renewing Opportunity in the American Dream (ROAD) to Housing Act.

The Senate’s and House’s distinct versions of the current bill share much of the same DNA, according to the Bipartisan Policy Center. Both include policies to streamline environmental reviews for certain housing activities, improve access to small-dollar mortgages, and increase cooperation in various areas between different federal agencies.

But Torres explained that one of the biggest differences between the two bills is how they treat institutional investors in the housing marketplace. The Senate version required institutional investors who purchased single-family homes to divest of those assets within seven years of the bill’s passage, except in special cases.

“So there’s definitely been a lot of pushback from institutional investors that are invested in single-family homes,” Torres said. But others also had concerns that preventing institutional investors from owning rental homes would make it harder for lower-income Americans—who can’t afford to own a home and need to rent—to find housing.

“A lot of members of the House, both Democrats and Republicans, have had some skepticism towards that particular provision in the Senate package,” Torres said. The bill the House passed on Wednesday did not include the measure.

The bills also differ in provisions relating to oversight of housing agencies, guidelines for point-access block buildings, and community banking, the Bipartisan Policy Center explained.

But some experts say even the measures that both versions agree on may not help Americans.

“It’s a very wide-ranging bill. It has a lot of different aspects to it,” said E.J. Antoni, the chief economist at the Heritage Foundation’s Thomas A. Roe Institute for Economic Policy Studies. “Unfortunately, though, a lot of them are just more demand subsidies, and they’re more government programs, which aren’t actually going to fix the fundamental mismatch between supply and demand that we face today.”

In order to make housing more affordable, the government needs to address that mismatch between the amount of housing available and the need for that housing, Antoni said, talking with WORLD before the House passed its version of the bill.

“One thing we could do to actually help on the demand side is simply enforcing immigration law,” Antoni said. “And I understand this is a really hot-button issue and some people get really mad when I talk about it, but look, the housing market is a market at the end of the day. … It abides by the law of supply and demand. And having an additional 20 million people in the country represents an increase in demand and, therefore, an increase in price.”

Norbert Michel, director of the Cato Institute’s Center for Monetary and Financial Alternatives, told WORLD before the House passed its version of the bill that the Senate’s proposed text likely wouldn’t do much at all to the housing market. Most of the bills’ deregulatory provisions don’t cut much red tape, and they don’t change the status quo of housing policy, he explained.

“Whatever outcome current government policy and previous government policies have wrought, that’s where we are now. And you really shouldn’t expect anything radically different from this bill,” Michel said. “It really doesn’t radically change what we’ve been doing for the past several decades.”

But Francis Torres said that, as a renter, he believes that the legislation could improve housing options for him and other renters, even if not right away.

“I think this bill is an opportunity to take seriously a lot of ideas that people that know housing very deeply have been arguing for for many years,” Torres said. “I wouldn’t say that, as a renter, I would expect my rent to go down the month after this bill passes just because of this bill. I think in the long run, me and other people who rent would benefit from a more abundant rental housing market—would benefit from housing being easier and faster to build in the places where there’s most access to jobs and opportunities.”

Still, getting the legislation passed when the House and Senate remain divided wasn’t exactly a sure thing. And the White House will likely need to wade into the fray for negotiations to make real progress, he said. Right now, the ball is in the White House’s court.

“Will the White House be a proactive advocate for getting something done? That’s the real key question right now,” Torres said. “It’s safe to say that, absent some direction from the administration and some mediation from the administration to get across the divide between both chambers, it’s not clear that there’s a path to enactment here.”

But Trump may have already worked against himself when it comes to passing the measure. Just days after Trump insisted that the bill should appear on his desk soon, he urged congressional Republicans to use the housing bill to help pass provisions of his SAVE America Act—legislation that Democrats have widely opposed.

—Featuring reporting from Harrison Watters