House Committee on Financial Services Holds Hearing, “Building Capacity: Reducing Government Roadblocks to Housing Supply”

By Sarita Kelkar, NLIHC Policy Intern and Libby O’Neill, NLIHC Senior Policy Analyst 

The House Financial Services Committee (HFSC) held a full committee hearing on December 3, “Building Capacity: Reducing Government Roadblocks to Housing Supply.”  

In his opening remarks, Chairman French Hill (R-AK) framed the housing affordability crisis as a consequence of the existing gap between supply and demand. Citing past committee hearings exploring solutions related to housing inventory—better utilization of modular and manufactured housing, building middle class housing, reforming the HOME program—the Chairman emphasized the need for greater development capacity and a simpler regulatory framework. Ranking Member Maxine Waters (D-CA) referenced the severity of the affordable housing and homelessness crisis, outlining the benefits of policies like permanent supportive housing and the provisions in the “ROAD to Housing Act” (S. 2651) while emphasizing the need for bipartisanship. Chair and Ranking Member of the Housing and Insurance Subcommittee Mike Flood (R-NE) and Emanuel Cleaver (D-MO) echoed the positions of their full HFSC committee counterparts.   

Four witnesses participated in the hearing: Mr. Kevin Sears, Immediate Past President at the National Association of Realtors; Ms. Julie Smith, Chief Administrative Officer at Bozzuto, on behalf of the National Multifamily Housing Council (NMHC), the National Apartment Association (NAA), and the Real Estate Technology and Transformation Center; Mr. Tobias Peter, Senior Fellow and Codirector at the American Enterprise Institute Housing Center; and Ms. Nikitra Bailey, Executive Vice President at the National Fair Housing Alliance.  

In his opening statement, Mr. Sears discussed the severe lack of housing supply driving the nation’s affordable housing crisis: a shortage he proposed could be addressed by updating the capital gains exclusion, improving homebuyers’ ability to use existing assumable loans, and removing barriers that builders face. Ms. Smith then explained how the current economic and regulatory environment impedes building efforts, making it difficult for apartment providers to meet renters’ long-term needs. Mr. Peter outlined how regulatory policy, such as zoning rules, reduces the amount of buildable land, drives housing prices, and contributes to the nation’s housing shortage. He framed building more homes on smaller lots as essential to improving housing supply and affordability.  

Ms. Bailey focused her testimony on fair housing. She described federal actions leaving people seeking housing free of discrimination unprotected—from the decimation of the Office of Fair Housing and Equal Opportunity to fair housing lending programs—and outlined how this decreases housing affordability and homeownership. Ms. Bailey noted the importance of maintaining the “Fair Housing Act” to create homeownership opportunities while uplifting fair housing laws. Calling for Congressional oversight over the administration, she ended her testimony describing the need for supply and demand side solutions like in the “Housing Crisis Response Act” (H.R. 4233). 

During Q&A, representatives engaged with the witnesses’ ideas and asked questions relating to rising housing prices, supply, regulations, and federal involvement. Chairman Hill asked about causes behind the supply gap, to which Mr. Sears answered how underbuilding, regulatory barriers, and higher construction costs contribute to the lack of housing inventory. On the regulation side, Representative Barr (R-KY) asked about the impact of reducing regulatory burdens on financial institutions on the mortgage lending market. Mr. Sears named the benefits of streamlining regulation and opening financing to an increased number of credit unions and local banks. Alongside other representatives, Representative McClain (R-MI) asked about manufactured housing, to which Mr. Peter reiterated the need to produce more housing alongside associated lending practices. Other topics discussed included facilitating the development of more quadplexes and duplexes, the need to address the rising costs of insurance premiums, and expanding first-time buyers’ access into the market.  

In regard to fair housing and affordability, Representative Scott (D-GA) asked about the importance of the Affirmatively Furthering Fair Housing (AFFH) rule from the “Fair Housing Act of 1968.” Ms. Bailey emphasized how, rather than a rule that provides funding, its intent helps reform local exclusionary zoning laws. Representative Beatty (D-OH) detailed the importance of public housing, asking about the need to expand resources to address the nation’s affordable housing crisis considering cuts to HUD staff. Ms. Bailey responded in the affirmative, addressing how current cuts may push more people into homelessness.  

NLIHC supports legislation that incentivizes state and local zoning reforms that increase housing supply, as well as regulatory reforms to improve existing programs. However, these reforms alone will not address the housing needs of renters with the lowest incomes—housing providers cannot afford to construct, maintain, and operate housing that is deeply affordable enough for people with the lowest incomes. Government subsidies are needed to fill in the gap between the cost of housing and what these households can afford to pay. NLIHC urges Congress to fully fund and adequately staff HUD and U.S. Department of Agriculture (USDA) Rural Housing Service programs in order to ensure affordable housing is reaching people with the greatest and clearest needs.   

Information about the hearing, witness list, and a link to watch a replay of the hearing can be found here.  

Read NLIHC’s statement for the record presented to the U.S. House Committee on Financial Services here.