Executive Order Aims to Boost Affordable Housing

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A new White House Council has been formed to identify regulations and barriers that make it more difficult for developers and local officials to create new affordable housing – and make recommendations to knock these barriers down.

“For many Americans, access to affordable housing is becoming far too difficult," said President Donald Trump in an executive order dated June 25, 2019, to create a White House Council on Eliminating Regulatory Barriers to Affordable Housing.

The Council was created to identify Federal, State, local, and tribal laws, regulations, and administrative practices that artificially raise the costs of housing development. It will also identify steps that can reduce these barriers, and will report its findings within 12 months of the date of the Order.

Growing housing shortage

Rising housing costs are forcing families to dedicate larger shares of their monthly incomes to housing. In 2017, approximately 37 million renter and owner households spent more than 30 percent of their incomes on housing, with more than 18 million spending more than half of their incomes on housing.

"Driving the rise in housing costs is a lack of housing supply to meet demand," says the President.

To satisfy the need for housing, developers will need to build at least 4.6 million new apartments between 2017 and 2030, according to a study conducted by Hoyt Advisory Services.

"Federal, State, local, and tribal governments impose a multitude of regulatory barriers — laws, regulations, and administrative practices — that hinder the development of housing," the executive order asserts. These barriers range from restrictive zoning to rent control laws. More than a third (32 percent) of the costs of multifamily development can be attributed to local, state and federal regulations, according to recent research into the cost of regulations by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC). In a quarter of cases studied in the research, that number can reach as high as 42.6 percent.

“Barriers, such as density restrictions, onerous zoning and permitting processes, parking requirements and NIMBY opposition obstruct our industry's ability to bolster the housing supply," says Robert Pinnegar, president and CEO of National Apartment Association (NAA). A recent survey from the NAA ranks metropolitan areas by the relative ease of developing new apartments.

The executive order points that the lack of affordable housing is holding back the U.S. economy. Because many workers cannot afford to live in high-productivity areas with the best available jobs, a geographic misallocation of labor between cities may have decreased the annual economic growth rate in the United States by 36 percent between 1964 and 2009, according to the executive order.

The Council created by the executive order includes the leaders of several federal agencies and will solicit feedback from local officials and private sector stakeholders to identify the barriers that it will recommend be removed in its report. The first roundtable event of the Council was held on November 1, where housing leaders "come together for a wide-reaching discussion on eliminating regulatory barriers that are the primary reason for the continued rise in housing costs," according to a dispatch on the meeting from the Council on Affordable and Rural Housing.

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