Ambitious new legislation could provide a major boost for low-income renters looking for an affordable home. Re-introduced by Senator Elizabeth Warren (D-MA), The American Housing and Economic Mobility Act would substantially boost production and preservation of affordable rental housing. It would also lower rents, reduce segregation, and help homeowners hurt by the Great Recession. In addition, it would support building more community facilities, like clinics, libraries, parks and schools that serve low-income renters.
The bill would improve access to affordable housing on two fronts. First, it proposes funding to increase the development and preservation of affordable rental housing. It also offers assistance to low- and moderate-income homeowners and buyers. This assistance is targeted to build wealth and reduce segregation. Second, it proposes a number of measures to eliminate fair housing barriers. It expands protections under the Fair Housing Act. It also gives incentives to local governments if they revise land use rules that produce segregated neighborhoods and make affordable housing more costly to build.
Senator Warren’s proposal will fund the construction or rehabilitation of 3.2 million housing units for low- and moderate income households. It provides $445 billion over 10 years for the National Housing Trust Fund (NHTF). The NHTF supports the production of housing affordable to persons with the lowest incomes. It will create 200,000 new homes on tribal lands with $2 billion going to HUD’s Indian Housing Block Grant program. USDA rental housing programs serving rural communities would receive an additional $523 million. This will build and preserve 380,000 affordable rural apartments. It would also double the number of home loans for low-income buyers provided by USDA, helping 17,000 more families buy homes..
The legislation proposes investing $25 billion a new capital magnet fund that would be funded 10:1 by private capital and produce 835,000 new homes. It also creates a $10 billion competitive grant program for local governments. The funds can be used for a wide range of community needs, like schools, roads and parks. To get this money, local governments must revise their land use rules that have promoted segregation or made it harder to build affordable housing.
The proposal also recognizes that segregation and the Great Recession have hurt many neighborhoods. It kept many low-income and minority households from building wealth through homeownership. The bill provides down payment assistance for first time homebuyers in low-income or segregated areas. It will also provide $2 billion to help low- and moderate-income homeowners in high cost areas who owe more than their homes are worth.
The bill not only increases the number of new affordable homes, it would protect more people from housing discrimination. It expands the groups protected under the Fair Housing Act by banning housing discrimination based on sexual orientation, gender identity, marital status and source of income. Ending discrimination based on source of income means that landlords must accept a renter’s application even if their income includes government assistance. This means that they cannot discriminate against an applicant if they have a Section 8 voucher.
According to an independent analysis by the chief economist of Moody’s Analytics, the bill would bring down rents for low-income and middle-class households by 10%. This would save families an average of $100 per month.
Senator Warren’s proposal will not add to the federal deficit. It would bring the estate tax thresholds back to the levels at the end of the Bush Administration. It would also introduce more progressive rates above those thresholds. These changes will affect only the 10,000 richest families in the country.
Senator Warren said, “The cost of housing is squeezing American families in communities all across the country — rural, suburban, urban — whether they’re struggling to pay rent or trying to buy a home. The legacy of government discrimination and negligence means that communities of color have been hit the hardest. It’s time to stop nibbling around the edges and, instead, pass this big, bold proposal to solve our housing crisis and take the first steps to address the legacy of housing discrimination head on.”
Because the Senate is currently controlled by Republicans, the bill has little hope of passing. But Senator Warren is a 2020 presidential candidate. Introducing a sweeping affordable housing bill will help bring more attention to the affordable housing crisis during the presidential campaign.
Other presidential candidates have also offered major affordable housing proposals. Notable among them are the Rent Relief Act, sponsored by Senator Kamala Harris (D-CA), and the HOME Act, introduced by Senator Corey Booker. Both of these bills propose rental assistance tax credits that would provide affordable rents to millions of low-income households. Both were introduced in the last Congress, and recently reintroduced. You can read more about these proposals on Affordable Online here.
Senator Warren’s proposal is based on the idea that we need to produce more affordable housing to meet the need. With more affordable housing stock available, competition will bring rents down for most low- and middle-income Americans. On the other hand, rental assistance tax credits proposed by Senators Harris and Booker will bring rents into line for millions of households right away. One approach targets the long-term need for more affordable places to live, and the other targets the immediate need to get relief from skyrocketing rents. Both approaches can play a valuable role in making housing more affordable for all low-income renters.