The Department of Housing and Urban Development should consider doing some housing and urban development.
The Department of Housing and Urban Development is the agency responsible, one would imagine, for housing and urban development. Over the past two decades, America has done far too little urban development—and far too little suburban and rural development as well. The ensuing housing shortage has led to rising rents, a surge in homelessness, a decline in people’s ability to move for a relationship or a job, and much general misery. Yet the response from the federal government has been to do pretty much nothing.
When the coronavirus pandemic hit, the federal government granted $87 billion to the CDC and other health agencies, and paid pharmaceutical companies billions of dollars to create a vaccine. When the property bubble burst, the Bush and Obama administrations earmarked as much as $100 billion to stem the foreclosure crisis (albeit with horrid results). During the financial crisis, Congress created a $700 billion backstop for failing banks. And to jolt the country out of the COVID recession, Washington disbursed nearly $2 trillion to households and businesses—including putting a temporary moratorium on evictions and providing $46 billion to cash-strapped renters.
What is happening with housing might not seem as dramatic. But that is only because the crisis has been brewing more slowly. Despite the unemployment rate sitting at record lows and household wealth sitting at record highs this year, an also-record number of Americans were experiencing homelessness: 653,104 in just one night this January. And by some measures housing is less affordable now than it has been in half a century. Shaun Donovan, who served as HUD secretary from 2009 to 2014, told me he had “never seen availability problems this bad … Housing has always been a top-three issue in New York and San Francisco. What is changing now is that it is a crisis in red parts of the country, rural parts of the country—in places where it’s never been an issue.”
Yet legislators have not passed a significant bill to get people off the streets and out of shelters. Joe Biden has not signed a law to increase the supply of rental apartments in high-cost regions or to protect families from predatory landlords. Congress has not made more families eligible for housing vouchers, or passed a statute protecting kids from the trauma of eviction, or set a goal for the production of new housing.
For its part, HUD says it is doing what it can. “Housing sets the foundation for everything else in a person’s life,” Marcia Fudge, the HUD secretary, told me in an email. “HUD is doing all in our power to invest in those who have often been left out and left behind.” But the department can only work with the authority and money Congress allots it. As housing costs have risen, as more people have been forced to crowd in with neighbors or camp in their minivans or skip going to the doctor to make rent, neither HUD nor its budget has expanded to meet Americans’ needs. Right now, it subsidizes housing costs for 2 million households, though more than 10 million families spend more than half of their income on shelter.
The country’s lack of a national housing policy is part of the reason we are in a housing crisis, and Washington needs to take a real role in ending it.
In the past few weeks, I asked a number of housing experts why Congress, HUD, and the administration weren’t doing more.
The problem is structural: Washington just isn’t set up to address the housing crisis. The federal government plays a large, but largely indirect, role in the housing market. It operates through incentives, credits, guarantees, and subsidies. Rather than building housing, it makes mortgages cheaper and covers part of market rents. Rather than setting up retirement communities, it provides tax breaks for developers. You could say the country’s real department of housing and urban development is the Treasury Department, along with Fannie Mae and Freddie Mac. The Senate committee responsible for housing is the Banking Committee.
“The biggest footprint is in mortgage markets,” Jenny Schuetz, a housing economist at the Brookings Institution, told me. The Federal Housing Finance Agency—which oversees Fannie and Freddie—“has more practical authority over housing markets than HUD does. And it’s this obscure agency that most people don’t even know exists.” But the Treasury Department, she added, “doesn’t view itself as a housing agency. I don’t think that many people are sitting inside Treasury actively working on housing-access issues.”
It wasn’t always that way. Indeed, Washington played an aggressive role in expanding the country’s housing stock from the 1930s to the 1970s. As part of the New Deal, the government financed the construction of homes for tens of thousands of families. HUD was founded during Lyndon Johnson’s administration and, as part of his Great Society, set out to build or rehabilitate millions of housing units.
But concentrated poverty and social unrest in public housing—and the anti-Black racism it triggered in voters and politicians—led Johnson’s successor, Richard Nixon, to put a moratorium on new government-financed projects. HUD would instead provide eligible applicants with vouchers to help pay for their housing. This would “in the long run be the most equitable, least expensive approach to achieving our goal of a decent home for all Americans,” he told Congress. A decade later, Ronald Reagan gutted the voucher program, slashing HUD’s budget by 60 percent.
As a result, today’s HUD is not much of a housing agency. And it is definitely not much of an urban-development agency. (“I used to joke that I’d like to put the UD back in HUD,” Donovan told me, pointing to the department’s limited community-development efforts.) It lives in the shadow of Reagan: small, narrowly focused, and somewhat disrespected. Its current secretary, Fudge, not only publicly lobbied for a different Cabinet gig after Joe Biden’s election but did so by arguing she did not want to end up at HUD. “It’s always ‘We want to put the Black person in Labor or HUD,’” she told Politico while seeking the USDA post that ended up going to Tom Vilsack. (“These out-of-date comments do not reflect the Secretary’s strong pride in the HUD workforce and the work that HUD has accomplished during her tenure,” a spokesperson responded.) Preceding her in the job was Ben Carson, who had no housing experience and repeatedly asked for his own budget to be decimated.
Nearly all of HUD’s budget goes to its voucher programs. And unlike SNAP benefits or Medicaid coverage, vouchers are not an entitlement; the majority of qualifying families do not get help. (Ninety-three million Americans are on Medicaid; 41 million use SNAP; just 5 million live in a household receiving a voucher.) Applicants languish on waiting lists for years, even decades. Many eligible people don’t bother signing up, and as many as one in three people offered a voucher does not end up using it. Take-up rates are low because the process is so arduous and because landlords discriminate (illegally, but commonly) against voucher recipients.
“Think of lining up families who qualify for food stamps and only one in four families gets to eat,” Matthew Desmond, a Princeton sociologist and the author of the book Evicted, told me. “That’s exactly how we treat housing policy today. It doesn’t make a lot of sense, because, without stable shelter, everything else falls apart.”
Something else is stopping Washington from addressing the housing crisis: the Tenth Amendment to the Constitution. Land-use policy is not the purview of the federal government. It’s the purview of the states. Congress cannot rewrite Los Angeles’s building code. The White House can’t decide to upzone West Hartford, Connecticut. “I used to spend time with my counterparts in other countries and they’d say, Well, we just updated our national building code and national zoning code. We just wrote a national housing strategy,” Donovan told me. “I’d say, Wait, you have a national building code?”
As my colleague Jerusalem Demsas has written, we have delegated our housing policy not just to state and local governments but to every neighborhood’s homeowners association. Residents of a given place have ample opportunities—zoning-board meetings, candidate forums, historical architectural reviews, city-council open mics—to stop development. So they do. And thus mostly wealthy, mostly older people shape policy to their preferences: keeping new families out, maintaining single-family zoning, stopping development, and prioritizing the aesthetics of buyers over the needs of renters.
Local control is going to make it hard to get out of this crisis. “We’ve got 3,000 counties and 40,000 cities and towns,” Schuetz, of the Brookings Institution, told me. “There’s huge variation in not just their political motivations but in their capacity to carry policy out. And there’s no way to implement local reforms in a widespread way, at any kind of scale.”
But Washington can do something—much more than it is doing now. Expand the low-income housing tax credit. Direct even more money to states with high housing costs. Get rid of the law preventing the government from increasing the number of public-housing units. Fix up the units we already have. Make housing vouchers an entitlement, so that every poor family that needs help with rent gets it. Doing all of this would help not just help millions of poor Americans get and stay housed. It would also help boost the supply of affordable apartments and make HUD a strong advocate for all low-income renters. “Maybe I am getting out over my skis here, but I feel like if HUD were an agency funded at the level of need, an agency administering a universal benefit, it would be a different agency,” Desmond told me.
Then it could develop novel policies to address some of the big drivers of today’s housing shortage: building costs and land-use restrictions. The federal government cannot change land-use policies unilaterally. But that doesn’t mean that it is out of policy levers, housing experts told me. It just means that it needs to work somewhat indirectly: providing cash incentives to places that harmonize their building codes, green-lighting dense development near transit hubs, and allowing prefab homes, for instance. The Biden administration is starting to enact these kinds of policies, and pressing Congress to let it do more. In terms of building costs, the federal government can’t do much to lower the price of lumber. But it can allow more skilled immigration for construction workers and tax land to encourage development.
More modest, cheaper policies are at hand as well. For instance, HUD could start advising state and local governments on how to increase their housing supply. “There is a lot of experimentation going on at the local level,” Schuetz told me. “HUD could at the very least be monitoring this stuff, performing research, evaluating what works and what doesn’t.” It could help Tucson learn from Oakland, Iowa from Massachusetts. “This is squarely in HUD’s comfort zone,” Schuetz added, noting that no agency or political entity is doing this work at the moment.
Many of these policies cost money. But the federal government needs to spend more on housing, particularly on multifamily rental housing. The first thing politicians and civil servants in Washington need to do is simply see the housing crisis as the federal government’s responsibility. Universal homeownership was once the explicit goal of the U.S. government; affordable housing for everyone, everywhere, and the end of homelessness should be the policy priority now.
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