House Subcommittee Hearing on Government Costs Burdening Affordability
July 30, 2024
The House Financial Services Subcommittee on Housing and Insurance last week held a hearing titled "Housing Solutions: Cutting Through Government Red Tape."
Why it matters: The July 24 hearing focused on various issues affecting the housing industry, including regulatory burdens, environmental and energy standards, accessibility and affordability, rent control policies, insurance, and the role of the U.S. Department of Housing and Urban Development (HUD).
What they’re saying: Key points included the high costs associated with regulatory compliance:
- Industry witnesses highlighted that 24% of new housing costs are related to local regulatory burdens that add $93,000 in extra costs per unit. Republicans and some witnesses pointed to federal environmental and HUD regulations that contribute to higher costs.
- Environmental and energy standards were cited as contributors to higher upfront costs that may exacerbate housing affordability issues. However, Democrats noted that costs from the energy savings programs could be offset by lower operating and replacement expenses.
- Accessibility and affordability were highlighted as major challenges, especially for low-income and elderly populations. Witnesses called for expanded funding for effective housing programs like HUD’s Section 202 and the Housing Choice Voucher Program, emphasizing the need for more affordable and accessible housing units.
- Insurance costs also weigh on affordability, and witnesses pointed to inflationary pressures on construction costs for casualty insurance as well as liability insurance premiums from increased settlement amounts. One witness, Linda Couch, Senior Vice President, Policy and Advocacy, LeadingAge, suggested Congress should develop HUD insurance program for property and liability coverage on affordable units.
- Rent control policies were criticized by industry witnesses and Republicans for their potential to reduce the housing supply.
The bottom line: While lawmakers disagreed on certain specific policy stances, including the benefits of certain regulations, legislators generally recognized the reasons for the mix of higher costs and their impact on developers, landlords, tenants, and homebuyers.
Contact David McCarthy (dmccarthy@crefc.org) with questions.