According to the National Low-Income Housing Coalition’s (NLIHC) 2019 Out of Reach report, a full-time worker needs to earn an average hourly wage of $22.96 to afford a modest, two-bedroom rental home in the United States.
This amount is called the “housing wage,” and is $15.71 higher than the federal minimum wage of $7.25 per hour and $5.39 higher than the national average hourly wage of $17.57 that is earned by renters. In nine states and the District of Columbia, the two-bedroom housing wage is over $25 an hour.
With this study as a backdrop, it is worth taking a look at the housing proposals of the 2020 presidential candidates.
An Executive Order signed by President Trump in June 2019 establishes the White House Counsel on Eliminating Barriers to Affordable Housing Development and is chaired by HUD Secretary Ben Carson.
The expressed goal of the order is to loosen restrictive zoning and building regulations, increase the supply of housing, and bring down housing costs.
To date, this is the only action from the administration with a direct relation to housing affordability. However, because most regulatory barriers to affordability occur at the local level, the federal government has relatively little leverage in this area.
One thing the executive order does do is lock in affordable housing as a 2020 issue. So, how are the current Democratic candidates for housing approaching the problem? Following is a summary description of the plans that have been made available to this point.
Senator Elizabeth Warren
As she does with many issues, the housing plan released by Senator Warren is very detailed. Warren’s plan, “the American Housing and Economic Mobility Act,” includes, among other things:
- Building, preserving or rehabilitating 3.2 million housing units nationwide for lower- and middle-income people in order to lower rents by 10%. This would be funded by raising the estate tax back to the Bush-era levels;
- Creating a down-payment assistance program designed to address the black-white homeownership gap by providing assistance to first-time homebuyers who live in formerly red-lined neighborhoods or communities that were segregated by law and are still currently low-income;
- Expanding fair housing legislation to bar housing discrimination on the basis of sexual orientation, gender identity, marital status, veteran status, or income;
- Extended the Community Reinvestment Act (CRA) to require non-bank mortgage lenders to invest in minority communities;
- Providing $2 billion in assistance to mortgage borrowers who are still underwater on their home loans following the financial crisis, meaning they owe more than their homes are worth; and
- Instituting new requirements for sales of delinquent mortgages.
Senator Cory Booker
Booker’s plan includes:
- Creation of a tax credit that would aid in capping rental costs at 30% of before-tax income;
- Implementing zoning reform by requiring cities to eliminate restrictive zoning rules in order to qualify for federal loan and grant programs (it should be noted that Booker is re-thinking this part of his proposal since it will hit lowest income cities the hardest. Wealthy areas that are most likely to use exclusionary zoning are also the least likely to use [or need] federal funds);
- Funding the construction of new housing units designated for low-income renters by providing $40 billion annually to the Housing Trust Fund;
- Expanding fair housing laws to prohibit housing discrimination on the basis of sexual orientation, gender identity, or source of income;
- Expanding access to federal housing assistance programs (this differs 180 degrees from the Administration’s current efforts to cut back on the number of people eligible for housing assistance);
- Creating a fund that would pay for legal counsel for renter’s facing eviction;
- Increasing the amount of money designated for grants given to communities to administer services for the homeless; and
- Give $1,000 “baby bonds” to every child at birth, which can grow by up to $2,000 per year depending on the family’s income. This money could then be used to fund the down payment on the purchase of a home.
Senator Kamala Harris
Harris’s plan focuses on increasing the homeownership rates in black communities, and includes:
- Expanding the range of information used to create credit scores to include data such as rent and utility payments;
- Setting aside $100 billion for federal grants that would assist with down-payments or closing costs for families who rent or live in historically red-lined communities;
- Strengthening anti-discrimination laws to prevent discrimination in home sales, rentals, and mortgage lending; and
- Harris introduced the Rent Relief Act, which would create a refundable tax credit for households making less than $100,000 annually (or $125,000 in high-cost areas) and spend at least 30% of their income on housing costs.
Mayor Pete Buttigieg
Mayor Buttigieg has put forth an extensive proposal, called “The Douglass Plan,” to address racial disparities in homeownership and wealth. The plan would create a “21st Century Community Homestead Act” that would be tested in select cities around the country.
Through this program, a public trust would purchase abandoned properties and provide them to eligible residents. These would include people who earn less than the area’s median income or those who live in historically redlined or segregated areas. Residents who participate would be given full ownership over the land and a ten-year forgivable lien to renovate the home so it could be used as a primary residence.
Other proposals by the Mayor include:
- Funding national investment in affordable housing construction;
- Reforming land use rules to make it easier to build affordable housing units; and
- Expanding federal protections for tenants against eviction and unjust harassment.
Senator Bernie Sanders
While Sanders has not put forward a detailed affordable housing plan, he has proposed an “Economic Bill of Rights,” which has a housing component. This plan references the fact that some people are paying “40%, 50%, 60% of their limited income in housing,” and mentions urban gentrification as an issue that needs to be addressed.
Former Secretary of HUD Julian Castro
As a former HUD secretary who already had an understanding of affordable housing issues, Castro’s plan is detailed and extensive. His proposals include:
- Expansion of the Housing Choice Voucher program;
- Creation of a refundable renter’s tax credit for households who spend more than 30% of their income on housing;
- Allocating an additional $45 billion annually for the national Housing Trust Fund and the Capital Magnet Fund to support affordable housing initiatives;
- Reforming zoning laws to encourage the construction of affordable housing;
- Addressing homelessness by expanding funding for grant programs and creating a definition of homelessness at the federal level;
- Extending fair housing protections to the LGBTQ community and to individuals who were previously incarcerated;
- Developing an approach to identify where gentrification is occurring and help households avoid being displaced; and
- Establish zoning policies that take into account climate change.
Senator Amy Klobuchar
Senator Klobuchar has outlined more than 100 actions she plans to take in her first 100 days in office, a number of which involve affordable housing, including:
- Reversing the Trump administration’s proposed changes to federal housing subsidies;
- Expanding a pilot program that provides mobility housing vouchers to families with children to help them relocate to higher opportunity neighborhoods;
- Suspending changes to fair housing policy that are being sought by current HUD Secretary Ben Carson in order to combat housing segregation; and
- Overhaul housing policy more broadly as part of a national infrastructure plan.
Representative John Delaney
Congressman Delaney has proposed a $125 billion affordable housing plan that would do the following:
- Increase funding for the Housing Trust Fund to at least $7 billion annually;
- Create a $5 billion affordable housing grant program that provides funding to states and municipalities that do away with zoning restrictions limiting the construction of affordable multifamily housing (note how this differs from other proposals that would remove federal funding for localities that have exclusionary zoning; this is the “carrot” vs the “stick.”)
- Establish a right to counsel in eviction procedures, accompanied by $500 million in federal funding for low-income renters’ legal representation;
- Increasing the funding for the Homeless Assistance Grant program and the Department of Veterans Affairs Grant and Per Diem account;
- Revoke the charters held by secondary-mortgage Fannie Mae and Freddie Mac over five-years and, instead, establish a government guarantee on mortgages through the Government National Mortgage Association (Ginnie Mae); and
- Require borrowers to put at least 5% down to get a mortgage.
None of the other candidates have put forward extensive affordable housing proposals, although all have mentioned housing as a priority.
In 2018, Senator Michael Bennet introduced legislation to fight evictions by creating a national database to track instances of eviction and giving money to local and state programs that would increase tenants’ legal representation.
Author Marianne Williamson has called for protecting homeowners from predatory lending practices and increasing access to loan modifications for distressed mortgage borrowers.
Entrepreneur Andrew Yang calls for revisiting zoning rules by “taking the needs of renters and those who would be interested in moving into areas into account.”
Former Congressman Beto O’Rourke has stated that he wants to increase funding to the National Housing Trust Fund.
Senator Kirsten Gillibrand has proposed a $50 billion investment each year in the Housing Trust Fund. She also said that she would choose a HUD secretary “who understands the nature of homelessness as well as affordable housing.”
While all of the outlined “plans” are really nothing more than part of a campaign platform at this point, the detail of some of them shows that there is a fairly high level of thought being put into the affordable housing crisis the U.S. is facing. As the 2020 presidential campaign heats up, we will certainly hear more on the subject and can look forward to more specifics. One thing is certain – no matter who is elected President in 2020, affordable housing will be of much greater import than in any prior election.