America Needs a National Housing Loss Rate

The need for a national housing loss rate 

Each year, an estimated 10 to 20 million Americans lose their homes through eviction and mortgage foreclosure, tax sales, eminent domain, post-disaster displacement, and other less-studied forms of housing loss. These destabilizing events lead to homelessness, job loss, adverse health impacts, and downward economic mobility. And yet, America neither tracks housing loss nor holds politicians and decision-makers accountable for keeping it low. There is no national database of evictions or foreclosures, and research from New America found that one in three U.S. counties have no available annual eviction figures. Without a clear picture of housing loss across the country, it is nearly impossible to pass data-driven policies that keep people housed. 

If the United States wants to get serious about stemming housing loss, then it should establish a national housing loss rate to stand alongside the national unemployment rate as a key indicator of social and economic well-being. The creation of a housing loss rate—a metric of how many people lose their homes involuntarily over a given period of time, and why—would help drive accountability and action among policymakers and improve resource allocation, regulation, and housing supply interventions. 

Recommendations 

We envision working on two parallel, mutually reinforcing tracks to establish home loss as a regularly tracked indicator, akin to the unemployment rate. The first track would employ a survey-based approach to establish a national housing loss rate, while the second, longer-term effort would build local infrastructure to collect and analyze data on actual incidences of housing loss. 

Congressional Action 

Congress should direct one of the lead federal housing agencies —  most likely the Consumer Financial Protection Bureau (CFPB), the Federal Housing Finance Agency (FHFA), or the Department of Housing and Urban Development (HUD) — in consultation with the others to produce a feasibility study of developing and deploying a nationally representative survey to measure housing loss. The feasibility study should assess the most promising data collection strategies, the body responsible for implementing this effort (and whether this effort should be hosted inside or outside of government), and methodological questions such as the desired frequency, geographic coverage, and scope of the survey. 

Executive Action 

Concurrently, HUD, FHFA, the CFPB and the Census Bureau should use their existing authority to assess the feasibility of including housing loss questions or modules into surveys over which they have jurisdiction. Surveys identified by experts as possible entry points include the Census Pulse Survey, the American Community Survey, the American Survey of Mortgage Borrowers, and the American Housing Survey. Where the insertion of questions is feasible, HUD and Census should work with housing experts to develop and pilot proposed questions. 

The Domestic Policy Council (DPC) should convene federal housing agencies to establish a comprehensive housing loss data collection, storage, and sharing strategy (including a plan for free, public access to the data in a way that also protects privacy) in consultation with housing advocates and academics. An interagency process to establish a national housing loss rate would be the strongest lever to achieve meaningful executive action. 

Finally, the Office of Management and Budget (OMB) should incorporate housing loss into its Life Experiences projects. The Customer Experience Executive Order, enacted in 2021, requires OMB to work with the DPC and the National Economic Council to study salient “life experiences” during which Americans interact with government services, in an effort to improve government efficiency. OMB should explore whether better tracking of housing loss could be incorporated into one of the existing projects—it is most relevant to facing a financial shock and recovering from a disaster—or whether housing loss could be the subject of its own life experience project. 

Conclusion 

Developing a national housing loss rate will take time and resources, and most likely will require congressional action and funding. A survey effort would likely need a time horizon of at least five years, and collecting and understanding actual incidences of housing loss will take significantly more time. However, as with the U.S. unemployment rate, which took decades to establish, the necessity of such a metric justifies the effort. A housing loss metric, if rigorous, regularly collected, and available at the national, state, and local level, would have profound impacts on our understanding of the causes and consequences of home loss and improve our ability to develop policies and programs that keep people more securely housed.

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Increase Dedicated Resources for the National Housing Trust Fund

The United States faces a shortage of 7.3 million rental homes affordable and available to extremely low income (ELI) renters—those making at or below 30% of area median income (AMI). The private market does not build and operate housing affordable to renters in this income bracket on its own. Subsidies are necessary for landlords to charge rents that these households can afford. 

The National Housing Trust Fund (HTF) is targeted to increase the supply of ELI rental homes. Ninety percent of HTF dollars must be used for the production, preservation, rehabilitation, or operation of affordable rental housing, and at least 75% of these dollars must support housing that is affordable to ELI renters. By contrast, the nation’s largest housing production program—the Low Income Housing Tax Credit—primarily serves renters at 50-60% AMI. 

The HTF is currently funded with a small annual fee (0.042%) on Freddie Mac and Fannie Mae activity. States received their first HTF allocations in 2016, and approximately $3 billion has been allocated to date. The Department of Housing and Urban Development (HUD) administers the HTF as a block grant to housing finance agencies in all 50 states and U.S. territories, which create state-level Allocation Plans to determine how HTF dollars are awarded. HUD’s formula for distributing HTF dollars is based on (1) the number of renters making at or below 50% of AMI who are severely cost-burdened, meaning that they pay more than half their income on housing costs, and (2) the shortage of rental homes affordable and available to households making at or below 50% of AMI, with extra weight given to ELI households. 

To increase the supply of affordable homes, Congress should make greater investments in the HTF. Expanding the supply of homes affordable to ELI renters will also address the overall housing shortage. If millions of cost-burdened ELI renters could move into subsidized homes, more market-rate housing would become available to higher-income renters. 

Recommendations 

To avoid competition with other programs in HUD’s annual budget, the HTF is intended to be funded outside of the annual appropriations process. The Build Back Better package that passed the House of Representatives in 2021 included $15 billion for the HTF, but this provision was stripped out of the slimmed-down Inflation Reduction Act that Congress ultimately enacted. 

As a new source of revenue, Congress should reform the mortgage interest deduction (MID) to make second homes ineligible and invest the equivalent savings in tax expenditures into the HTF. While Congress reformed the MID in the 2017 Tax Cuts and Jobs Act, this legislation ignored years of bipartisan tax reform proposals that proposed to eliminate the MID for second homes. The proposal would face pushback from second homeowners, but research shows that it is politically popular and bipartisan: a 2012 Quinnipiac poll found that 55% of Democrats, 55% of Republicans, and 58% of independents supported this reform. Elimination of the MID for second homes could win cross-cutting support from deficit hawks seeking to cut back federal spending and progressives who favor federal support for people with the greatest needs. 

Conclusion 

On its own, the savings from eliminating the MID for second homes will not enable the HTF to entirely close the gap between housing supply and housing needs of the lowest-income renters. However, a substantial boost in resources would enable the HTF to make a greater dent in the housing shortage. 

More widespread impact would also make the HTF a more visible federal program, increase its constituency of supporters, and create the political will for even more dedicated funds in the future. 

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Why Creating an FHA/VA Mortgage Program for Developers Is a Good Idea

Lack of affordable mortgage programs for small businesses and developers contributes to the housing shortage in the United States. Primarily, commercial lenders guarantee and fund mortgages for small businesses and developers. These loans, known as investor and commercial mortgages, are very restrictive, resulting in only small pools of qualified applicants. Creating a federally guaranteed investor mortgage combined with an optional construction loan will assemble a larger base of qualified borrowers financially positioned to purchase and build more housing inventory. 

Forming a federally backed investor mortgage and construction loan program does not require a large government expenditure initially. It only needs the full faith and promise of the United States government as a guarantee. Commercial banks could qualify the applicants and issue loans by utilizing existing systems servicing Fair Housing Authority (FHA) and Department of Veterans Affairs (VA) mortgage programs. The proposed program would be administered by the Department of Housing and Urban Development (HUD) and the VA, bypassing the need to create a new federal agency. 

Creating such a program, however, would require legislative authorization from Congress as it would expand the federal government’s role from guaranteeing primary residential mortgages. 

This proposed program would feature: 

The program differs from the FHA 203k product by not requiring the borrower to occupy the property as their primary residence and by permitting both renovation and construction on land purchases. 

A federally guaranteed investor mortgage program has many benefits. Having larger pools of qualified borrowers encourages the development of properties like duplexes, fourplexes, and other small apartment buildings in urban areas often overlooked by traditional developers. This not only promotes more infill development, it also addresses the important Missing Middle Housing concept by supplying more units at competitive rents for the middle-class workforce near their employment. Moreover, by using available local municipality initiatives, the owners could offer some or all their units at below market rents – potentially adding more affordable housing inventory as well. Finally, establishing larger pools of qualified borrowers provides developers of different races, genders, and ethnicities more opportunities to create generational wealth through a proven source: real estate. 

The main argument against creating a federally guaranteed investor mortgage is the elevated risk of borrower default. While this concern is valid, there are several layers of protection built in to mitigate it. For example, the full recourse requirement ensures all borrowers’ assets are subject to government ownership to offset the default risk. Second, requiring a mortgage insurance fee along with the monthly mortgage payment for the loan term supplies additional funds to the federal government, reducing the risk. Limiting construction loans to 80% of the completed project’s appraised value provides a financial buffer. Last, in addition to meeting all the loan conditions, borrowers would be required to submit a detailed operational business plan for final approval. 

While federally backed loan programs to purchase and build housing units already exist, they are designed primarily for larger projects. There are no federally guaranteed mortgage and construction programs designed for small businesses and developers doing small projects. Omitting this category threatens to restrict the potential development of housing inventory critically needed throughout the United States. To help boost the supply of housing, a federally guaranteed mortgage and construction program for small developers should be created.     

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Accelerating Affordable Housing Through Market-Based Incentives

The lack of affordable housing supply in high-opportunity metro regions impedes equitable economic growth. According to a study published in the American Economic Review, the misallocation of labor as a result of housing constraints has led to a 36% reduction in aggregate U.S. economic growth. Meanwhile, new market-rate construction often faces arduous permitting processes from local governments. This proposal would accelerate affordable development by granting permitting incentives to qualified projects, allocating rewards through a competitive bidding process favoring the most impactful proposals. 

Under this system designed by the Department of Housing and Urban Development (HUD), developers would obtain credits to bid on packages of permitting privileges based on voluntarily incorporating enhanced affordability into their projects. Deeper affordability milestones would garner exponentially more credits to steer resources toward greatest needs. Additional credits would be awarded for proposals in regions facing urgent supply shortages. Developers could then leverage credits to bid on incentive packages in allocation auctions administered by HUD. 

Incentives would include expedited reviews, waived fees, dedicated staff coordination, and density bonuses. While incentives are standardized federally, execution taps local jurisdiction staff funded by federal grants. HUD would disperse formula or competitive grants to municipal governments that elect to participate and hit prescribed targets. Codifying terms upfront attracts municipality buy-in and reduces the barrier of negotiating one-off municipality agreements. Instead localities can opt in to a pre-set federal program with funding levels and metrics already defined. By financing the supplemental staff capacity needed for faster reviews, this streamlined approach creates the right supporting conditions to accelerate affordable housing approvals. 

To maximize the allocative efficiency of the program, robust targeting based on affordability and project urgency due to the disproportionate need for deeply affordable units in high demand metropolitan areas would be incorporated rather than a pure lottery. Some ways to achieve this: 

This retains market incentives while steering resources toward most impactful projects. 

An additional component would enable developers to trade their credits, optimizing incentive opportunities across regions when buying and selling credits. The tradeable tickets create a secondary market where developers can buy/sell eligibility to optimize incentive opportunities across regions based on their risk tolerance. For example, a large developer could acquire credits from several small projects to boost their chances of winning desirable incentives. Or developers could sell a portion of their credits to investors to finance projects while still participating in auctions. This flexibility and liquidity attracts broader private sector participation to expand affordable supply. 

The full policy is novel, but elements like expedited permitting, fee waivers, and tax incentives have successfully boosted affordable housing in some states. For example, Massachusetts uses local option property tax exemptions. Combining tailored incentives with market mechanisms provides a new model. 

Legislative Recommendations

Congress should pass legislation with bipartisan sponsorship authorizing HUD to:

Executive Recommendations 

HUD would administer the program design and auctions in phases: 

HUD would compile and maintain a centralized database of zoning codes, public land holdings, and other housing development variables. 

The White House Office of Management and Budget (OMB) would coordinate interagency efforts around alignment with the Department of Transportation, the Treasury Department, and other agency incentives like tax credits. Savings from streamlining bureaucracy and increased tax revenue as a result of improved economic growth could offset a substantial share of costs for the program. With strong bipartisan appeal, funds could be pulled from the Infrastructure Investment and Jobs Act (IIJA). 

This proposal has the power to cultivate an ecosystem of incentives where developers compete to deliver public goods. Market dynamics drive outcomes, overcoming constraints on equitable growth while working through local partners. Using incentives over mandates minimizes political opposition as cities chip away at large affordable housing deficits to promote inclusive prosperity.

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Aligning Reconstruction and Zoning to Invest in Housing

The Community Development Block Grant (CDBG) Program is one of the most flexible federal funding sources for communities to invest in housing. In the few instances where CDBG tools mention reconstruction, it is basically defined as demolishing and rebuilding one home where another one existed. The U.S. Department of Housing and Urban Development (HUD) prohibits adding dwelling units as part of the rebuild process. What if CDBG encouraged more than one home to be rebuilt? 

The federal government should provide clear policies and programs to encourage reconstruction projects that add to the housing supply. Instead of limiting reconstruction projects to a one-for-one replacement, HUD should allow communities to rebuild homes to a number of units allowed by their locally adopted zoning and development codes. 

Communities across the country are experiencing the triple whammy of aging people, aging homes, and aging infrastructure. This puts neighborhoods at risk for property vacancy and abandonment. Dilapidated homes become the target of public code enforcement and private speculators. 

The potential for redevelopment attracts outside capital and contributes to neighborhood gentrification. CDBG dollars, often used to fund demolition, should not leave neighborhoods with empty lots. Instead, investments in reconstruction could preserve neighborhood affordability by funding well-designed homes with additional units. 

While pushback against density continues, many communities have reformed zoning to allow for diverse housing types. Accessory dwelling units (ADU) are favored by seniors who want to age in place. Reconstruction policies and programs that allow for two to three units advance the Biden Administration’s Housing Supply Action Plan. 

Congress should

HUD should

Aging neighborhoods with decent-sized lots in communities with flexible development codes are good candidates for reconstruction. The federal government has an opportunity to supply a little more housing and keep neighborhoods affordable by investing in reconstruction.

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Increase Occupancy of Existing Affordable Housing by Simplifying the Qualification Process

Regulatory requirements for federally subsidized housing programs— such as the Low-Income Housing Tax Credit program (LIHTC) and Project-Based Section 8 Vouchers (PBV) — force households in crisis to wait months to be successfully approved for housing placements while affordable housing units sit vacant. 

These policy proposals will simplify the affordable housing qualification process for all federal housing programs, primarily focusing on PBV and LIHTC, to move eligible households into vacant units more quickly. The current timeframe now is over a month, usually multiple months, to move a tenant into a unit. This should be shortened to a period of weeks, ideally days, for people in crisis. Shortening the approval process will mean more people housed for longer periods of time in housing that already exists. 

Challenge and Opportunity 

Income verifications

Income verifications are cumbersome, and most agencies require people to apply in person, often waiting for hours to be seen. Typically, applicants must return multiple times with additional required paperwork. The longer this takes, the more likely the original paperwork submitted will become stale, creating a vicious cycle of delay. 

Eliminate mandatory in-person meetings: Agencies should be required to provide a phone-based mobile platform for applicants and allow digital submission of all documents. Pronto Housing, which has developed such an app, reports that when given the option 80% of housing applicants work on their applications between 7 pm and 1 am and on holidays and weekends. This will create fair access for people who work inflexible jobs that do not allow time off or prevent computer access. 

Create “presumed-eligible” criteria: Households that are presumed eligible would have income qualification documentation waived at initial move-in. Possible criteria could include: recipients of other federal income-based programs such as Supplemental Nutritional Assistance Program (SNAP), Temporary Assistance for Need Families (TANF), Medicaid, or Low Income Home Energy Assistance Program (LIHEAP); severely disabled; chronically homeless; or seriously mentally ill. This should be achieved via executive processes within each agency. Los Angeles’s Community Development Block Grant (CDBG)-funded pilot program could be a model.

Allow access to HHS EIV: Allow all federal housing programs access to the Health and Human Services (HHS) Enterprise Income Verification (EIV) system. EIV, which the Department of Housing and Urban Development (HUD) currently uses but LIHTC and the Department of Agriculture (USDA) do not, provides information on employment status, unemployment, and Social Security benefits. Using this system across agencies would remove the need for applicants to submit redundant documents such as pay stubs and social security statements. 

Inspections

In-person inspections required for Section 8 vouchers (both project-based and tenant-based) are completed by short-staffed Public Housing Agencies (PHAs). These inspections, even if done promptly, can expire before a tenant becomes income-qualified, creating a second vicious cycle of delay. 

Waive inspections for new construction: For new construction or rehabilitation, where units are already inspected by local building officials, licensed architects, and contractors, allow reliance on a Certificate of Occupancy or certificate from a licensed architect. Those documents should be good for 12 months. 

Plan of Action

At least one important proposal (access to EIV), and possibly more, will require legislation. None of these proposals require new funding, although the mobile-based application system may require some technical assistance funding to PHAs, which could be implemented under HUD’s existing Technical Assistance grant program. 

1. Eliminating in-person meetings: HUD can make an administrative change requiring PHAs to implement a mobile-based application system, and then help them implement the program through technical assistance grants. For LIHTC projects, implementation of a mobile system would require action by the Internal Revenue Service (IRS). The IRS should be able to encourage adoption for LIHTC projects and provide guidance through an executive process even if a mandate for mobile access would require legislation. 

2. Presumed eligibility: Establish cross-agency criteria for presumed eligibility at different income levels. The Biden Administration should direct HUD to develop criteria for presumed eligibility for affordable housing, seeking input from the IRS and USDA. 

3. Access to EIV system: New legislation would be required to allow the IRS and USDA to access the HHS EIV system. Despite this hurdle, it would ultimately save all agencies time and money to have a unified system of income verification. This has been a topic of discussion among federal employees at these agencies for over a decade, yet the legislative action required has been a barrier that needs to be tackled. 

4. Waive inspections for new construction: For new construction or rehabilitation, HUD should be able to implement a waiver of the inspection requirement at minimum as an emergency measure for households in crisis via executive/administrative action. 

Counterarguments to the above proposals might include (i) the difficulty in changing existing systems and processes, (ii) the possibility of accepting an over-income tenant and (iii) the possibility of moving a tenant into an unsafe unit. With regards to the possibility of accepting an over-income tenant, the income verification process has skewed too far to the extreme of counting every penny and worrying that someone who is low income one month could be wealthy the next month. The sad reality of economic mobility in this country is that people who are low income mostly stay in that position and the risk of moving in with someone who is over-income is very low. The risk of having an eligible person give up on the process because it is currently too difficult is much higher. With regards to an unsafe housing unit, this is a serious issue that should not be minimized. However, new construction or rehabilitation under local building official oversight runs almost no risk of being unsafe and the Covid-era measures HUD has used for inspections are now years into testing. 

Conclusion 

Given the extent of the housing crisis throughout the United States, it is a tragedy that affordable units sit vacant for months due to complex paperwork requirements. Directly addressing the realities of access for low-income persons and treating homelessness like a true crisis by prioritizing housing access over paperwork will increase occupancy throughout the country by moving households into vacant units faster. 

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Harnessing Federal Programs to Improve Local Housing Permit Data

Many recent regulatory reforms are intended to spur new housing development, but timely data on the location and quantity of new housing is limited. The most comprehensive data source on new development, the U.S. Census Bureau’s Building Permit Survey (BPS), relies on antiquated methods that can introduce a variety of errors and biases. Individual jurisdictions are asked to submit regular reports on the building permits they issue. In addition to the potential for human error, many jurisdictions are not asked to report on a monthly basis, and some that are asked to report on a monthly basis don’t do so. As a result, although the BPS is reasonably reliable at high levels of geographic aggregation (e.g., counties, states, metro areas), it is less reliable at the municipal level. Moreover, the BPS does not provide any information at lower levels of geography (such as the census tract or block group). This is a problem, because many recent land-use regulation reforms are intended to spur development in specific areas, such as transit-rich or high-resource locations. The lack of accurate, timely, geographically precise permit data makes it hard to assess whether these regulations are working. 

The Census Bureau should work with information technology (IT) vendors, states, and local governments to facilitate the automation of local building permit reporting. All large jurisdictions (and many small jurisdictions) use some form of computerized tracking system for building permits. In some cases, the tracking system involves specialized software, typically developed by a private vendor. In other cases, it’s simply a spreadsheet. A uniform software tool for inputting building permit data would make the BPS more reliable, and it would also facilitate more fine-grained geographical analysis of new housing development. Data from the tool could be directly transmitted to the Census Bureau, reducing the potential for errors in local aggregation and tabulation of the data. More fine-grained geographic data would help the Department of Housing and Urban Development (HUD) to assess whether local efforts to affirmatively further fair housing are bearing fruit. It would also help states that have recently adopted regulatory reforms concerning fair housing and transit-oriented development to assess the impacts of those reforms. Moreover, automating the collection and transmission of data would reduce paperwork burdens for local governments. 

The Census Bureau should first explore using the same appropriation source that is funding the Modernizing Construction Indicators (MCI) project. This funding may be sufficient to launch a pilot project that would convene a working group of local and state officials, software vendors, and researchers to identify the key attributes needed in this new reporting system. Whereas the MCI project is currently focused on improving the BPS by using data from vendors who collect building permit data from governments, the proposed project involves working with the vendors who provide information technology services to governments. Rather than relying on a patchwork of private vendors with different data standards and licensing rules who collect data from local governments and then repackage it, the Census Bureau and other agencies should contribute to the development of IT solutions that can be used by the vendors who provide service to local governments. These IT solutions can, in turn, feed into the Bureau’s own standardized data collection process. 

The pilot program would involve creating and deploying software that would record the same permits currently covered by the form used for the BPS. The data collected should include the geographic coordinates for each newly permitted structure and the number of units included in each structure. Local jurisdictions that volunteer to participate would receive funding to implement the new system, either from the same appropriation source funding the MCI project or from a separate congressional appropriation. The Census Bureau would revise the system based on the pilot program for broader rollout, for which Congress would have to provide additional funding. 

Federal agencies (e.g., HUD), state governments, and nongovernmental organizations could use the data to better assess the efficacy of land-use regulatory reforms. Both government entities and advocacy groups are largely flying blind with respect to their reform efforts, due to lack of data. In order to assess, for example, whether reforms targeted to transit-rich or high-resource locations are yielding development in those locations, advocates and policymakers need to know how much development is occurring in those locations.

In addition to yielding specific benefits for the evaluation of regulatory reforms, there are also broader social and economic benefits of timely, reliable, spatially precise data on new housing development. For example, such data facilitates the development of economic indicators by the Conference Board and Federal Reserve Board; helps financial institutions estimate mortgage demand; and contributes to various kinds of research by private businesses.

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Eliminating the Chassis Requirement to Free Manufactured Homes from Local Discrimination and Regulatory Dead Weight

The coastal housing problem is highly salient in the housing discourse. However, more Americans live in rural areas than in all of California and New York combined. Even in metropolitan areas, most U.S. metros still have median home prices within 125% of construction costs — meaning that construction costs matter more than growth controls and land prices for home prices there. 

Unfortunately, from 1987 to 2016, single-family residential construction productivity increased only 12%. Indeed homebuilding productivity has fared uniquely badly compared to the rest of the economy throughout the postwar era. Site-built construction overall, and single-family home construction in particular, remains resistant to productivity-boosting innovations. 

Enter manufactured housing, the oft-maligned (or forgotten) housing type quietly providing 8.4 million affordable homes across the country. Modern manufactured homes have strict standards for structural integrity, material durability, and safety. In recent years, administrative changes to the Department of Housing and Urban Development (HUD) Code that governs manufactured home construction have allowed innovations like higher roof pitch and even limited multifamily designs to enter the market. 

The Opportunity 

Like cars or airplanes, manufactured homes are factory-built on an assembly line inside a controlled environment. This allows greater efficiency compared to site-built homes, where workers need to perform their duties in all weather conditions and sometimes awkward positions. Because manufactured homes are built indoors, workers can operate more efficiently and safely. This efficiency has a significant cost advantage, according to the Joint Center for Housing Studies at Harvard University, up 25-65% less than equivalent site-built construction. 

Despite their efficiency advantage, manufactured homes face discriminatory barriers to fair competition with site-built construction. Many state laws and local zoning codes restrict or exclude manufactured homes, often based on architectural features common only on manufactured homes, like the congressionally-mandated permanent chassis. 

The permanent chassis under every manufactured home must be retained even after permanent installation onto the land. This requirement is meant to retain nominal interstate portability, even though manufactured homes are rarely moved after they are attached to the land. The permanent chassis limits architectural flexibility by requiring the home to be installed higher off the ground to account for the chassis’s vertical height, makes basements less practical, and effectively precludes using HUD Code construction for upper floors due to the weight and bulk of the chassis. 

In the past, organizations like the National Association of Homebuilders opposed reforming the HUD Code chassis requirement in an effort to protect home builders from more efficient, factory-made competition. Today, with the construction sector at full employment, this motivation for opposition has subsided. 

Congress alone can eliminate the permanent chassis requirement for manufactured homes because the requirement is part of the definition of a manufactured home established by Congress. To do this, Congress must amend the definition of a manufactured home to remove the phrase “on a permanent chassis.” By doing this, Congress can eliminate wasted construction materials, allow new multifamily design options under the HUD Code, and unleash competition from factory-built manufactured housing. 

Plan of Action

Identify and engage key stakeholders 

Educate legislators on the basics of manufactured homes, their role in the housing market, and their inherent efficiencies.

The end goal is to incorporate revised manufactured home definition without permanent chassis requirement into must-pass legislation. An alternative is to pass it as standalone legislation.

Conclusion

Based on conversations with HUD staff, it is our understanding that once the permanent chassis requirement is lifted by Congress, HUD and the Manufactured Housing Consensus Committee will need to revise its existing administrative regulations to incorporate off-chassis construction into the existing HUD Code, or it could develop a parallel HUD Code for off-chassis construction. 

After the HUD Code revisions are completed, homebuilders will have more design flexibility, and consumers will have more options beyond local site-built home builders for small and starter homes. Increased uptake for manufactured construction following this policy change will come from allowing HUD Code construction to compete more evenly against site-built construction.

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Prioritize Western Water Grants that Support New Housing

Most Western states wisely require new housing developments to have an assured water supply, generally giving developers and communities three options to “create” new water for development: (1) build new storage and conveyance to capture unused water; (2) purchase and legally transfer water rights from an existing user; or (3) pursue “demand management” by lowering water use among existing users. Meanwhile, Section 40901 of the Infrastructure Investment and Jobs Act (IIJA) provides $8.3 billion over five years for the U.S. Bureau of Reclamation (USBR) to provide partial funding for projects involving water storage, water recycling and reuse, and water efficiency projects in Western states. The USBR should prioritize funding water projects for local governments that would expand the production of new housing in their service areas if given the water resources to do so. 

Local governments in the West employ a variety of policies to ensure adequate water supply. In some places developers must pay water impact fees to connect to the public water system, while in others they must purchase and dedicate water rights to cities for approval of new housing. Alternatively, some places resort to building moratoriums to address insufficient water supplies. The cost of water for a new single-family home can exceed $60,000, a significant barrier to new construction in some places in the West. 

Recommendations 

While there could be pushback from USBR authorities to using funding in pursuit of housing development, the IIJA statutory requirements (such as requiring that funding go to projects that increase water use efficiency or enhance water management) leave ample leeway for the Biden-Harris Administration to direct the USBR. Because demand management requires no legal change in water rights and limited investment in new infrastructure, targeting the USBR’s WaterSMART grants is likely the best place to start. Additionally, promoting demand management will likely have support from Western environmental groups with strong preferences against both building new infrastructure to divert water from rivers and “buy and dry,” where farmers fallow land and sell their water to cities. 

Only $2.9 billion of the USBR funding in the IIJA has been allocated to date. Scoring grant proposals in part based on their ability to boost housing supply is a smart use of the remaining IIJA funds and future USBR funding. 

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Redirect Federal Housing Tax Expenditures from “Gated” Cities to “Opportunity” Cities

House prices have surged over the past decade, doubling while general prices have only increased by a third.  Numerous municipalities help to fuel this housing cost rise by exercising an overly burdensome regulatory process. These restrictions impose severe costs on potential new residents and the national economy – with one estimate that local zoning laws reduced U.S. growth by 36 percent between 1964 and 2009. Preferential tax benefits for housing — including the mortgage interest and property tax deductions and the exclusion of capital gains on home sales – become especially valuable for landowners in restrictive housing markets where prices are high and new construction is low. 

To address this challenge, I propose removing housing-related tax expenditures in cities that excessively limit housing production and redirecting them to incentivize housing growth in nearby cities. 

The federal government is projected to spend $604 billion over the next five years in tax benefits for homeowners. Under this proposal, the federal government would remove housing tax benefits for all landowners in identified cities that refuse to build housing at a pace necessary to accommodate our growing nation. To maximize benefits from this policy, these tax savings would then be redirected toward residents and governments (through direct payments or tax credits) of cities that build enough new housing for future residents to migrate to these same metro areas. 

Recommendations 

Specifically, this proposal would remove housing-related tax benefits for all housing units within “gated” cities and redirect those tax savings toward “opportunity” cities. 

Should this proposal be implemented, there are important considerations to keep in mind: 

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Exclusionary Zoning or Highway Funds, Your Pick: A Viable Mechanism for Federal Action on Zoning

The United States is short 3.8 million units of housing, largely due to artificial limits on housing in high-demand areas driven by outdated zoning and building codes. The mandated underbuilding of US housing in rich coastal cities led to an estimated 36% loss in growth from 1964 to 2009 (newer estimates are smaller but still are significant amounts of lost value). As a result, according to US Housing and Urban Development (HUD) criteria, some 22 million renters qualified as rent-burdened in 2021. We propose that the federal government use highway funding as a legal mechanism to force states to adopt zoning reform. Since the legislative process is slow, we also propose immediate executive action to nudge state and local agencies on minor factors limiting housing supply, including building codes. 

Legal precedent for our proposal is 23 U.S.C. §158, which imposed a national minimum drinking age by taking away recalcitrant states’ highway funding. Furthermore, there are ample existing models for federal legislation to take: for example, California’s extensive reforms, including but not limited to allowing by-right construction of Accessory Dwelling Units and preempting San Francisco’s zoning policy, and Montana’s reforms, which require by-right zoning approvals and allowing of up to quadplexes for almost all cities above 5,000 in population. We propose mimicking the New Jersey Mount Laurel doctrine or the California Housing Elements legislation, imposing a requirement for looser regulations on states containing cities with a rent crisis.

Legislative Recommendation

Congress should pass legislation following 23 U.S.C. §158 requiring each state with a Metropolitan Statistical Area where the median renter is rent-burdened (i.e., median rent is at least 30% of area median income) and where area median income exceeds the US median income to submit a plan to HUD detailing how they will address the rent crisis in their state.

Any state whose proposal is found to not expeditiously move it to a place where the median renter is no longer rent-burdened can lose appropriations from the Highway Trust Fund. 

Congress should also appropriate $1 billion to fund planning studies in states affected by this law.

Executive Recommendation 

The U.S. Department of Transportation and the Federal Transit Administration should start using allowed population density within a catchment area as a scoring criterion for competitive transit grants. 

The Federal Emergency Management Agency should, in its building code modernization project, examine if building code changes can allow for the building of more housing and align with peer countries’ regulations.

Some might argue that a congressionally driven strategy is too difficult. We disagree, as coalitions for legislative housing reform have been able to form in urban NIMBY and progressive California, rural-Republican dominated Montana, and suburban, new Republican-leaning Florida. We propose fostering an urban-rural coalition by targeting separate messages to each party. Specifically, we would target urban Democrats by focusing on the socioeconomic disparities fostered by exclusionary zoning, and target (rural) Republicans by pointing out that restrictive zoning is an infringement on property rights, and its resultant sprawl threatens the rural character of communities. Some might argue that highway funding and housing are unrelated. However, the federal government has an interest in ensuring its transportation is an efficient use of taxpayer money, and under exclusionary zoning, development is encouraged to unnecessarily sprawl overloading interstate highways, thus forcing expensive highway widenings; essentially, arguing that housing and transportation are inexorably linked. 

If our proposed bill is passed, gains on housing affordability will be locked in and restrictions preventing the average American from owning or renting where they want to live will begin to fade, unlocking the potential of the American economy.

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.

Less Paperwork, More Projects: Streamlining applications for Federal funding in housing development

U.S. housing and planning officials have identified a series of roadblocks that slow down or prevent their cities from being flush with affordable units. In particular, the paperwork is simply too complicated.

Existing federal rules make filing for Department of Housing and Urban Development (HUD) funds challenging. National Environmental Policy Act (NEPA) compliance requires one set of paperwork, National Register of Historic Places mandates require another, on top of the paperwork requesting funds. Outside of compliance rules, applications for funding regulations need their own paperwork and require status reports throughout the project.

Opportunity 

The programs meant to create housing abundance have instead created a complex network of paperwork that is redundant, rigid, and discouraging. Let’s narrow our lens, and consider how developers use the Low-Income Housing Tax Credit (LIHTC) in particular. Developers may pull together as many as 11 sources of funding for a single project, which they are encouraged to do. Many state Qualified Allocation Plans prefer projects that leverage other government funding sources outside of the LIHTC. 

But it costs money to make money. According to a 2018 Government Accountability Office report, developer fees were about 10% of the total costs for both new construction and rehabilitation projects. In addition to literal fees, sourcing and applying for diverse funding takes time. A 2021 Terner Center report identified “lack of alignment of deadlines,” multiple application rounds, mismatched priorities (“the city elected to disburse capital funds early in the process to help the project be competitive for state funds, while the housing authority’s approach was to prioritize project “readiness”), and contrasting requirements as massive time sucks that delay critical housing projects. 

Plan of Action

Some states already streamline allocation from multiple funding sources to truncate development timelines and contain costs.

In Pennsylvania, a single entity administers multiple programs as a “one-stop shop” – a single application for a nine percent LIHTC automatically marks the applicant for HOME and National Housing Trust Funds, turning three applications into one. The Pennsylvania Housing Affordability and Rehabilitation Enforcement (PHARE) program also consolidates applications: Applying for a four percent LIHTC credit? You are also automatically eligible for other PHARE-distributed funds, like the Realty Transfer Tax and Marcellus Shale Fund. All of the sources that Pennsylvania Housing Finance Authority (PHFA) allocates, it does so in-house and with nearly-identical requirements. Because of this optimization, PHFA can award developers the “optimal mix of funding” in a single application. 

Other states consolidate applications to further streamline funding processes. In Minnesota, the state has consolidated multiple housing resources within a single application process. This so-called “Consolidated RFP” has turned $298.9 million of state investment into $883 million in housing development activity, representing over 5,074 affordable units. 

If states are able to put these innovations into place, then so should the federal government. The best place to start is HUD. Housing development grants and other affordable housing programs are already centralized at HUD, making it a natural fit for updated practices meant to distribute those programs. 

Recommendations

Recommendation 1. Create a federal one-stop shop for affordable housing investments. 

In FY23, there were 40 unique HUD funding opportunities, each requiring its own application. About half of these grants are disbursed to individuals seeking assistance for repairs or other programs. The other half, like the Choice Neighborhoods Implementation program or Capital Fund at Risk program, are aimed at communities and developers. In addition to HUD, other agencies earmark or leave open grants and funding opportunities for housing developments. To reduce friction for developers applying to multiple funds, HUD should look to Pennsylvania and Minnesota and create a lean interagency working group to consolidate applications.

This working group would have two goals:

  1. Enumerate all federal-level housing development grants and funds in a given fiscal year.
  2. Create a minimum viable universal application. 

The first goal would empower HUD to be the keeper of all knowledge regarding housing development grants, which it does not currently do. This makes it easier to capture information about how these disparate grant opportunities are used across the country (something that the Government Accountability Office is extremely interested in). By cataloging developer-level grants, HUD would be a single source of information on Capital Magnet Fund, National Housing Trust Fund, public housing operating funds, and myriad other funding sources. 

Recommendation 2. Align requirements and deadlines across grants and funds. 

With a minimum application in place, the working group should then align the minimal amount of excess application material required to make an application competitive for the biggest number of grants. This would decrease the burden for developers submitting multiple applications, as well as federal grantmakers reading and grading applications. The working group should consolidate deadlines (or even consider taking applications in limited waves) to accommodate the universal application process. 

Recommendation 3. Empower staff to award responsibly.

When more established and active, the working group should empower members to award “optimal mix of funding” to applicants. If an applicant was unaware they qualified for an additional grant, awarding staff should take reasonable action to submit the applicant into the process for the additional grant. With the universal applications, this would require minimal, if any, additional work on behalf of the working group staff or submitters. 

Conclusion

Developers, funders, and the bureaucratic teams that sign off and disburse funding — everybody hates paperwork. Opening access to funds does not have to require more person power, as exemplified in the states that use consolidated applications. That access, paired with more streamlined application paperwork, would cut down busy work for developers and get them to what they do best fast: build. 

This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.