Housing Reform: The One Thing Republicans and Democrats Can Agree On
Outside of a “subpoena cannon” firing directly at the White House, it’s not clear what policies, if any, the new divided Congress will pursue. A few weeks ago, soon to be speaker Nancy Pelosi mentioned plans to work with President Donald Trump on a bipartisan infrastructure bill, but the exploding budget deficit makes the prospect of such trillion-dollar legislation somewhat dubious. Another possibility for bipartisanship could be immigration reform, but the failure of just such a plan in 2018 indicates that this isn’t likely to happen.
However, there’s one issue where both parties have genuine common ground: housing policy.
Housing prices have grown much faster than wages over the past several years. And they’ve skyrocketed over the last half-century: after adjusting for inflation, the price of the median house in the United States has risen by more than 530 percent since 1950. The root causes of this price explosion are zoning restrictions: many areas in the United States have very restrictive regulations on the heights of buildings and the use of land. These rules, supported by well-connected, civically active homeowners, restrict the supply of housing and raise property values. Zoning regulations unnecessarily limiting construction are at the heart of the housing crisis in San Francisco and many other cities.
Zoning restrictions are determined at the local level. Federal programs have proven useless without local reforms that allow the housing supply to expand and drive down prices. For example, the federal Low-Income Housing Tax Credit (LIHTC), which provides benefits for developers to build apartments available to low-income tenants, is remarkably ineffective. First of all, a majority of housing projects that have received the LIHTC would have been built without the credit. In other words, instead of stimulating the construction of more housing and helping low-income tenants, the LIHTC is just a special tax benefit for developers. Additionally, the LIHTC has become increasingly inefficient over the past decade, building fewer houses even as program’s cost has grown by 66 percent. Similarly, proposals to subsidize rents benefit landlords more than tenants—unless the housing supply increases.
Fortunately, politicians on both sides of the aisle understand that to address the high cost of housing, the government must reform zoning regulations. On the Republican side, Housing and Urban Development Secretary Ben Carson has put forward a plan to attack local zoning restrictions that prevent the construction of large apartment buildings and multi-family homes. Under this proposal, cities would only be eligible for Community Development Block Grant money (an otherwise ineffective and flawed program) if they reform zoning laws to allow for the building of new housing.
There’s also support for this idea on the Left. Senator Elizabeth Warren recently released a three-part plan to address the housing crisis. And while a significant part of her bill is dedicated to public investment funded by an increase in the estate tax, it also includes the creation of a block grant program for which cities are only eligible if they relax local zoning laws.
Republicans probably won’t be on board for $450 billion in new taxes and spending. But both sides agree on creating federal incentives for zoning deregulation. A bill that focuses on consolidating existing, ineffective programs and turning them into engines for regulatory reform should thus have bipartisan support. Furthermore, unlike the infrastructure bill, which would require either $1 trillion in new taxes or new debt, housing reform would lower the deficit. Consolidating the community block grant and LIHTC programs into one incentive could reduce spending. An expansion of the housing supply would lower rents and raise real incomes. And the resulting decline in poverty would reduce the caseload of public assistance programs without narrowing eligibility.
Chances are, more congressmen are going to be interested in throwing bombs over the Mueller investigation and preparing to run for president than looking for solutions to Americans’ problems. But if the 116th Congress wants to legislate rather than bloviate, the door for housing reform is open.
Alex Muresianu is a writer at Young Voices. His writing has been featured in The American Conservative, The Washington Examiner, and The Federalist. Follow him on Twitter @ahardtospell.