Transcripts For CSPAN3 Hearing On Housing Market Home Prices 20220715

However, not everyone has been able to realize the dream of Home Ownership and the pandemic housing boom has made these disparities worse. In fact, while millions of people were able to take advantage of historically low Interest Rates to purchase homes or reinforced finance their mortgages, skyrocketing home prices and other ongoing challenges made it harder for millennials and gen z people of colour and individuals without intergenerational wealth to compete and access Home Ownership. So, while the Federal Reserve estimates that home equity reached a record 27. 8 trillion by early 2022, many qualified would be homebuyers could not partake in this wealth building event. These trends threaten to further widen the already wide racial wealth and Home Ownership gaps nationwide. Black bars are the only group to experience a decline in home purchase lending among bars of colour. For example, in my city of los angeles, the black Home Ownership rate was 34 in 2021, however lower than it was in 1910 after experiencing a substantial loss of wealth during the post2008 foreclosure crisis, households of color continue to be locked out of opportunities to build wealth. Its unconscionable that despite historical low Interest Rates, this nation was still unable to ensure that historically undeserved and excluded borrows could make Home Ownership games. We have heard stories of black homeowners being disproportionately denied refinance loans to appraisal bias and other kinds of discrimination, including reports that wells fargo denied nearly 50 of black refinance applicants. Weve heard stories of borrows relying on mortgage financing being out completed by all cash buyers, including wall street backed investors and buyers. In a hearing chaired by mr green yesterday this Committee Heard about how these cells conversions of homes into Single Family rentals have harmed tenants, would be homebuyers and neighborhoods. Rising home prices are directly contributing to inflation, accounting for 40 of the price hikes in the last cpi score Inflation Numbers and with recent Interest Rate hikes we can expect that for many the dream of Home Ownership will remain just that, a dream. Congress must pass this committees closing title of the build back better act legislation i drafted that would create and preserve over one million homes. This 150 billion investment would ensure the Long Term Health of our economy by significantly increasing the supply of Affordable Housing, thereby reducing housing costs and corresponding inflationary pressures. Additionally, last week, Committee Democrats passed my downpayment towards equity act to provide downpayment and lending assistance to first time first generation homebuyers. I thank our witnesses and i yield back. I now recognize the Ranking Member of the committee, the gentleman from north carolina, mr. Mchenry for four minutes. Just last week, this committee marked up the chairs down payment towards equity act, act, a massive 100 billion spending spree that would continue fueling skyrocketing housing costs. Its this kind of unchecked spending that is pushing the its this kind of unchecked spending that is pushing the Housing Market from boom to bust for the average American Family thats on top of 40 year high inflation and skyrocketing Consumer Prices across the board, which are outpacing wage gains. In fact, this is clobbering Household Budgets and if purchasing a home is still within the realm of possibility that will cost you double what it did just last year, from 3 to 6 now for a 30 year fixed rate mortgage. So lets break down that statistic. The median sales price for a house so far this year in 2022 is 428,700 with an fha minimum allowable down payment of 3. 5 excluding Closing Costs and other fees. That means the first time home buyer might have to finance as much as 413,700 at 6 interest. Youre looking at a Monthly Payment of 2,480. Thats up from 1740 last year. So thats a 740 a month difference, or roughly a months worth of groceries for a family of four. And those groceries are more expensive this year. In fact, potential homebuyers are being pushed out of the market today instead of taking responsibility for this economic wreckage, President Biden is blaming anyone and anything other than his own policies. Earlier this month, he claimed there was quote zero evidence that the 2. 6 trillion 500 days in office, had anything to do with inflation, that his spending had nothing to do with inflation. He even called that notion bizarre. And if you ask me whats bizarre here is the cognitive dissonance between the democrats, bad policies and their lack of accountability for this economic Dumpster Fire theyve unleashed. Weve been down this road before and we know where it inevitably leads. It starts with democrats creating new programs or pressuring the gscs to make increasingly risky loans for borrowers or cant keep up with the artificial price spikes theyve created and it ends with those families, many loin coming for some home buyers being hurt the most when the Housing Market is a downturn. Taxpayers are left on the hook for tens of billions of dollars to boot. It doesnt have to be this way. We need to get serious about creating a Sustainable Housing finance system that can withstand the pressures of a market downturn. We should focus on ways to actually increase the supply of housing and create stable prices. We should restore proper oversight of our Housing Finance regulators like fjfa and fha both of which have somehow gone , more than two years without appearing before this committee. In fact, todays hearing would have been the perfect venue to hear from fha director thompson. Ranking never hill and i sent a letter last week urging the chair to invite director thompson to testify on growing growing threats to our Housing Finance system. Its those threats on which we should be focused. Instead, all we are getting today is more excuses, more pleas for new reckless Government Housing spending and more empty promises than this time, and promises that this time it will be different your different. I yield back. Thank you very much. I now recognize the chair of the Housing Community Development Insurance subcommittee. The gentleman from missouri, mr. Cleaver for one minute. Mr. Thank you, madam, chairwoman. Homeownership is the single largest source of wealth for the American Family. Home ownership promotes wealth building by both acting as a forced saving mechanism and by allowing families to benefit from the appreciation of their home value. Home value americans who own their homes have gained more than 6 trillion americans and Institutional Investors who have a remarkably positive story to tell about the housing boom, during the pandemic for other americans and american communities, we are witnessing a gargantuan loss of wealth which will leave a permanent impact on this nation. These americans have lost their homes, they have seen the rising cost of housing. Either way, their incomes and they have been delayed, uh theyve been shut out the opportunity to build meaningful wealth in this nation. The impact of this troubling landscape will be substantial, particularly in communities of color, and i appreciate this this hearing madam chairwoman and your razor like focus on housing opportunities. Thank you and i yield back thank you very much. I now recognize the Ranking Member of the Housing Community Development Insurance subcommittee, the gentleman from arkansas, mr. Hill, for one minute. Thank you, madam chair. Thank you for holding todays hearing. I know every member of Congress Shares the common view that we face a serious affordability challenge across our country, even though we may disagree on the best ways to address it. Madam chair, do you remember the famous politician in new york, Jimmy Mcmillan . You might know him as the rent is too damn high party guy from governor of new york race back in 2010. Back then, a lot of people thought that campaign was a joke, but when the average home being sold this year is over a half Million Dollars and last year 146 cities in the United States hit the mark where a typical house cost a people arent laughing anymore. Million dollars, i look forward to hearing from todays witnesses about supply Side Solutions to our nations affordability, challenging their outlook for the Housing Market amid these turbulent Economic Conditions and the biden inflation. With that madam chair i thank the chair and i yield back. Thank you very much, mr. Hill. I want to welcome todays distinguished witnesses to the committee. First we have mr. Michael calhoun who is the president of the center for responsible lending. Next we have professor dr. Jean choi like who is a Senior Research associate for the Housing Finance policy center at the urban institute. Next we have miss lydia pope who is the president of the National Association of Real Estate Brokers. And then we have mr. Norbit michelle, who is the Vice President and director of the center for monetary and financial alternatives in the cato institute. Without objection, your written statements will be made part of the record. You will have five minutes to summarize your testimony. You should be able to summarize your testimony in that time. Also, you should be able to see a timer that will indicate how much time you have left. I would ask you to be mindful of the timer so that we can be respectable of everyones time. Mr calhoun, you are now recognized for five minutes to present your oral testimony. Thank you, chairwoman waters, Ranking Member mchenry, and members of the committee for the opportunity to testify on the critical housing issues impacting american families. My testimony today ill first summarize the impact and lessons of the covid pandemic and its impact on housing. Next ill set out current affordability and supply challenges we face. And finally, ill discuss the steps needed to make our housing system provide affordable, Sustainable Housing in the upcoming years for american families. As we all remember, 2020, covid bought precipitous job losses in and a grinding halt of much our economy. There were prospects of double digit foreclosures exceeding even those of the Great Recession along with mass renter evictions and landlord insolvency. However, the comprehensive response of congress and federal agencies was extraordinarily effective in preventing those calamities. Mortgage forbearance with payments deferred to the end of the loan maintained a strong Housing Market with low foreclosure rates and homeowners with sustainable mortgages. Likewise, the threatened wave of evictions to families surrender was largely averted through rental assistance that also sustained landlords. The overall economy recover recovered quickly with return to low employment due to these interventions. That said, we are all aware that today we face formidable challenges. Recent increases in house prices and Interest Rates. It combined to quickly produce a doubling of the monthly mortgage payment needed to buy a house. Rents have also escalated. As shown by the chart of my testimony, setting out the history of housing booms and corrections in america. It will likely take a number of years for housing prices to normalize, usually through a flattening of house increase. Also, future stabilized Interest Rates will likely be higher than the record low rates of recent years. Combined these will continue to , reduce housing affordability. Housing production has also significantly trailed our needs for many years and this shortage is a huge obstacle to families securing an affordable home. Another continuing challenge is that the growth of Household Wealth and home equity has been heavily skewed. Today the top 1 hold 30 of the 30 of the overall wealth. The top 10 nearly 70 . While the lower half of american households have a total of only 2. 6 of our nations wealth. Housing gains have likewise been skewed, including a massive Home Ownership and wealth gap that is projected to continue to grow in the coming years. This gap is reflected in the fact that today black College Graduates have less wealth and lower homeownership than white households that did not complete high school. In some there pressing Housing Needs across the country, rural and urban. This calls for us to reform our housing policies and systems to better meet those needs with the families today facing more volatility financially in todays 21st economy and many households not having the personal or Family Wealth and opportunities that provides. In my testimony, i detail a number of these specific policy reforms. First, we have to finish the covid work of helping remaining families preserve their mortgages and their existing rental housing. It is far more effective to maintain housing security than to try to rebuild. Second, we must aggressively expand housing supply, working at all levels of government and with multiple strategies. Next, with two 100 years crises hitting us in just a dozen years, we must harden our systems to withstand future systemic shocks. Equally important, the cost of addressing those shocks should be a collective burden and not placed on the most vulnerable families. In addition, we need well structured supports that helped families sustain the more frequent financial volatility occurring. This includes deferral mods like we saw in the pandemic crisis, along with new programs like reserve funds and loss of Income Insurance programs. These efficient systems both help individual families and they derisk, lower the risk of our overall markets and institutions. Finally, we must recognize the scope of historic and ongoing discrimination documented in our Housing Market and the massive wealth and homeownership gap it is produced. Our future must include a commitment to the necessary effort and resources required to rectify this and provide housing security across the country for american families. Thank you. I look forward to your questions. Thank you. Next we will go to the professor. You are now recognized for five minutes to present your oral testimony. Chairwoman waters, Ranking Member mchenry and distinguished members of the committee thank , you for the invitation to testify on the critically important issues of current Housing Market trends. The current Housing Market, historic decline and affordability and policy options for supporting equitable access to homeownership. My name is sam chandon. Im a professor of finance and director of the center for Real Estate Finance research at new york university. Home prices in the United States reached their last year in 2012 and have been rising rapidly in the decades since. Appreciation accelerated within months of the pandemics taking hold with home prices increasing at the fastest pace on record over the last two years. Today, the median price for existing homes stands above 400,000 for the first time. The 2020 inflection owes in large part to a shift in the location preferences of relatively mobile and affluent households, favoring larger homes and lower density neighborhoods. And two other factors including demographic trends, low cost financing, pandemic supplements to Household Income and house price expectations. On their own these demand drivers would not generate extraordinary house price increases. Rather, demand is coincided with a National Housing supply shortage estimated it 3. 8 Million Units by freddie mac and as high as 6. 8 Million Units by the National Association of realtors. The supply shortage is especially severe for entry level homes. This is a long term trend, not exclusively a feature of the current market. From approximately 40 in the early 1980s, the share of entry Level Construction is now just 7 of homes under construction in the United States. Confounding longer term supply and demand fundamentals, Mortgage Rates have surged in recent months. The impact of these increases has been immediate, resulting in historic deterioration and measures of housing affordability. The combined impact of higher prices and Mortgage Rates and limited entry level Home Construction is being felt disproportionately by families of color. Color younger families and , Income Constrained families aspiring to homeownership. Today, these groups face even higher barriers to the nations most reliable vehicle for generational wealth building, social and economic mobility and housing related Health Outcomes, s. Barriers to housing opportunity are wide ranging and not only related to families financial circumstances. Prevailing models of credit scoring, determinate discrimination in the housing search process. Higher financing costs unrelated to creditworthiness and disparities in labor market and Health Outcomes during the pandemic are among the myriad headwinds. There are no interventions that will immediately and completely close the housing gap. Nonetheless, it is encouraging that in recent months major initiatives have been announced that ameliorate the medium and long term outlook, including elements of the administrations housing supply action plan, fannie mae and freddie macs recently announced equitable Housing Finance plans seek to address many of the structural drivers of persistent disparities, including new approaches to the consideration of positive rental payment history. While the plans take important steps to improve access to financing, the enterprises are not tooled to address supply shortfalls directly. Whatever the mechanism if the supply of affordable and Workforce Housing is not expanded, initiatives that enhance demand, however well intentioned, will likely have the unintended consequence of undermining affordability for the very populations they are intended to support. So even as construction numbers rise in response to market forces, a multilevel approach to enhancing housing supply for all will address Building Code and zoning issues at the local level, supply shortfalls for Construction Materials and skilled labor, which may well be exacerbated in the coming years by infrastructure programs, improve access to financing for a wider range of housing types, including modular housing and smaller multifamily rental properties, and recognizing that investment in housing equity is also an investment in public health, with clear implications for both chronic and Infectious Disease morbidity and mortality. Additional demand side policies might reduce local taxes and transaction costs of buying and selling, removing a barrier to mobility as households grow their families, thereby freeing up entrylevel homes. As issues of supply loom large the role of Institutional Investment in the Housing Market and its influence on prices has garnered increasing attention. Institutional buyers repositioning homes for the rental market represent a relatively new component of Housing Demand responsive to families seeking the benefits of residing in a Single Family home without the obligations or the benefits of outright ownership. Following the financial crisis, Institutional Investors likely had a small but favorable impact supporting the stabilization of prices and housing occupancy in distressed neighborhoods, but the data also shows higher rent increases in rates of eviction of eviction facilitated by formal property management. The Institutional Investors share of the market has risen since just prior to the pandemic, but still only accounts for approximately 2. 5 of home sales according to freddie mac. On balance, the available data suggest that Institutional Investment and repositioning of homes for the rental market are not currently material contributors to National Housing supply shortages. Thank you again for the opportunity to testify. I look forward to your questions. Thank you very much. Next we will go go to dr. Troy, you are now recognized for five minutes to present your oral testimony. Madam chair Ranking Member , mchenry and members of the committee thank you for the , opportunity to testify today. Id like to start by mentioning what i present today is based on my own views and should not be attributed to urban institute. Its trustees or funders. Today, i will share some key data points that highlight the Racial Disparities in homeownership that persisted prior to the pandemic. How the pandemic has disproportionately impacted households of color, and how the changes in the Housing Market environment are now again making it more difficult for households of color to access full ownership. Then i will mention too promising demand side two solutions that the federal government could consider that can benefit households of color to obtain and sustain homeownership. First, i would like to emphasize that large, persistent Racial Disparities in homeownership, one of the primary tools of building wealth, existed before the covid19 pandemic. Just before the pandemic, black homeownership rate was 30 point lower than the white homeownership rate. The latino rate was about 24 point lower, and the asian rate was about 12 point lower. The Racial Disparities exist even after controlling for income. Our Research Finds that unless well designed intentional policies and actions are developed and executed. The racial homeownership gap, especially the black white gap will remain unchanged in the next 20 years. Thanks to various efforts by the government to help households , including for parents and emergency rental assistance, we have observed that both foreclosure and eviction rates fell below the prepandemic level. However, the data shows that both black and latino homeowners and renters were more likely to have missed their monthly housing payment and mr pandemic. And additionally, following the Great Recession and now again, during the covid19 pandemic Financial Markets have tightened credit restricting lending and making it difficult for households with less than perfect credit to buy homes. Credit history is the most cited reason for mortgage denial, having a disproportional impact on black and latino borrowers who are more likely to have missing or low fico scores. Tighter lending standards and disparities in Credit Scores mean that many black and latino renters who would have been able to obtain a mortgage under prior credit standards were more likely to face greater difficulties to access homeownership. As a result, these households missed the opportunity to build wealth from the rising home prices and the benefit from the historically low Interest Rate. Amidst the pandemic, both the home prices and rents have risen significantly. National home prices are now up more than 15 from a year ago and rents have increased by more than 11 . The 30year fixed Mortgage Rate is now around 6 , more than the double the average rate last year. The limited housing supply has led to increase competition in the market. The share of cash buyers in recent months account for more than a third of all home purchases. Home buyers of color are more likely to purchase the fha loans , but it has become were difficult for those using the fha channel to compete with those with greater financial resources. Additionally, because of the spike in rental prices, those who remain renters well face greater difficulty saving up for future down payment. Downpayment. While multiple strategies are needed to bridge the racial homeownership gap, including the increase in the Affordable Housing supply here, i will mention too promising demand Side Solutions that the federal government could consider first consider. Is a better targeted down first payment assistance. Our Research Finds that prioritizing first generation homebuyers can serve a greater share of households of color. For example, if we increase the will face greater difficulties saving up for future down payment. Multiple strategies are needed to bridge the gap including the increase in the housing supply. Here i will mention two solutions that the federal government considers. First is a better targeted down payment. Our Research Finds that prioritizing first generation home buyers has a renters with parent who is also rent, the share of potential blacks and latino households is about 60 . Compared to 46 of blacks and latino households under the criteria. The second is to incorporate payments into mortgage underwritings our Research Finds that past housing payment is a better performance. Much more work is needed to credit bureaus. [captions Copyright National cable satellite corp. 2022] expanding the use of rental payments for underwriting at fannie mae and introducing it as freddie mac, fha and da. And how to use this data in the mortgage underwhelming thank you for the opportunity to share my research with you today. Thank you very much. Next, we will go to ms. Pope. You are now recognized to five minutes to present your oral testimony. We are the largest and oldest black Real Estate Association in america and we are referred to as realists realtieses. Founded with the mission of mock and i housing, it was founded during the discrimination of housing that made it difficult for blacks to own homes. We are on the front lines advocating for fair practice and promoting policies that remove barriers to wealth creation. Today, increasing Interest Rates and home price market is widening the wealth gap. Today we see cash fires dominating the no inventory market who purchase these properties to rent, raising the rental prices nationally. Today, if youre a black person in america, and you want to sell your home, you have to go through the unblack process in order to get a fair appraisal. Today, blacks have been targeted by lone level price loan level prices and outdated credit models accounting for race and secret scoring and underwriting and there is a 1 increase decreasing the black buying power by 11 . 2013 has published a state of housing and black america report known as sheba, which has become one of the most referenced and citing housing didnt documents and offered some sound practicing solutions. In february 2022, we had a first report called the wire impacts practices against black women. To close the wealth gap, we are offering the remedies that could spur Home Ownership for black americans today, tomorrow and generations to come. First, we supported an urge to passage that is a build back better deal many blacks fall into this first generation buyers and will benefit from this fund. Secondly, we support in the student loan calculations and accounted as negative in the fica scoring for mortgage credit determination creating a large barrier to homeowners for many blacks who had otherwise qualified. Third, we call for the elimination of loan level pricing adjustments. And understanding diversity, training must be brought in and violation must be dealt with. Nareb supports the financing plan that includes a program to address these inequalities in the Housing Finance system and extend the wealth benefits of ownership. And utilize the services of the really a estate professionals are still needed in the home buying and the human touch walk through this difficult process. And in close, i will say this is a tough time and we nareb applause the efforts in this area. My past experience of as single black woman well two children is why my passion on equality and equity is so important. I was that victim of creditory lending and no one held my hand to buy a home. My solution to get a real estate license and stand before you as a National President to make a difference. I employ the committees and the officials, the housing regulators and directors to join nareb in promoting and ensuring democracy in housing. Thank you. Thanks, very much. Now we will go to mr. Michelle. Good afternoon chairman waters and Ranking Member and members of committee. Thank you for the opportunity to testify today. I am Vice President and director for the center for monetary and financial alternatives. The views i expressed are my own. The best way for the federal government making more affordable is to reverse course on federal policies that increase demand. It is true that home eckity represents a large portion of Many Americans wealth but it does not follow a policy should promote housing debt. Home eckity depends on home price appreciation and in conflict with more affordabling house. And from 2012 to 2021. Home price growth rate was doubled in the income and growth rate there. Are three glaring problems with these policies. First, the level of federal involvement in housing has been escalating for decades. That correlation is no accident. Combined, fanie and freddie have stood behind half of the mortgage for decades and some is responsible for close to 70 . If we included the securities the federal share averaged 92 per year over this period. All federal housing policies, even those outside the gses and fha are geared towards increasing demand. Because Housing Markets are also supply constrained, they pup upward pressure on prices and rents these policies include everything from housing lockdownses and military and other Government Employees as well as basic section eight vouchers. They place upward pressure in prices because they increase the number of dollars. And theres some spillover to related markets. Waste. Spending has worsen the effects of these demand inducing housing policies. Congress passed five bills totaling 7. 5 trillion. It worsened inflation and exacerbated both labor market problems and pandemicrelated supply chain problems leading to the high increase necessary cpi that americans continue to experience. Total spending bounced back sharply starting in the Second Quarter of 2020 and kept rising. Starting with april of 2021, they reported high inflation. In may, the cpi rose at 8. 6 . It was a broadbased increase where prices sheltered. Congress and the administration seemed intent with that content with that spenting. The federal spending boost demand while doing nothing to address the display constraints or leads to more inflation. Prior to the 2008 crisis, the fed rarely held any nbs on its balance sheet. Between 2010 and 202 2 00 the lowest was 827 billion. And the fed went from holding 1. 4 trillion in 2020 to 2. 7 trillion in 2022. This nbs purchase policy makes very little sense. Thank you for your consideration and ill be happy to answer any questions you may have. Thank you very much. I now recognize five minutes for questions. Ms. Pope. First of all, i want to thank you for being here, and the work that the realtors have been doing ever since ive been elected to office to deal with discrimination and other issues, dealing with Home Ownership. During the pandemic, increased competition for homes in a tight Housing Market pushed Home Ownership further, out of reach for many process perspective firsttime buyers, people of color and low wealth individuals. A recent study by the National Association of Real Estate Brokers show that in 2021, the Home Ownership gap grew to over 30 , higher than it was in 1960. And my city of los angeles, the black Home Ownership rate was 34 in 2021. Lower than it was in 1910. Last week, Democratic Committee passed my down payment toward equity act. My bill would authorize 100 billion for a new Grant Program to provide assistance of up to 10 of the Purchase Price of a home to first time, first generation home buyers to help cover down payments, Closing Costs and to help buy down Interest Rates. The impact would impact in the black community. This will be a big help. So thats extremely a very Good Opportunity for black americans to take advantage of and again, allow the creatione generational wealth to continue. And then lit help immediate the actions of the inequalities the wealth gap in the discriminatory practices. Actices. This will be a regret help the black american families. Thank you very much. Even though i had not blanked on asking this question, i am very interested in knowing what is happening with the evaluation basically, of homes in the black community and what is happening with the way that the discrimination appears to have been taken place for so many years. All the values have diminished. Theyve lowered the values because the appraisals and we are working very closely as well and very supporting to the pay that they want to stop the discrimination of the biases. Only 25 of californians could afford to purchase medium price home in the First Quarter of 2022 compared to 47 of home buyers nationally. One driver of the affordable criteria is crisis is the supply shortage. It included over 150 billion in investments that were create and preserve over. 3 million homes, including by offering incentives to low jurisdictions to ease burdens to buying and building new housing. Can you talk about the importance of making the types of transformative housing and Community Development investments included in the build back better act . When we look at the mix that is required today, restrictions on the availability of land, the cost of materials, the only very, very small share of those homes is within reach of income constraint families and many aspirational home buyers. So programs that not only encourage supply but encourage sly that supply and those who are aspiring to Home Ownership will be most effective in alleviating in some of the supply challenges and pricing issues that we face. Thank you very much. Mr. Mchenry is now recognized. Dr. Michel, i want to drill deeper in todays hearing title its called boom or bust. As i aoutlined in my opening statement, President Biden increased federal spending by more than 2. 5 trillion. Our National Debt now surpasses 30 trillion. The massive spending spree includes nearly 20 trillion the 256 billion jobs act enacted last year. It doesnt include the 1. 7 billion socalled build back better act or whatever theyre calling it right now. It keeps changing week over week. So that build that passed the house in november, it was then called build back better. It also doesnt include a trio of housing bills that the chairs introduced but not passed the house. That includes 600 billion in housing infrastructure or unscored ended homefulness act that is likely to cause 2 trillion a year. All from board money. So if you would, please explain both the observed and projected effect that this massive spenting is having on the economy and its action to the inflation that americans are experiencing. Sure. The stimulus more than tripled the gap between actual output and what the estimated the potential output of the economy. Even before march of 2022, the 1. 5 trillion spending that we had then, federal spending has increased even on a per kappa capita in the First Quarter of 2021 thats well over the average quarterly increase which is less than 1 during the last decade. So theres pretty much no way that that sort of spending wont eventually lead to inflation. The result that weve gotten out is not all that surprising its just an enormous money relative to what people are used to having on the whole. And this is worse, of course, for anyone on fixed income or without a steady or secure or index to inflation source of a longterm income because they are not getting that money directly or incorrectly at first. They are get the price increase at first in many cases. And then in many cases when theyve got the income, theyre still getting an even larger price increase now due the magnitude. So this is bad for millions of people and i think its probably obvious that to most people that the lower your income the worse your situation, the harder this is going to be to deal with. So thats kind of where i go with that. So we know that federal spending comes in a lot of forms but one of the worst is when we come up with new giveaway subsidies for people who probably dont need it and shouldnt get it. One good examples of provision in that build back better act we marked up that same provision again in november. Individuals make up to 140 of the Median Income of the area would be eligible to get these grants in the last three years and the parents did not. So this means an individual marin county, california, making up to 230,000 can qualify for more than 97,000 in free government money on a 970,000 home. Even if they owned the same sized home a thousand days earlier. As an economist, what does a subsidy like that do to the marketplace and what are the what are well, how do you respond to such an irrational demand size subsidy . Yeah, its a terrible policy. The response would be higher home prices. It makes no sense at all in any way. Thank you very much. The gentleman from california, mr. Sherman who is also the share of the subcommittee on Investment Protection interrupt ship entrepreneurship is now recognized for 5 minutes. Thank you. First, it is interesting. Were all in favor of appreciation were all in favor of affordability. Those from contradictory. Theres an irony there. But theres reason for us to support both. Our friends have taken away the induction for property taxes for an awful lot of taxpayers and they have not indexed that provision for inflation. So whether its 2 inflation or whether its a much higher level of inflation, that provision hurts not only the upper middle class but will soon hurt the middle, middle class. The same applies on their Home Mortgage deduction. So while were making housing more available, theyre making housing more costly. But the biggest impact is local government. They really control housing. And so many in so many areas, people want either open space or maybe open space dotted by a few rich houses. The effect this the cost of providing the new structure is double or triple what it would be. The cost is dealing with the zoning, the resulting increase and land price, the fees and all the receiptors that are often designed to make sure that communities are not integrated and of course, that means in many cases, is not racial linting berated. There ought to be Single Family homes that are available for rent. We have a labor market where people are willing to move around far more than they are in europe and that gives us an economic advantage. Government spending increases demand and inflation. What he did not point out is that taxes reduce demand and reduce inflation and thats why they were fully paid for and why if we can facts the wealthy appropriately, we reduce inflation. Mr. Calhoun, we often hear that fha borrowers struggle to complete against compete against those who are borrowing on conventional mortgage. Sell receivers want to avoid the tougher appraisal requirements, last year, the house passed my bill which unfortunately, we did not have. The home buyers assistants act which broadens the types of appraisers that can appraise for an fha purchase be the aim same for those that do me same for the gses. This is significant because the borrowers are firsttime home buyers. Are there other policies that we can take whether its the appraisal requirements or elsewhere so that fha borrowers in equal footing when they go and buy a house . Yes, congressman. Your last comment, i think its important, included in my testimony was the chart that i will just show you here, is the history of housing prices. The colored part is ill ask you to focus on the question. We got 40 seconds. Ok. Yes, the things that you can do. Your appraisal thing, the current requirement of certified appraisers make it much harder to find. And thats fun wound the more important thing. Fha is doing things in the services so they move faster and then right now, they have several proposals that provide more clarity for lenders to make it easier for borrowers to qualify and to encourage lenders to participate in the fha program. As you know, fha is the largest provider of new homes purchases for borrowers of color. I want to point out how important that is that thats the chairwomans downplaying the program. Half of them needed families to help them and not everybodys got a rich uncle or a rich parent. I yield back. Thank you very much the gentlewoman from missouri, mrs. Wagner is now recognized for five minutes. Thank you, madam chairwoman. It seems we are not any closer to bringing down the high cost of housing. Over the course of 20 hearings, instead of addressing the lack of production of new housing units, the majority has spread blame on Property Owners and investors, appraisal firms and the mortgage industry. More biden blame game. Meanwhile, they have spent trillions in taxpayer money that has worsened inflation, tripled supply chain and Construction Market and ultimately made housing even less affordable. Dr. Michel, i represent the second corral district of missouri, which continues to experience labor shortages and supply chain issues that affect almost every industry from construction to manufacturing. Collectively, do the policies offered today by the majority and the Biden Administration address those issues . No. No. It would worsen it. The idea its maybe im sure its wellintentioned. You want to help people. Everybody wants to help other people and thats good. But the fact remains if you have, if you go down this road of giving just giving out more money, it still takes a long time to build a house. You cant build a house in every single location where people want to live. Theres not enough land. You dont have enough labors to do everything you want to do. You have an infrastructure package thats going to draw labors to that. So youre going to be throwing more money, allowing people to bid up the same amount of resources over a short period of time. And thats the opposite of what you want to do if you want to make things more affordable and easier to attain. Could you describe how the supply chain issues were facing will continue to drive up home prices and rental rates if it is yeah, no, it would be the same sort of situation where you dont have enough of what wasnt. And you dont have a way to get everything quickly. If you talk about things like livestock or labor, you cant magically produce them no matter how much you want to bid up the price. So letting these things go, letting these, these supply and demand forces take hold without further subsidizing them is the only way to let those prices come back down to let the market reallocate on its own pace rather than trying to just continue to increase the demand side. Yeah, the federal role in Housing Finance policy has expanded greatly over the last several decades. And yet, the american Home Ownership rate remains at roughly the same level as the 1960s. Dr. Michel, is there evidence that would suggest the entrenched role of the federal government in the Housing Market has played a role in its current state . Yeah, absolutely. Its kind of amazing to hear lots of other people on the panel suggesting that we just continue being the same thing that weve been doing that got us into this mess in the first place the only appreciate increase in the black or latin Home Ownership rate was not the sustainable by definition. We want to keep helping people thats good. That doesnt mean that you help people by getting them longterm fixed loans that they cant afford. And youre not addressing the underlying economic issues. Youre just throwing money at a problem and youre putting somebody in a financially risky category. So the fact that you take so much that stimulus away or so much that subs sedation away and its not sustainable, it ends in a bust. Theyve been pushing their build back better plan, while the list is quite long, could you briefly mention some of the most harmful policies . Well, outside the gses is that yeah. I mean, i think if you look at the gses, just thats the biggest chunk of it for me, the gses and the fha. This is no longer a small program. This is the entire market. So its essentially a federal takeover. And with those expansion, weve seen this happen over time and again. Yeah, thank you. I yield back the balance of thank you, and thank you for recognizing that weve made priority. Housing with no help from the republicans. Thank you very much. I got address real quickly because i heard representative wagner and representative henry, they keep talking about, you know, it seems to me that some of the housing crisis, particularly in regard to black america predates all of what they are talking about. They also seems to me that when you tell someone you give them a hand up, its ok. But when you have the huge republican tax cuts to goes to the americans, that is much more money than you see going to regular folks. Thats ok. And then, to say that the president is not doing the right thing when in fact, he knows that we are coming out of the greatest pandemic this country has seen over 100 years and yes, the war in ukraine is affecting the economy, which is why the president is in the g7 and working together with our ally who are also suffering from inflation, and suffering from putins war. So theres no question about that. And i would hope that my republican colleagues who say that their support of ukraine which we all should do, and make sure that they get the money that they need to defend themselves, but we should also support our people at home. And we had a conversation with chairman paul george who said that paul george who said if we did not make the investment that we made, that our economy would not be as strong as it is right now which is stronger than most other places around the world. To say that we are supporting ukraine but then say oh, the president is making it up when you know and can see the comparison just does not make sense. So if youre not going to support ukraine, say youre not supporting ukraine because that does cause us to have higher gas prices and inflation in the United States of america. But now, let me go to my question to ms. Pope first. Ms. Pope, i know your Great Organization has put out a report. The chairwoman started talking about this earlier about the state of housing in the black america which discusses other challenges have confronted black homeowners. We know more costly for black households and the black homes tend to appreciate less or be valid at lower value. So this whole thing in regards to algorithms maybe. Can you explain what role of abms are and what more needs to be done to make sure that calculations and algorithms are not having negative consequences on what you will go doing to make sure we have equity there . Thank you. The Housing Market and the appraisal values are low. And what are we doing as america . It is important that went were dealing with the appraisers and the Appraisal Society that number one, 1 of the Appraisal Society are black. We dont have enough africanamericans within the industry to understand the values of our neighborhoods where we group at, where we know about, where the know the house across the street is worth more value omit the importance of even the pay policy to discuss lousy challenges on the training that needs to happen within the Appraisal Society, the licenses that need to take place and we need to make sure we hire and employ more black appraisers to lessen some of the guidelines to be able to increase that community so that were able to be have real appraisers. The low assets to capital the health care, the quality of food, you know, the inequality and the Racial Discrimination has not changed. We have to hire more black appraisers. What role does the Student Loan Debt playing in serving a as barrier to Home Ownership and how can we address this issue here in congress . I put out a bill for overwhelm ownership and i know for me, that was deficient prohibited me from owning a home for a while. A lot of wealthy young adults get education. A lot of black young adults are having a higher student debt. Theyve more likely to drop out of college because they have multiple duties to serve. [indiscernible] and that is also going to have an impact for the Home Ownership. I would love to have look more into your text but this is a very important issue to address. Thank you so much. Im out of town. I yield back. Thank you, chairwoman waters. The opening lines of the majority policy paper for this hearing suggests Home Ownership should be a policy for closing a wealth gap in this country. Please tell us what Economic Research suggests about making reduced wealth gap and objected for Home Ownership policy. Well, i dont agree that Home Ownership itself should be a policy. There are lots of reasons not to own a home. Its an individual decision. And if were talking about Something Like sustainable Home Ownership, there are many Economic Conditions and reasons that will make that either difficult or easy. Theres nothing wrong with renting. Federal policy should not distinguish wean renting or owning. Even though theres a correlation between things like good step up and Home Ownership, it doesnt mean one causing the other. It shows negative spillover effect from owning, especially low equity, longterm low equity loans, hesitant to move, hesitancy to move in search of a better job opportunity. I was looking for some balance and you provide that balance. So, thank you for being so straightforward with this. Ok. When secretary carson was there, we begin to appreciate that making housing affordable depends a lot on being able to expand new housing supplies while holding the line best way possible of building new houses. What happens to housing prices and affordability when we expand Housing Demands suddenly without addressing the conditions of housing supply . Prices go up. And as the prices go up with the fha or gse loans that we have, we have more lower equity loans. So, youve got sort of pockets, geographically throughout the United States that are either more or less constrained than the other and youve got one industrial policy that just says get more loans, get more loans, get more loans. So its not surprising to get exactly the result that weve had, which is more Consumer Debt and incredibly rapid increase in home prices. What do you think congress should do to help bring down the cost of building new housing so we can expand supply without driving up prices . Well, theres very Little Congress that can do to increasest cree the increase of supply. They have to and that means pairing back on the increase on demand. So, the supply is going to be more local driven. And you have to back off, literally, back off. You have to shrink the footprint of all the things that are being done federally to increase demand. Otherwise, youre going to keep getting higher prices. One of the bills under consideration in this hearing is a bill that provide 25,000 or even more to provide qualified assistants to firsttime home buyers in purchasing their homes. Can you comment on the pros and cons of that approach . The pros are if youre a recipient of that you get the money for your down payment and thats good for you. But the cons to that, again, are your doing nothing to change the under lying condition. So if you have an africanamerican for example, that doesnt have a rich uncle, you know, theres youre assuming that simply giving them the money would be good for them. And the Research Shows that what we get from spillovers from Home Ownership, you could actually be picking the behaviors that somebody has or build overtime when they do save money. So youre taking the saving the money part out of the equation youre saying that doesnt matter when in fact that part could matter more. And thats not to say that there shouldnt be something done to advance economic increase and Economic Opportunity but theres a difference between that and just giving somebody the check. Got you. Listen, for the record, ive been a realtor for well over 40 years. And i can assure you through the entire time since the very beginning first orientation class, every realtor is aware that there should not be any discrimination in housing whatsoever. And the only color any realtor should be concerned with is greed. And thats putting the deal together. Thank you. I yield back. Thank you very much. The gentleman from georgia, mr. Scott was also the chair of no house the Cultural Committee is now recognized for five minutes. Thank you, chairlady. Ms. Pope, let me direct that question to you. A recent study pointed out that 33 of home sales were made by a private Investment Group in any area. And my area in atlanta led the nation as the number one metropolitan area in the entire nation for invest invest invest iven Single Family homes. Explain how this informer activity ended in the Housing Market impact individual buyers and hurt them. When leners hesitate, buyers cant purchase. So when they cant purr charges it opens the doors for investors who pay cash. And they do them in bulk. So the more properties for less money. Its a wholesale what happens in this case is the place of the resident and it creates low inventory for the neighborhood but what ends up happening is you have a high rental market that makes it no sustainable for the Home Ownership. And it makes it difficult for anyone looking to buy a property that its hard to buy because all property has been taken up by these type of investors who are buying them, paying them in cash. A typical home buyer doesnt have the cash. Thats why financing is available. So strip that away from the American Dream, strips them away from that Home Ownership. Yeah. And to your point, the Atlanta Journal constitution, our own newspaper, reported that this activity was linked to address the decline in Home Ownership rates. However things connection disappeared when compared in a white neighborhood with prominently predominantly black neighborhood. Can you explain that to me . So when an investor buys a single property, rather than rent it or fix it up to sell, then that market is increased. It makes the inventory low, because that borrow per cant purchase its at prime price. And now it is resold it. That makes it very difficult in the community because then it becomes unaffordable and possibly having challenges with the appraisals. And thats what were finding across the board. Im from ohio and we follow the same issues of having all these investors buying the neighborhood, increasing the sale price or renting. And it makes it harder for a black person or anyone to buy a home in that area because of the appraisal value or because they cant afford it now. And thats a typical average regular price. And let me get to the genesis of the issue from my standpoint. How are these firms able to track what neighborhoods and areas will see future high paying jobs and good performing schools which tend to increase home prices . So when an investor buys a property, you know, it takes away and it strips away the Home Ownership. So youre right. The home buyer, you know the School Systems that they go, the grocery, the banks very little on the neighborhood becomes a challenge. Because now youre taking away that Home Ownership, the neighborhood that is created to have sustainability. So that stripped away when youre lessening the Housing Market and increase the rental market. So, my time is running out. But heres the part that i want to add. Is it fair to say that these private equity firms would then charge a singlefamily home a majority africanamerican neighborhoods more than in majority white neighborhoods . Yes. Thank you very much. I yield back, madam chair. Thank you very much. The gentleman from texas mr. Williams is now recognized for five minutes. Thank you, madam chair. I am a Small Business owner and i am an investor. Now, as were having these as we are having these conversation, some of these questions coming out of left field about the Housing Market. We should take a second to recognize where the biden economy currently stands. And it stands with everybody, not just one group or two groups. Everybodys being affected by the bad decisions coming out of this Biden Administration. American savings rate is at its lowest level since the Great Recession, while Credit Card Debt is hitting alltime highs. Supply chains are broken. Having visible impact on our constituents go to the Grocery Store with empty shelves and on inventory for Small Business, im in the car business. Im a Small Business owner in the car business and we usually carry around 800 units on the ground and today as i sit in my business, we only have 26 units on the lot for sale. So, i can tell you about supply chain. The supply chain problems are making it particularly difficult for commercial and Residential Real Estate industries, projects are being delayed because they cant find the Raw Materials necessary to complete their bills. When the timeline gets stretched out because of unforeseen circumstances, and the overall costs goes up. Even if he builders are able to secure all the necessary materials, they are having real problems in finding skilled workers to complete these new projects. And inflation is at 340year high as a result ofoutofcontrol government spend big the biden conversation and to accommodated policy. This has forced the Federal Reserve to raise Interest Rates to get the fun precedented price increasing under control. And this has led to the 30year fixed Mortgage Rates of almost 6 . This is not making this a buyerfriendly environment for anyone. And as a result, all of these factors, Consumer Confidence sitting with as low as level since the start of covid pandemic. What steps do we need to take to get our economy back on solid ground, mr. Michel . Well, i mean, part of it again is i think on the inflation side is the fiscal spending. Part of it is the supply chain issues or largely the supply chain issues are caused by golf shutdown. You have an incredibly large drop in demand and it is now back in demand. Bigger than anything in the historical record. So we have to be a little bit patient. We have to stop spending more at the federal level. You dont want to keep getting them up. And the feds are doing what they should be doing. The fed has started tightening. At this point, Monetary Policy is probably the only tool thats going to help longterm and there are signs that thats starting to work. The markets are tightening. Money growth is coming down. Signs of inflation turning back. So i think thats i think were on the right road as far as that goes. And we need to quit talking about tax increase and we need to keep tax where is they are. I dont really understand the tax increase thing, but go ahead. I dont understand it either. But well move on to that later. Extensive regulation for it. They can be a major drag on the economy and private sector participants. And theres been studies that have been shown in President Bidens first year in Office Businesses have spent over 131 million paperwork hours. Im in a businesses all commission. And my business, we even had to hire a Compliance Officer and paying him a salary to comply these two regulations where were getting burdened with. This takes away valuable time from productive activities. And it could be helping people buy houses we must also be looking at ways to free up business times. So real quick, have you done some Extensive Research on the act and can you discuss certain parts of the bill that would lead you to believe that were holding back in the economy that we could reexamine in this committee . Sure. With systemic rick and stability regulation, given the fed and treasury a blank check to do anything of guarding against potential system pick risk and failure. And thats showing up in crypto and tech markets right now. My time is up, madam chair. I yield back. Thank you very much. The gentleman from missouri, mrr the subcommittee on housing, Community Development is now recognized for five minutes. Thank you, chair. Let me first deal with some of the issue that have been throwing out to mr. Michel. First of all, i appreciate your appearance here in the committee and presenting information. But what i like for you to address is if there is a 2 trillion drop out of the revenues of the United States, does that contribute to inflation . A drop in tax revenue contribute to inflation . Yeah. No, i would not make that argument. So dropping doctor 2 trillion in tax revenues is not devastating on the economy and spending 1 trillion for infrastructure. Is there a connection . One is a inflationary area and one is not. If you drop 2 trillion in tax revenue, its not. And if you put 1 trillion spending into the economy, that it is inflationary. If thats where this is going where we have inflation, all we need to do is increase tax, i dont know if thats equitable. I dont know if it works that way in practice. I dont thinkity suggested that. I think i suggested that. Fair enough. Yeah, i misspoke. What im trying to deal with is, you know, we spend 1 trillion. Now we had 2. 3 trillion hit on the economy with the tax cuts. And the revenue fail or is falling substantially short of the doctor 2. 3 trillion. 2. 3 trillion. So, you know, i will get to a point where something is right or wrong because its right or wrong and not two did it. And so, you know, i mean, the 2 trillion drop is unheard of. And let me ask you one other thing and ill move along. My assumption is that you will pose the bipartisan infrastructure bill that some of us proudly voted for, republicans and democrats. Is that true . Correct, i dont think that was a good bill. Ok. And so what would you say to the people who are concerned about the 45,000 bridges in Poor Condition of the United States . What would you say to the people in your community who didnt meet the stats and realize we were in trouble. We rank 15 im sorry, 13th in the world in terms of our aging infrastructure . 45,000 bridges in Poor Conditions. What do you say to the people all around the country who believe we were in trouble and what would you say to every president from bill clinton have said they wanted to pass the infrastructure bill . We need a infrastructure week that the legislative process is going to began. So all these people would have to be wrong that with definitely needed an infrastructure bill. Is that what you are saying . Yes, i would say thats wrong. And i would say that theyre politically very popular for every president and senator, yeah. Why is it popular . Is it because here in kansas city, were getting ready to put in new bridges, where we were having flooding, where 25 people died . Is it something that we should be i should be apologetic about . I voted for it very proudly and i have not heard a single republican or democratic or anybody else complain about it. No. If i were you, i would want to get as much money as i could from my constituents from as many places i could get it from. Thank you for the opportunity. I thank you to for your michel, for your president on your committee and your answer. Thank you so very much. You can answer that clean water. The gentleman from arkansas, mrr five minutes. Well thank you, madam chair. I certainly enjoy this mack pro economic debate with our witnesses and our members. Its always rewarding, actually. Im i would say to friend that i appreciate his work on doing bipartisan or or cognitive support or targeted support in ukraine. I wanted to thank you for his work to make sure we had bipartisan port. I do want to correct the record in kansas city and greg on tax issue. The jobs act tells allamerican emilys with lower tax rate, easier filings, a better child tax, we have to make those cuts permanent. On the revenue issue, despite the large cut in rate or at their highest level in american history. We are earning more Corporate Tax revenue than we have and that is really for u. S. Investment. The gentlemans argument about revenue loss quite exaggerated. The real challenge we are talking about today is the impact on supply chain, inflation and the impact on housing ability. I want to start with the doctor. Very interesting testimony. You say the Analysis Shows in Investors Show the market has risen just prior to the pandemic but only counts for 2. 5 of house sales. Momandpop investors in cities and counties account for 24 of the market. Is there evidence this is only in low income neighborhoods or is it more than the rowing metro area . The dangers you cite, eyesight and my testimonies. He just completed study, there is always opportunity but you that is significant opportunity to improve availability. Nationally, if 24 24 of investors buying home without the intention of living in them but repurchasing them as singlefamily rental home. It does include a wide range of. We should be careful not to wait large institutions with that entire pool. Let me reclaim my time. The margin is an individual momandpop investor. Ive never seen anything disproportionately and low income neighborhood. Let me ask you this. A lot of families have in the rental market. The best place for a mom, isnt that a better choice for her rather than an arm and . The set of amenities they look for may exclude tings like good quality public schools, better access the location. Let me thank you for that. If you have other comments, submit them for the record this is a key element of what we are taught about today. The st. Louis Federal Reserve bank shows that minority homeownership skyrocketed under the Trump Administration on the post crisis love of basically 2016, 2017. The pandemic knocked them off the order ability rate. We need to get back on that. I yield back the rest of my time. The chairman from colorado who was also the chair on Consumer Protection is now recognized or fiveminute. My friend mr. Hill i think he started off on the right track. He started by talking about this being a macroeconomic kind of question. It is also microeconomic. We have had some questions about why and demand, he doesnt really want to mess around supply. Because the demand by making sure people dont have any cash. That will work. All of a sudden there will be an oversupply. Long before joe biden got, we saw house prices increasing. We had our population in the supply has not kept up with the population. That is what is happening in colorado. The ohios, maybe our, new york. A lot of people leaving. House prices have stayed stable. I really appreciated your Economic Analysis of things probably the best. Demographically in the united date of america, do we have enough housing for our population. Where did we see our population going over the next 10 years . Do we think this lie will book would be demand . I will start maybe with you see it could demographic question. In the future i do not the demand increasing. Demand is much higher than applied. Homebuyers in america and the offers coming through the properties are at least fiveenzymes more. Now they are sitting ducks. When you look at all of those buyers, the demand is strong. The supply will take time unless we do more housing within the suburban area homebuyers urges the properties. It doesnt work with that. Just not enough properties that we need that anyone could help to help so we could increase the supply for our buyers. I dont see the supply happening that fast, i do not. You had a chart that you will show. Curious that you have taken a look at demographic trends nationally. It seems to me, the immigration rate was up and down. Talk to me about how you see some light and demand on a general basis. Not the monetary supply, just people. There are a couple of factors that make it clear. I note the urban institute, they have done research. We have an aging housing supply that is not keeping up. There is about 1 percent dropping out each year. You have to take that into account. We are experienced a huge ship. The new household younger households looking to buy home, we have to factor with current older households, a trend towards families wanting to age in place. We have got to remove barriers particularly for the entrylevel market. That is a critical part to keep us where we are. Let me stop you or one second to make a final comment. I know the western united dates, the Interest Rate have taken effect on the Housing Market. Land development has load. Home sales have slowed. Any comment on the Interest Rate before my time expires . You will not get a chance to answer it i yield back. Thank you. The gentleman from South Carolina is now wrecking more five minutes. Thank you. 45 years i have built houses, departments. Some of the responses have been laughable. The democrats could pick who they want, this is my second hearing. You might want to get people who have been in the business. The number one issue causing housing prices go up is very simple. It is the war this administration has not oil and gas. The trucks that delivered a load of lumber our house. I cannot see mr. Norman. Im sorry. I dont see you on camera. Let me get some there you go. Can you see now . Can everybody see it . How about now . We lost you again. Austin, could you come in . Whats going on here . The gentleman from South Carolina. Youre on. We cannot see you. Mr. Norman . We need to see you on. We cant get it, could i come back . We could come back. Wet im sorry, thank you. Lets go to the next person. The gentleman from illinois, the chair on Artificial Intelligence is now wrecking recognized. Thank you. Im struck by the fact that very often we put a lot of effort to host instruction you look at the number of emptynesters sitting around with large numbers of empty rooms, we could hear the problem with people who are homeless. We could snap our fingers and reality eight that to reallocate that. I am a little distressed by everything put into waste to interfere with the free market in ways that lower the ability the ability to purchase houses might be able to. What are the most costeffective innovations in the free market or just returns to the free market that would allow people, the supply and demand for lowend housing or removal of subsidies we have placed or rules that encourage people to have big houses and big lot. Does anybody want to take we will have to put some federal money on this. What are the most effective subsidies and where could we . I will respond for the record that i have a Home Lending Program to families. I have also been a private Real Estate Developer and have experienced from that side as well. We suggest now is to help families, todays more volatile world, economy workers should not be precluded from homeownership. Those are things like reserve but. We are as well as low income protection that helps people make up or the deficient quite frankly in the Unemployment Insurance row graham. Program. We are in a different world than we were in 2008. People have a portable mortgage now. We are seeing not seeing a dramatic funds like we did in 2008. We now need to make lending more like it was in the 19th the exam exceed in the 1950s and 19 60s. If those are properly underwritten with responsible programs such as reserve funds and loss of Income Insurance, we could do this in a way that is paper and worn safer and more inclusive. It seems like part of the way is to allocate this in more smaller unit. When we look at the deterioration and share units being built that are small or entrylevel we are down about 7 . The average home under control this is not entrylevel trade a lot of this at the local level. It is certainly an issue, local zoning limit. Using parcels of land to build smaller homes. The other is allocation insurance. Local transfer taxes would buying and selling are high enough that it will inhibit some family remove into a larger home to move into a larger home. Staying in a smaller space a little bit longer than you otherwise would transaction off costs are too high. Thank you. It looks like my time is up. The gentleman from tennessee, mr. Rose is now wrecking for fiveminute recognized for fiveminutes. [indiscernible] all right. Are you hearing me . I am doing this remotely, so i apologize. Are you hearing me better . Go right ahead. Thank you chairwoman waters and Ranking Member. Before we get into my question i wanted to make a few comments. The chairwoman referred to this many as the democratic. I think this is one of the Problems Committee that is currently constructed. It should be the Financial Services midi committee. That is what we get some of these hearing titles that it will be biased and not serious. The democrats go back interact, this was directly contradict by the professional budget office. I would like to echo some comments at the outset that have been made by my colleagues. We have 30 trillion in debt. We are experiencing the highest inflation in over 40 years. Gas is over five dollars a gallon. This proposal would spend money that we dont have. It would exacerbate the nation hurting everyday american. On december 6, 2021 the Financial Network issue issued this on real estate transaction. The nonfinance real estate transaction. If this rule were to get finalized, antimoney laundering requirements would be asked extended to all real estate transaction. The very last part . Do you see any issues with extending regulatory reach . That is kind of mindboggling to me. I dont know why we would do that i dont think there is a regulatory issue. I would not be in support of that. On a similar note, i have expressed concern that the federal government uses the secrecy act to deputize the private sector to collect personal data from american. You previously recommended the records and have long oarsmen abide and access those these elaborate on this . I think that would be a way of handling this that is completely consistent with the constitutional protection we are supposed to have. If you are accused of a crime that is one thing. If youre not, you should not be subject to long smith action. It is to say that the bank will keep record. If there is somebody who is legitimately suspected of a crime, Law Enforcement will go get a warrant and then you could go get that information. That is not a problem in any other middle investigation. I entirely agree with that. To shifting gears, [indiscernible] i dont think it is the biggest component. The direction has to be upward price pressure. It is increasing liquidity to some extent, making it easier to get loan. It is magnifying that problem, yes. Democrats have been trying to extend the responsibilities to do things like inequality and change. Do you worry about proposals to extend the fed mandate . Should the feds responsibilities be narrower . I am worried, i think it should be narrower, not broader. My client has expired. So much. I yield back. You are so welcome. I wouldnt to call this the Republican Democratic midi. Committee. I would like to again welcome everyone to the committee. In 1972, i was trying to get a house for the very first time. I went to fha. I noticed today that fsa disproportionately, the way people work borrowing money for houses. They ensure mortgages for around 18 . It looks like youre basically in 2020 and 2021 continued the downward trend toward the lower level up until about 2012. 50 home purchase continues as projected, sellers would be encouraged to conduct business when the cash values are above the asking price. Thank you so much for that question. Sellers could take offers of cash. As real Estate Practitioners we could educate about the different type of finance. Sometimes it is not the right way to go. It is a better way to nine and finance. Sometimes they think it could close in 710 days. A couple weeks later you couldve gotten a better. I suggest that Real Estate Agents educate their sellers on why this is important for homeownership. What anyone else like to respond . Fha could be more userfriendly and has been constrained and relies totally on appropriated funds. It has historically been underfunded. It has played catch up recently through appropriation. It needs to operate with the same resources that other lending options to so they are equally competitive. Right now they are very much still a resource constrained. Making it less userfriendly or borrowers and sellers. I would like to add, one of the things we have to think about, it is an outcome of many things that happen in places in this country. The only ways to reverse that trend is with the people who have been previously discriminated in the market. We have seen multiple times, the Racial Disparities over time. One of the reasons is because they have been a target of predatory lending practices and makes a huge impact on their well. A lot of academic Research Shows it is more prevalent in the private vector. Every issue actually makes sense. We are seeing the Racial Disparities. We get into the next question but recently i get all of these calls saying we would like to buy your townhouse. We got the most competitive offer that we could give you. Those calls come in all of the time. That affects the market. My time is going to run out, i yield back. The gentleman from South Carolina is now recognized for five minutes. Thank you and i think all the witnesses for being here today yesterday, in the subcommittee hearing where democrats tested their leftwing policies ruining the Housing Market and a lot of the witnesses allocated for this is great, a government takeover of all private property and housing. Yes or no, does anyone on this and all believe the government should own and operate all housing pretty within the united date . United states . No. No. Is there one yes . Okay, alright. This same witness for the democrats also advocated that renters and homeowners should participate in a rent and mortgage to write and withhold payments to landlords whether they could afford to pay them or not. Do any of the panelists believed that during the pandemic if someone did not lose their job that it would be appropriate or them to go on a rent or mortgage strikeyou think you have to payr bills if you can . Anybody want to say you should pay your bills if you can. It seems that under the current majority plans to address rising mortgage and rent cost, it is throwing more and more money at the problem rather than addressing the root cause driving these price increases. The federal government is heavily subsidizing housing with very little to show for it. Homeownership has decreased since the Fair Housing Act passed in 1968 and it my colleagues plan is more of the same, throwing money at the problem. Like demand is the issue in the Housing Market. We know the lack of supply is what has been driving increased costs, whether to rent or buy. This committee marked up the chairs down payment towards equity act on a party line vote. This bill would give individuals making over 200,000, which is more than any of us make as members of congress, almost 100,000 grants for home purchases. How would the Housing Market respond to this type of Grant Program were it to become law . It is the same sort of phenomenon where you have, you can look at a major drop in Interest Rates, what has happened over time is those drops, the decrease has been capitalized in home prices. What with the inflationary impact be . Would it go up . So the chairs bill would make inflation worse than it already is. Can you explain how housing costs factor into the core price index. It is not directly. It is a shelter based Service Price where you have rental prices incorporated into it and then for homeowners it is a rental equivalent. It is based on the value of homes and those also affect rents. The service you get out of that component is calculated it goes into the cpi. It becomes a part of the index. It is done with a fairly substantial lag. We are going to see an elevated shelter component of the cpi for at least another year now matter what. Is it fair to say this down payment Grant Program would directly counteract the actions being taken by the fed, the lower inflation . Yes in that we continue to put upward pressure on the cpi through that housing component. It is obvious we need to be focused on increasing the supply of housing when demand is already skyhigh, especially throughout the sun belt like in South Carolina, we need more homes, not more subsidies. I yield back. Rep. Waters thank you very much. The gentleman from massachusetts who is also vice chair of the subcommittee on Consumer Protection and Financial Institutions is now recognized for five minutes. Thank you, madam chair. First and foremost for your leadership and for the to coram and fairness you exhibit every day in this role. Housing is a fundamental human right. Across the country and in my district, the massachusetts seventh, millions of people do not have access to a safe, decent, and affordable place to call home. For decades black families have been locked out of homeownership activities due to discriminatory lending and now private equity backed institutional landlords have pushed the string even further out of reach by gobbling up singlefamily homes and worsening the housing crisis across this country. The five largest singlefamily rental companies own almost 300,000 homes. What are the consequences when Institutional Investors purchase the home default, often in cash, and how are they worsening or how is affordability enforcing wouldbe homebuyers into the rental market . Thank you for the question. Let me say when lenders hesitate to lend low balance mortgages, that means lower properties in the neighborhood buyers do not purchase when they are hesitating. What that does is opens up the door for investors to pay cash. They buy in bulk. Probably for less money than their wholesaling. It creates low inventory for the neighborhood. When you have these cash investors and a homeowner cannot have an American Dream because they are bought out of the cash deal, it makes it very difficult. They have to go back and rebid on properties it makes it harder because there are many buyers who are pricing higher than is normal, which pushes them out of the market and brings them into a mold where they have to rent. Many are in a situation where the rental market is getting ready or the rents are getting ready to increase or getting ready to add so they have to resign that lease another year. It does have a lot of provisions on black owners for buying homes. Most of these homes Institutional Investors are buying up are in predominantly black neighborhoods. Yes or no, is the influx of Institutional Investors and cash buyers driving up home prices in predominantly black communities, yes or no . Yes. Homebuyers are not there we once impacted. Are these committee saying the rents go up as well . And what you say Institutional Investors are accelerating gentrification of committees of color and displacing low income residents . Yes. Thank you. That is exactly what ive been hearing in cities across my district like cambridge and boston, where rents have risen by 30 and 20 higher than last year, respectively. That is unsustainable and vulnerable constituents are drowning financially so they cannot afford these rate increases. This hearing is about homeownership. Right now homeownership is not feasible for many in my district were being squeezed by predatory rent hikes imposed by Institutional Investors. You mentioned your testimony that broad student debt cancellation would help address the racial homeownership gap. I agree. What other policies will provide tenants facing unsustainable rent increases . We have to increase the supply of affordable rental housing as well. One of the provisions that expired in january, the childrens tax credit, one of the things we talked about homeownership producing is also a manifestation of peoples existing wealth and existing Financial Security. Another thing is there recent Federal Reserve research that shows an expansion of medicaid increases not just general Financial Security but homeownership. What you have talked about is putting people in a stable Financial Condition so they can securely rent or purchase a home. I would like to give a shout out to two programs we need to list up that have come out of massachusetts. That is where one of the largest firstgeneration targeting programs was implemented that was the basis for chairwoman waters provision and also has one of the largest statewide income loss insurance programs, which we need those kind of new approaches to provide efficient ways to address these housing problems. Thank you. I was trying not to be too parochial but i appreciate you lifting up those successful models and i thank you madam chairwoman for your steadfast leadership. Rep. Waters thank you very much. The gentleman from wisconsin is now recognized for five minutes. Thank you, madam chair. I appreciate you calling todays hearing. Ive been listening along and i continue to hear policies by those on the left that would exacerbate inflation. People are getting clobbered. I was recently at a gas station in wisconsin yesterday talking to a couple who were frustrated, they can barely afford to fill their car with gas, they are frustrated with their grocery bills, their rents are increasing, they are getting clobbered because costs are going up. What i hear is all sorts of excuses as to why costs are going up rather than looking at the real problem. The real problem is we have runaway spending in washington, d. C. We have an Energy Policy that is on its head. We have a contraction of supply and energy. We have to unleash American Energy because people are getting hurt every day by democratic policies. When i listen to where we were in the market. We looked at billions of new dollars of spending which would accelerate inflation. We just heard a proposal, we sought in the testimony about wiping away student debt, which is not wiping away, just shifts the burden to who pays for it and shifts it to murder to more debt than all americans will pay for to the benefit of some of the wealthiest americans , people that received graduate degrees as doctors, as attorneys, that is who it helps. It would accelerate inflation. I want to ask you if i can come as we listen to this debate today and we are looking for real substantive solutions, is the challenge on the demand side that congress should be subsidizing the demandside, or is the problem on the supply side we should be looking and focusing in on how do we sustainably increase the housing supply and how do we consider that in this inflationary environment that the outgoing majority has put us in . The mistake with the supply argument is we need more housing. That is a mistake because it is looking at supply without talking about demand. You should be talking about supply relative to demand. We note supply is relatively inelastic in fixed. There are always constrained housing supply markets. Therefore the worst thing to possibly do is constantly increase demand which is exactly what federal policy does. You will only get one result from doing that. Go to the underlying issue, this is a great example. If it is true that private equity firms are predominately buying up foreclosed properties in poor neighborhoods, than the problem to address is the poverty, not demandside loans and lending ability of all of these government agencies. That is the way to address that. Lets dive in on what would happen if we accelerated dramatic new federal Government Spending programs as we think about the inflationary pressures we are building in the United States. We barked of the bill with another 100 billion or so. What would be the Economic Impact of popping in another 100 billion into the u. S. Economy that if the start of the Biden Administration democrats passed 1. 9 trillion dollars in new Government Spending already. What if we took the fire that has been started and we threw on five dollars a gallon of gasoline onto it . You will get more inflation without clearing the supply problems. If you said from now on everyone gets whatever loan they want, now they can go out and do whatever they want. That is fine. Everyone will be bidding on the same amount of stuff. If we pump in demandside subsidies to make it clear, what happens to price . They go up. If prices go up doesnt make it more affordable or less affordable to a family in wisconsin . It makes it less affordable. The democratic policies of pumping money in are going to hurt the people that we hear them claiming to assist. Is that accurate . That is fair. It is the same story we see on Energy Policy. It is an attempt to contract supply so we do not unleash American Energy so we . The prices so we have transformational change and it is clobbering people every single day. Then we have the house inside where people are getting higher rents and unaffordable mortgages and we see the Federal Reserve have to raise Interest Rates because the democrats are awash in runaway spending. As Interest Rates go up, it is harder to save your down payment because inflationary pressure, the hypocrisy is thick. I appreciate you being here. I will yield back. Rep. Waters thank you very much. The gentleman from massachusetts , who is also the chair of the task force on financial technology, is now recognized for five minutes. Thank you for having this hearing. This is probably one of the most pernicious problems idea with in our district. I represent the other half of boston that ms. Presley does not represent and we are struggling with housing cost across the district. Doctor, i noticed looking at the housing data that the applications for mortgages have dropped off considerably, and that is understanding with the rise in Interest Rates. I also noticed the number of people applying for an adjustable has doubled. I was here in 2008 on the committee and i saw what happened when adjustable mortgages reset and people got stuck. The valuations of the home were going down and the payments were going up. We ended up with the housing crisis. Had there been any protections available now under todays circumstances that were not available then that might prevent us from going into a similar tailspin . Thank you for the question. As compared to the housing boom bust in financial crisis, there are a number of changes that have been made in the market. The adjustablerate mortgages of today do not have the same risk profile as those made during the housing boom. We do not see teaser rates, we do not see a rapid succession of recess. We do not see penalties on refinancing into a permanent mortgage. That being said, mortgages ultimately do reset. It is important that borrowers, particularly aspirational borrowers who may be Income Constrained in reaching for that housing opportunity when theyre taking an adjustment rate mortgages they are mindful of and wellinformed of the potential risks those present. There are quite a few projects that are sevenyear reset. The buyer has some time. There is an open question of where we will be at with Interest Rates in seven years. The value of their home could be exceedingly greater at that point. We might have a lot more equity and we could deal with it. Is there concern out there . Is there reason for me to be concerned about the increase in the number of adjustable mortgages. This has doubled pretty quickly in a matter of weeks. Is there concern . Is there a reason for concern . There is reason to watch it carefully. We are in a different world than the mortgages in 2008 which had built in increases in the market rates. Most farmers have trouble with shocks to their mortgage payments. Perhaps an even bigger risk we face right now is there is heavy marketing of cash refinances today. If they come with the double whammy, not only are you doing that for the high Interest Rate, you are giving up a much lower fixed rate to get that stop the regulators in our housing agencies need to be very vigilant to protect consumers from that kind of predatory loan flipping. That is the big risk we face. There is been a good job of keeping protections on industrial rate mortgages. This is a place where consumers have a hard time understanding the impact and being able to absorb the shocks. Thank you for keeping an eye on this. You have anything you want to add on that . I know you are keenly aware of this problem. I would like to get your perspective. I would like to add that when the homebuyers and homeowners are looking to get a raise, the best advice is coming from the National Association of Real Estate Brokers is to look for a housing counselor. It is a free service. It educates them. It provides understanding of the mortgages so they are not going to the default loans. We do have an affiliate nonprofit and we look to them to do these so the homeowners can understand what they are getting. That is what i would add to this statement. Thank you. Madam chair, i will yield back. Thank you for having this hearing. Rep. Waters thank you very much. The gentleman from South Carolina is now recognized for five minutes. I know mr. Norman had some problems early on and he could not be on the screen. Evidently those problems still exist. We will just keep going. We will try to get him before the end of the hearing. The gentleman from north carolina, ms. Adams, is now recognized for five minutes. Rep. Adams thank you chairwoman waters, Ranking Member mchenry. This is a very important hearing and i appreciate your having it. Thank you to our witnesses for your testimony. In your testimony you cite the Affordable Housing shortage as contributing to the issues the environment is facing. Our committee how to hearing on the singlefamily rental industry, the role they played in snapping up homes and further constricting the already tight market. The homes these firms are purchasing are not surprisingly concentrated in a predominately and brown neighborhoods. The same is true in my district of charlotte. Investors are willing to pay well above market prices in cash for homes and are acting as a gentrifying force. Can you discuss why addressing the housing shortage is imperative to improving housing security and homeownerships opportunities for all americans . Thank you for the question. Particularly as others have mentioned, in the starter home market is where they are feeling the most brunch for supplies and available homes and that is what we are seeing a lot being picked up. The first thing we should do is our federal housing agencies as well as the goc should stop their Auction Sales of distressed loans and should instead put them back into individual homeownership because when they auction them, even when you set aside problems for nonprofits, overwhelmingly these go to Institutional Investors who are the ones who are able to afford to buy a pool of loans and that is where a lot get snapped up. They were also buying individual loans as you described. That is a concern and we need to provide more Affordable Housing and not unnecessarily see it siphoned away under the homeownership market in the affordable renting market. Rep. Adams that is what we can do to ensure you do not see this transfer of housing and wealth from americas families to wall street . That is your opinion . That would be a big step in at least slowing that down. Rep. Adams i am proud to be the lead sponsor of hr 778, the lifetime act, along with representative brown and senators lahey and collins, bill that would already appropriate dollars to be used to support a Housing Development and would free up the physical bang recovery. We get over 100 national and local groups, including conferences and mayors, National Association of counties and the National Association of homebuilders. I want to encourage all of my colleagues to sign onto to this common sense legislation. In your testimony you concluded that we need a multifaceted approach to enhancing Affordable Housing supplies. Can you briefly discuss how increasing the housing supply in Public Housing investments could immediately plunk the negative impacts to renters we have observed . I think there is some kind of problem madam chair. Rep. Waters i do not know where that sound is coming from. We have Financial Services staff . Rep. Waters where you responding to ms. Adams . Please go right ahead. Your bill 7078 is a great way to leverage and expand one of the most successful programs for adding to sustainable or affordable rental properties. In allowing you to use the physical bang recovery funds the fiscal recovery funds is a very efficient way to do that and we enjoy the endorsement of that bill. Rep. Waters doctor, we have 30 seconds, do you want to respond. I think youre able to hear me. Low Income Housing tax credits is probably the most Effective Program we have for addressing the Housing Needs of our most Income Constrained families. Expansions of that program that would allow for increases and preservation of the low Income Housing supply would be actually critical. It is not a surprise there is broad support for the program. Rep. Adams thank you, madam chair. I yield three minutes and three seconds back. Rep. Waters thank you very much. The gentleman from South Carolina, mr. Norman, is now recognized for five minutes. Is mr. Norman back . Rep. Norman can you hear me . Rep. Waters you recognized for five minutes. Rep. Norman thank you so much and thank you for this hearing. So goes housing, so goes our economy. Most economists recognize that. Ive been building housing commercially and residentially for over 45 years. Quite frankly, if the problems we are having now, and ive heard a lot of people with answers, the problems we are having is very simple. Gas and oil prices. The truck that brought lumber to the house today was not powered by solar panels. It was not powered by wind. It was powered by natural gas. If this committee wanted to get to the bottom of this, high gas prices affect over 137 different subcontractors within the housing industry. Subcontractors, people dig the footings. To have a hundred and 6 increase in gas, that is what is driving your prices up. Secondly is not being able to get workers. Paying people not to work is a severe problem. Third, supplies. I tried to order windows today. A simple window. Guess what kind of timeframe we are talking about . 17 months. 17 months for a window. Those of you who have been here with this administration, lets start producing our own oil and gas and lets get away from buying it from rogue countries like opec. I have heard a lot of the blame game going around. I have heard the theory that algorithms are involved. I do not understand that logic. I have heard the opinion that appraisers are a problem and they appraise minority homes last. For those of you that have never done this, the lenders determine who the appraisers are. The appraisers do not know if they are going to the house of a white person, black person, a red person. They do not know that. They appraise what they see. The fact that there needs to be more black appraisers, praises are needed everywhere. It does not matter the color of your skin. I have heard the theory that institutional bias reduces homeownership and somehow they are too they are to blame. Institutional buyers buy from the mom and dad who have owned the home years. That young comfortable that young couple who want to sell, tell them Institutional Investors are bad. They are doing what they do best. They help the Housing Market. I have heard the question why government gets involved to make developers build on bigger lots. The simple answer is people do not want big lots. The reason people rent is because they do not want the headaches of owning a home, of keeping it up, of paying the taxes. The blame game is directly responsible the responsibility of this administration. Under the Trump Administration homeownership for everyone was at an alltime high. Quite frankly, if you want to get the job done you need to talk to whoever is running this country and tell them we have to get the oil and natural gas back. The blame game has got to stop. Vladimir putin did cause the gas prices to go up, russia did not cause it, santa did not cause it, it is this administration and their lame policies that are killing this country. Let me just say this, we really need to have, and i appreciate this panel, i would suggest having people who have actually been in the business. If youve never done it, its like going to a dock who has never operated. Would you get on a plane with a pilot who has never flown a plane. I would suggest if you want to get to the bottom, get people who have experienced housing at its basic level would get the problem solved. I would just ask that we have more hearings in person. I apologize for the technical difficulties and i yield back the balance of my time. Thank you so much. It is important that we push against the gas lighting we have had and understand this isis is not going anywhere. Corporate greed and race gouging by the price gouging have benefited. Chairwoman waters, i cant thank you enough. You taught me that housing is infrastructure in human rights. I know that cash buyers have pushed many firsttime cashstrapped home buyers out of being able to have their own home. I know the urban institute found that three in four homes priced out are all just by all cash investors. This has affected communities half of the homes are valued less than hundred thousand dollars. For a loan larger than a hundred thousand dollars, firstline dish firsttime whom buyers are being knocked out and pulling people out of party. This has all impacted communities like mine, detroit, this resulted in michigan losing more black Home Ownership than any other state in the country. Fha borrowers are overwhelmingly firsttime homebuyers and impacts people in my community, who have less financial stability. We get fha financing improved and make it as a competitive financing option . We have great leadership secretary fudge in responsible lending, julie gordon at fha is totally committed. A bunch of it is plane researches resources. They dont get to use any of the fha premiums for operation. That means they are totally dependent on appropriation and are tremendously underfunded compared to private enterprises. So they need those resources. They do have a number of initiatives underway. They were able, thanks to some appropriations to upgrade technology with saved them in the crisis. Reppo to leave there there is no thing for fha to look at these best practices. Should we expect the trend continue going upward . What can the federal government do to ensure homes get in to private homeowners in set up private equity is swallowing them all up . The key issue emerging from the data we have available is that while there is a pool of buyers that are shooting homes for the rental market that would otherwise be available for ownership that it is a mixed group. We should not complete the larger pool in the private equity is only 2. 5 of the buyers. When we are thinking about the rental supply and ensuring we have a diverse number of rental opportunities, is making the tradeoff. They dont the obligations of ownership but they are willing to trade off the benefits that come with ownership and addressing the supply issues. When we look at what is being built, the average home under construction is 2500 square feet. That is not within reach of many aspirational buyers. Addressing challenges the local level to make sure we are able to build smaller homes within reach of some of the otherwise single flameless renters is singlefamily renters is critical. I yield my time. Ms. Dean is now recognized for five minutes. Thank you, madam chair. Are you able to hear me . We can hear you. Thank you for hosting this. I was struck by your testimony that unless we take action, the ownership gap will remain unchanged for 20 years. Obviously we cannot sit back and do nothing as policy makers. We have an obligation to try to correct that and close the gap. My county is suburban philadelphia. In my district, white ownership is at 876 sent rate while black ownership is at 45 almost 46 percent, according to the National Association of realtors, putting the blackwhite homeownership gap at 30 . We need to take action to address this tremendous disparity. We know how ownership is for families to build health. It is not just about having a place to live but help your kid before college, to retire with dignity. One of the policy solutions is targeted down payment. I am proud to be a cosigner of the act which authorized a new hud program to get first generation homebuyers in getting a home. I would love to people take advantage of it. Doctor choi, can you talk about how targeted down payment assistance programs such as the proposed hr 4495 would address the racial wealth gap . Yes, thank you so much for the question. So the existing programs, a lot of them have only income only um income only criteria. And then we do find that if we actually impose the first generation criteria on top of income that actually expand the expands the share of black and latino households who can take advantage of those kinds of programs. I do acknowledge that in this current market where the home prices are really heated up and the supply is restricted, a lot of people, even with down payment assistance programs are really finding it difficult to become owners because they are not competitive enough. So i do think this policy will have a longer term impact because um better targeted, but i dont think it will have like immediate income, but in the long term it is one of the policies that can really kind of make a change in better targeting black and latino households who have been discriminated in the Housing Market for a long time. And i dont think if we kind of do a very clever way of not trying to distribute money all at the same time, really increase the missionary pressures. So if we actually do it in a very clever way and think a long term, then it can actually do a better job of targeting the people that can support them getting into the Housing Market and create a more equal society. And i do believe that i think this could also have an impact on improving the Economic Health and resilience of our vulnerable communities because when their pandemic hits and when the inflation goes up, its the renters who are hit more harder because their rent prices go up very fast. But if youre a homeowner, youre actually secured in paying the amount of mortgage payments over a long period of time. So you are less volatile to the economic shock. So although there could be some preferences in accessing Home Ownership, if a person is disadvantaged just because they dont have a wealthy parent, we do have fix that issue. And i do believe that the targeted down Payment Program is a long term good policy. Thank you. Ms. Pope, in the remaining time that i have, i was struck by your testimony on this issue, you stated that rising Interest Rates along with rising home prices and a limited Housing Inventory make a perfect storm to suffocate blacks out of the Housing Market. I believe you are a practitioner. So please correct me if im wrong there. Can you speak to this . What can we do to mitigate the effects of the current market conditions, particularly for minority households and from from your practice, from your work . What do you hear about preferences and the desire to be homeowners instead of renters. Ill be real quick. The down Payment Programs are very important for black americans as we try to get into homeownership. Also, were dealing with the elimination of loan level pricing adjustments. Thats been a challenge with the credit scoring because of the Percentage Points is pulling us out of that. Also with the appraisals we mentioned earlier, we are the front lines of appraisals. You know, theres been biases and theres been documentation as it pertains to the appraisals and the biases that happen within the black industry as well as what i like to see is the student loans. If we can bring that to a level where its more affordable black people would be able to buy a home. I8 thank you. I yield my time back. Thank you very much. The gentlewoman from georgia, ms. Williams was also the vice chair of the subcommittee on oversight and investigations is now recognized. Thank you chair waters for First Holding this very critical conversation as it means so much to me and my constituents in atlanta and the rest of the nation because yall, my hometown of atlanta unfortunately leads the nation in the racial wealth gap. And unsurprisingly it also leads the nation in the percentage of homes bought by investors. Home ownership is tied directly to the ability to build generational wealth. When individual homeowners are left out by investor purchases, they have fewer opportunities to buy homes in bill the type of generational wealth that will help close the gap not only in atlanta but across the country. So dr. Choi, listening to your testimony and the conversation that youre just having with representative dean, im wondering what specific investments can we make to put individual home buyers on more equal footing with private equity investors. Yes, thats a really great question. And i think one of the things i would like to also point out about the impact of Institutional Investors is that there are various research, but then in particularly in atlanta, there has been a recent research because Institutional Investors are so prevalent, so nationally they might not have a large impact that in santa, specifically, we do find that increase in Institutional Investors have affected renters and especially ventures to access homeownership is also at top of that. So yeah, i think the data is really concerning. So there are i think we talked a lot about the down payment assistance program. I know that some letters are considering special Purpose Credit programs where they can direct access to some of the capital to the communities or people of color who have been previously discriminated. So i think spcp is another good way to bridge the Racial Equity gap in this country. Another thing that i think is important and i know that there is a move in this space of like thinking about increase in cluding rental payment data into mortgage underwriting. One of the things that we also see from the data is that um that more greater share of black and hispanic households do not have fight go scores fico scores and they have lower fico scores. And if you actually include rental payment history data into mortgage underwriting. Our research does show evidence that this does disproportionally help households of color. So i know that theres some movement in this space, but we also encourage consideration of including rental payment and mortgage underwriting. Thank you dr. Choi. And that is something that were absolutely working on under the leadership of chair waters in this committee. I just had an amendment last week that will do just that allow consumers to opt in to add their rental history to their Credit Scores. Also during the pandemic, the percentage of home sales to first time homebuyers has been much lower than the five year average percentage . So dr. Choi, what does this mean for long term Home Ownership trends and our ability Going Forward to address inequities in Home Ownership . Yes, i think homeownership is very unique because its kind of like a way to build long term wealth. And what our Research Show is that if you actually delay purchasing your first home, you actually have lower wealth at the age of retirement. So the timing of buying your first home, that age is very important, and we know that um black households and black people are less likely to buy homes earlier in their life. So that is one of the reasons that its not just access to homeownership is the age of accessing Home Ownership and also sustaining homeownership, all that factors into the wealth disparities, and as we mentioned again and again in this committee, is that Home Ownership and wealth transfers from parents to children. So this is not just like one family issue, it is creating intergenerational wealth inequality, and thats a key reason that we have persistent Racial Disparities in this country. Thank you so much. Increasing homeownership, especially among black homebuyers is not guaranteed without meaningful policy intervention. So dr. Choi, your organization estimates that Home Ownership could decline by 2040 especially for people who look like me if action is not taken. Can you explain how this projection was reached and what steps can be taken to expand government backed loans to first time homebuyers, particularly black borrowers. One of the things that i also wanted to point out about this research is that we this was before the pandemic. So we didnt incorporate the impact of the pandemic. And if we actually do, there is a high likelihood that the numbers would look worser over time. So we do see that every time theres an economic shock, its actually the communities of color thats been disproportionately harmed. So the pandemic, Great Recession, all shows some evidence that when their Economic Situation is negative, then people are called color are most impacted. We did a projection by looking at the past data. So this is a projection of like Household Information and income and all those factored into access to homeownership. And then we do find that because and also because again, ownership unfortunately i am out of , time. I was so intrigued by your research that i will be following up with additional questions. Thank you madam chair for hosting this and i go back the zero time that i have remaining. Thank you very much. Id like to thank our witnesses for their testimony today. Without objection, all members will have five legislative days within to submit additional written questions for the witnesses which will be forwarded to the witnesses for their response. I ask witnesses to please respond as promptly as you are able. Without objection, members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. And with that, to democracy. Secretary tom testified on the opportunities and challenges facing farmers and rural communities. He outlines his nations efficacy to address the baby formula shortage. This hearing runs about two hours. Good morning. We are so pleased to have everyone with us and have our