Transcripts For CSPAN3 Hearing On Housing Market Home Prices 20240707

homeownership month, we must recognize that homeownership is a primary driver of wealth, for most families in united states. it's a source of stability and opportunity for families who can leverage their home equity to put their kids through college and you start a business and support them in retirement. however not everyone has been able to realize the dream of home ownership of 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. for finance their mortgages. skyrocketing home prices and other ongoing challenges made it harder for millennials and gen x gen z people of color, and individuals without intergenerational wealth to compete and access homeownership. so while the federal reserve estimates that home equity reached a record 27.8 trillion by early 2022 many qualified would be home buyers could not partake in this wealth building event. these trends threaten to further widened the already wide racial wealth and homeownership gaps. nationwide, black -- are the only group to experience a decline and home purchases among large color. for example, in my city of los angeles, the black homeownership rate was 34% in 2021. however, it's lower than it was in 1910. after experiencing a substantial loss of wealth during the post-2008 foreclosure crisis, continue to be locked out of opportunities to build wealth. it is unconscionable that despite historical low interest rates, this nation was still and able to ensure that historically underserved and excluded buyers could make homeownership gains. we have heard stories of black homeowners being disproportionately denied refinanced loans through appraisal bias and other kinds of discrimination. including reports that wells fargo denied nearly 50% of black refinance advocates. we've heard stories of borrowers relying on mortgage financing then out completed by all cash buyers. including wall street backed investors and buyers. and a hearing chaired by mr. greene yesterday, this committee heard about how these sales and conversions of homes into single family rentals have harmed tenants. and would be home buyers and neighborhoods. rising home prices are directly contributing to inflation and accounting for 40% of the price hikes and the last cpi inflation numbers. with recent interest rate hikes, we can expect that for many the dream of homeownership will remain just that. a dream. congress must pass this committee's title of the build back better act the legislation i drafted that would create and preserve over 1 million homes this one minute 50 billion dollar investment would ensure the long term health of our economy, by a significantly increasing the supply of affordable housing. thereby reducing housing costs and corresponding inflationary pressures. additionally, last, week committee democrats passed my down payment towards equity act bride down payment and lending assistance to first-time first generation home buyers i think 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. >> thank you, madam chair, just last week this committee marked out the payment was equity act. a massive 100 billion dollar spending spree that we continue feelings guy rocketing housing cause. it's this kind of unchecked spending that is pushing the housing market from boom to bust for the average american family. that's 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 three to 6%. now for a 30 year fixed rate mortgage. so, let's break down that statistic. the median sales price for a house so far this year in 2022 is $428,700. with an fha minimum allowance down payment of 3.5%. excluding closing costs and other fees. that means a first time home buyer mike i have finance as much as $413,700 at 6% interest. you are looking at a monthly payment of $2,480. that's up 1700 $40 last year. so, that's a $740 a month difference, or roughly a month's worth of groceries for family of four. and those groceries are more expensive this year. in fact, potential home buyers 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 two point 66 trillion dollars in new spending from his first 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. if you ask me what's bizarre here, the cognitive dissonance between the democrats bad policies and their lack of accountability for this economic dumpster fire they've unleashed. we have been down this road before. we know where it and let it never leaves. it starts with democrats creating new programs, pressuring the gses to make increasingly risky loans for borrowers who can't keep up with artificial price spikes they have created. it ends up with those families, many low income, first time home buyers, being hurt the most when the housing market has a downturn. taxpayers are left on the hook for tens of billions of dollars to boot. it does not 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 f h faa, and fha both of which have gone two years without appearing before this committee. in fact, today's hearing would've been the perfect venue to hear from fha, fhfa director thompson. ranking member hill, i sent a letter last week to encourage the chair to invite director thomas, to testify on growing threats to the housing finance system. it's those threats that we should be focused. instead, all we are getting today is more excuses. more police for new, reckless government housing spending and more empty promises than this time, promises that this time it will be different. i yield back. insurance subcommittee. the gentleman from missouri, m thank you very much, i recognize the chair of the house and community development insurance subcommittee, the gentleman from missouri, mr. cleaver for one minute. >> -- >> thank you madam chairwoman, home ownership is the single largest source of wealthy american family. homeownership promotes wealth building by both acting as a force saving mechanism and by allowing families to benefit from the appreciation of their home value. americans who own their homes have gained more than six trillion dollars and housing wealth over the past two years. there are some americans, and suffusion investors, who have remarkably positive story to tell about the housing boom during the pandemic. for other americans, american communities, we are witnessing a grand 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, they have been delayed, they've 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 hearing, madam chairwoman, and you're razor like a focus on housing opportunities. thank you, i yield back. >> thank you very much, i recognize the ranking member of the house and community development insurance subcommittee, the gentleman from arkansas, mr. hale. for one minute. >> thank you madam chair, thank you for holding today's 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 mcmullin? you might know him as the reds too high party guy from governor of new york back in 2010. back then, a lot of people thought that campaign was a joke. when the average home being sold this year is over half 1 million dollars, last year 146 of these in the united states hit the mark where a typical house cost 1 million dollars, people weren't laughing anymore. i look forward to hearing from today's witnesses about supply sides solutions to our nations affordably challenging. their outlook for the housing market, among these turbulent economic conditions, and the biden inflation. with that, madam chair, i thank the chair, i yield back. >> thank you very much, mister hill. i want to welcome today's distinguished witnesses to the committee. first we have mr. michael calhoun who is a president of the center for responsible living. next we have professor doctor choy who is a senior research associate for the housing finance policy center at the irving institute. next we have missed lydia pope who is the president of the national association of real estate brokers. and then we have mr. nor bit michel, who is a 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 we can respectful of everyone's time. mr. calhoun, you are now recognized for five minutes to present your oral testimony. >> thank you, chairman waters, ranking member mchenry, and members of the committee for the opportunity to testify on the critical housing issues impacting american families. my causeway today, i'll first summarize the impact and lessons of covid and its impact on housing. next i will set out current affordability and supply challenges that we face. finally, i'll 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 and a grinding halt of much of our economy. there were prospects of double digit foreclosures exceeding even those of the great recession. along with mass renter infections and landlord insolvency. however, the comprehensive response of congress and federal agencies, was extraordinarily effective in preventing those calamities. mortgage forbearance with payments defer to the end of the loan maintained a strong housing market with low foreclosure rates and homeowners with sustainable mortgages. likewise, the threat and wave of evictions to families was largely a burden through rental assistance that also sustained landlords. the overall economy recovered quickly when return to low employment do these interventions. that said, we are all aware that today we face formidable challenges. recent increases in housing prices and interest rates. if 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 of 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 it increase. also, future stabilized interest rates will likely be higher than the record low rates of recent years. combined, these will continue to reduce affordability of housing. housing production has also certainly trailed our needs for many years. and this shortage is a huge obstacle to families to carrying affordable home. another continuing challenge, the growth of household wealth and home equity has been heavily skewed. today, the top 1% whole 30% of the overall wealth. the top ten, 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 homeownership 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 well unless lower homeownership than white households that did not complete high school. and some, there are 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 today's 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 rare forms. 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 then 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-year crises hitting us and 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 volatile families. in addition, we need well structured supports that help families sustain the more frequent financial volatility occurring now. this includes deferral mud like we saw in the pandemic crisis. along with new programs like a reserve funds and loss of income insurance programs. these sufficient systems both help individual families and they the risk, 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 home ownership gap it has 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 professor. you are now recognized for five minutes present your oral testimony. >> chairman women waters, ranking member mchenry, and distinguished members the committee, thank you for the invitation to testify on the critically important issues of the current housing market trends, current housing markets historic declined and affordability. and policy options for supporting equitable access to homeownership. my name is sam chandan, and the director of finance at new york university school and school of business. home prices in the night states reached their last eight years and -- they've been rising rapidly in a decade since. appreciation accelerate within the months of the pandemic's taking hold with home prices increasing at the fastest pace on record of the last two years. today, the median price for existing homes stands above $400,000 for the first time. the 2020 inflection owes a large part to the shift and location preferences are relatively mobile and fluent households. favoring larger homes and lower density neighborhoods. two other factors, include demographic trends, low cost financing, pandemic supplements to household income, and house price as expectations. on their own, these demand drivers would not generate external housing price increases. rather, demand is coincide with a national housing supply shortage estimated at 3.8 million units by freddy mack. 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 feature of the current market. approximately 40% of the early 19 80s, the share of entry level construction is now december scent 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 to deterioration and measures of housing affordability. the combined impact of higher prices and mortgage rates and limited entry to level home construction is being felt is by families of color. younger families, and income constrain families aspiring to homeownership. today, these groups face even higher barriers to the nation's most reliable vehicle for generational wealth building, social and economic mobility, and housing related health health outcomes. barriers to housing opportunities are wide ranging and not only related to families financial circumstances. prevailing models of credit score, discrimination and housing search process, higher financing costs unrelated to creditworthiness, and disparities and labor market and health outcomes during the pandemic are among the 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 administration's housing supply action plan. fannie mae and freddie max recently announced equitable housing finance plans seek to address many of the structural drivers of persistent disparities, including new approaches to consideration and rental payment history. while the plans take important steps to improve access to financing, the enterprises are not to address supply shortfalls directly. whatever the mechanism, if the supply of affordable and workforce housing is not expanded, initiatives that enhanced 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 multi level approach to enhancing housing supplies for all will address building code and zoning issues at the local level, supply shortfalls for construction and materials and skilled labor, which may well be exasperated in the coming years by infrastructure programs. improve access to financing for a wider range of housing types, including modular housing and smaller multi family rental properties. recognizing that and housing equity is also an investment in public health with clear implications for chronic and infectious disease mortality. and additional demand site policies will reduce local taxes and transaction cost food buying and selling. removing a barrier to mobility as households grow their families, thereby freeing up entry level homes. as issues a supply loom large, the role of institutional investment in the housing market, and its influence on prices is already increasing attention. institutional buyers repositioning homes for the rental market represents 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. falling the financial crisis institutional investors, they likely have a small but favorable impact. supporting -- the stabilization of prices and housing occupancy and distressed neighborhoods. the data also shows higher rent increases, and rates of addiction. facilitated by formal property management the institutional investors and share 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. unbalanced the available data suggest that institutional investment repositioning of homes with 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 quest. >> thank you very, much next we will go to doctor chow a. you are now recognized for five minutes to present your oral testimony. >> madam chair, ranking member mchenry, and members a committee, thank the opportunity to testify. today i'd like to start by mentioning when i based on my own views and should not be attributed to urban institute its trustees our founders. today i will share some key data points that highlight the racial disparity in home ownership that persisted prior to the pandemic. how the pandemic has disproportionately impacted houses of color, and how the changes in the housing market environment are now again making it difficult for households of color to access full ownership. then i will mention two promising demands that the federal government could cut center that can benefit households of color to obtain and sustain homeownership. first, i would like to emphasize that large, persistent racial disparities and homeownership, one of the primary tools a building, well existed before the covid-19 pandemic. just before the pandemic, black homeownership rate was 30% lower than the white homeownership rate. the latino rate was about 24% lower, and the asian rate was about 12% lore. 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 rental assistance, we have assured that both foreclosure nova fiction rates fell below the pre-pandemic. leveller, the data shows that both black and latino homeowners and renters were more likely to have missed their monthly housing payment during the pandemic. additionally, fall in the great recession, and now again during the covid-19 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 disproportionate impact on black and latino borrowers who are more likely to have missing or low fico scores. tighter lending standards and disparities and credit scores means that black and latino renters who would have been able to obtain a mourners under prior credit standards are more likely to face death difficulties to access homeownership. as a result, these households missed the opportunity to build wealth and the rising home prices and the benefit from the historically low interest rates in the past couple of years. amid the pandemic, both the home prices and rams have risen significantly. national home prices are now more 50% from a year ago and brands have increased by more than 11%. the 30 year fixed mortgage rate's are 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 purchases for the fha loans, has come more difficult for those using the fha channel to compete with those with greater financial resources. additionally, because of the spike and rental prices, those who remain renters will face greater difficulty saving up for a future down. payment while multiple strategies are needed to bridge the racial home ownership gap including the affordable housing supply, here i will mention two promising demands side colors on the federal government could consider. first, is a better targeted down payment assistance. our research finds that prioritizing first generation home buyers can have a greater -- for example, if we increase the income limit to 100 20% area medium income and provide assistance to renters with parents who also runs, the share of potential blacks unless you know households that the bp a program could serve is about 60% compared to 46% of black and latino households under the 80% and my criteria. the second is to incorporate rental payments into -- our research finds that housing payments is a better predictor frigid mortgage predictors than credit scores. they began to explore rates -- while the gses are moving in the right direction, much more is needed. such as incentivizing more land lords to report data to credit bureaus, standardizing the data, expanding the use of rental payments, and introducing it -- also providing guidelines to lenders on how to use this data. again, thank you for the opportunity to share my research with you today. >> thank you very much, next we will go to miss polk. you are now recognized for five minutes to visit your oral testimony. >> thank you, chairwoman waters, ranking members, members of the committee, thank you for the opportunity to speak to you today on behalf of the subject of homeownership, especially among black americans, my name is lydia pope, i'm the president of the national association of state brokers known as -- we are the largest and oldest black real estate trade association in america and we are referred to as -- founded in 1947 with the mission of democracy in housing, we are founded in a time of discriminative housings in promises that made it difficult for blacks to own homes in which many of these policies still exist today, members throws 90 chapters across america are in the front lines of the black movies, creating housing opportunities, advocating for fair practice and promoting policies that remove barriers to wealth creation. today, increasing interest rate in home price markets as widening the wealth gap, delaying one more blacks from participating in the american dream. today, black homeownership is nearly 30% of white america and lower than those 50 years ago. today, covid brought about some major shifts in the housing market. today, we see investor cash buyers dominating the already know inventory market who purchases these properties to, right raising the rental prices nationally. today, if you're black person in america and you want to sell your home, you have to go through the unblocked process in order to get a fair appraisal. today, blacks have been targeted by low level pricing, down payment limitations, student loan qualifications, and outdated credit models accounting for race and credit scoring an underwriting, today, there is a 1% increase in mortgage rates, decreasing the buying power by 11%. to this end, economic inequality has deepened and the housing rate has plummeted once again. because of the national crisis and the effects of black homeownership, since 2013 has published, become or state of housing, black america report, known as chiba, which is one of the most reference and -- when discussing black homeownership with practical solutions. in february 2022, we won our first white pay-per-view report called the wire, which provides data impacts discriminatory practices against women, to close the wall gap, they're offering final remedies that could impact inspire homeownership for black americans today, tomorrow, and generations to come, first, we fully supported ursula passage to the down -- as part of the build back better bill, many blacks fall into this first generation buyers. would greatly benefit from this fund. secondly, they support the standardization of student loan calculations. the government policies encourage student loan before mid, and then counted as a negative in the final scoring for mortgage credit determination. this creates a large barrier to homeowners for many blacks who would otherwise qualify. third, they rub is the elimination of low level pricing adjustments, in which lenders have been increasing the cost of financing to borrow score or credit worthy and what the program guidelines. fourth, they support that paid tax course and advocates for fair appraisals, understanding diversity, training must be broadened within the institute, violations must be dealt with. five, they support the low balance mortgages and the secondary market for blacks to buy these affordable units in communities that are predominantly minority. supports the equitable housing finance plan that includes a special purpose credit program to address inequalities in the housing finance system and extend the wealth building benefits of homeownership. lastly, utilizing the services of the real estate professional, needed in the home buying process. they need consumer protection, experience, knowledge, and the human touch to walk them through this already difficult process. in closing, i would say, this is a tough time, the committee's efforts in this area i'm a resident of cleveland ohio, my past experiences a single black woman with two children as why my mission and passion on equality and equity is so important. i was the victim of predatory lending, i was that woman taken advantage of in the real estate market, because 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 am play the committees, the legislators, the administration officials, the gses, the housing regulators and directors to join us in promoting and assuring democracy and housing. thank you. >> thank you, very much. next we will go to mr. michele. you are now recognized for five minutes to present your oral testimony. >> good afternoon, chairwoman waters, ranking member mchenry, members of the committee. thank you for the opportunity to testify today. my name is -- for the cato institute. what the views are today are my own, they should not be construed for presenting an official position of the cato institute. i argued to reverse course on federal policies and increased demand. it is true that home equity frequently represents a large portion of many americans, it does not follow the federal law -less -- in fact, home equity depends largely on home price appreciation, and attribute to form -- federal policies undoubtedly make housing, as well as other goods and services, less affordable. they do so because they artificially boost demand in the supply markets. from 2012 to 2021, home price growth rate was nearly double the income. there are three glaring problems with these recent federal policies. first, the level of federal involvement and housing has been escalating for decades. along with housing costs that correlation is no accident. combined, fanny and freddy have stood behind more than half of outstanding mortgage debt for decades. and in some years responsible for shares close to 70%. in 2009 to 2020, their annual share of the total mortgage backed security market average 70%. if we include the securities of the federal share average 92% per year over this period. no accident.virtually all fedeg policies, even those outside the gses and fha, are geared towards increasing demand. because housing markets are almost always supply constrained, these policies consistently put upward pressure on uprights and rents. these policies include everything from supporting the gses to providing housing allowances, to military and other govern employees, as well as basic section vouchers. the economic principles are the same, they placed upward pressure on prices, because they increase the number of dollars, chasing the same amount of housing. there is surely some spillover to related markets. second, wasteful spending since 2020 has only worsen the effects of these demand inducing housing policies. congress passed five bills starting in 2021, toting seven and a half trillion dollars. they worsened inflation and exacerbated both labor market problems and pandemic related supply chain problems, thus leading to the abnormally high increases in the cpi that americans continue to experience. total spending demands high measure, bounce back sharply starting in the second quarter of 2020 and kept rising through the third quarter 2021. starting with april of 2021, virtually every monthly -- has indicated some form of abnormally high inflation. in may, the year of we are cpi rose at an annual rate of 8.6%, the largest 12 month increase since 1981. it is a broad based increase where prices were sheltered, gas, and food where the biggest contributors. congress and the administration seemed content without filled approach to increase federal spending. the problem, federal spending, whether it's on a museum, aid, or infrastructure, boost demand while doing nothing to address supply constraints. nothing to address the underlying issues that create the inflation the first place. finally, the federal reserve has contributed to higher housing costs by continuing to support the mbs market, therefore, feeling more leveraged buy homes in a low interest rate environment. prior to the 2008 crisis, the fed really held any and bias on its biology. now, it acts as though it can operate without holding massive -- mortgage backed securities. between 2010 and 2022, the lowest amount held was 127 billion dollars. the fed went from holding 1.4 trillion in 2020 to 2.7 trillion in 2022. in the face of rapidly rising cpi and steadily rising home prices, this envious purchased policy makes very little sense. thank you for your consideration and i'll be happy to answer any questions you may have. >> thank you very much. i now recognize five minutes for questions. miss pope, first i want to thank you for being here and the work that the realtors have been doing ever since i've been elected office to deal with discrimination and other issues dealing with homeownership. during the pandemic, increase competition for homes in a tight housing market pushed homeownership further out of reach for many perspective first time 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. in my city of los angeles, the black homeownership rate was 34% in 2021. lower than it was a 1910. last week, democratic committee past my down payment toward an equity act. my bill would authorize 100 billion dollars 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 my down interest rates. what do you see is the potential impact of such a program? >> the impact, thank you, congresswoman waters. the impact would be greatly impactful in the black community, especially considering down payment is one of the largest factors of not just systematic racism that we've encountered in the country over the years, this would be a big help when it comes to generational wealth. that is extremely a very good opportunity for black americans to take advantage, again, allow the creation of the generational wealth to continue. and then it will help mediate the actions of the inequalities the wealth gap and the discriminatory practices, this would be a great help to the black american families. >> thank you very much, even though i had not planned on asking this question, i'm 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 be taking place for so many years? >> as you know, all the values have diminished, they've lowered the values because of the appraisals. and, we are working very closely with our affiliates as well, we're very supporting of the pay in order to stop the discrimination of the appraisals in the biases. we're hoping that we'll have more training so -- license appraisers to be able to do with the need to do in order to bring the economy back and to allow our black homeowners to sell their properties and to buy properties not at this low value. we're taking a stand in supporting the pay. >> thank, you so very much. professor, house prices have skyrocketed during the pandemic, appreciating nationally by nearly 20%, between 2021 in 2022, making home buyers that much more unaffordable. according to the california association of realtors, only 25% of californians could afford to purchase a medium price home in the first quarter of 2022 compared to 47% of home buyers nationally. one driver of this affordability crisis is the worsening housing supply shortage. last year, the house passed the build back better act which included over 150 billion dollars in investments that would create and preserve over 1.3 million homes, including by offering incentives to local 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? >> thank you, chairman waters. i think we do see, you've alluded to we have a significant challenge in terms of the supply and availability of new homes. that number has risen significantly over the course of the last year and a half or so, we have a substantial pipeline of homes under construction. to your point, when we look at the mix-up what is being built in the united states today, in part because of local zoning requirements, building codes, restrictions on the availability of land, the cost of materials, only 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 in clergy supply that is specifically directed towards income constrain families, and those who are aspiring to homeownership, will be most effective in alleviating some of the supply challenges and pricing issues that we face. >> thank you, very much. mr. mchenry, the gentleman from north carolina, a ranking member of the committee is now recognized for five minutes. >> thank, you madam chair. dr. michelle, i want to deliver a little bit deeper into today's hearing title, it's called boom or bust. look, as i outlined in my opening statement, and president biden's first 500 days in office he increased spending by more than two and a half trillion dollars, our national debt now surpasses 30 trillion. the massive spending spree includes nearly two trillion dollars in the american rescue plan. the 256 billion dollar jobs act enacted last year. it doesn't include the 1.7 trillion so-called build back better, or whatever they're calling it right now, it keeps changing week over week. that bill that passed the house in november, it was then called build back better. it also doesn't include a trio of housing bills that the chairs introduced, but not passed the house. that includes 600 billion dollars and housing infrastructure war and scored in ending homelessness act that is likely to cause nearly $200 million a year, hundred billion dollar down payment towards equity act. those are nearly a trillion dollars in spending, well from borrowed money. so, if you would, please explain both the observed and projected effects that this massive spending is having on the economy in the connection to the record inflation americans are experiencing? >> sure, so, the stimulus was more than triple depending on how you cut it. more than triple the gap between actual output in the economy and what we estimate is the potential of where the economy. even before march of 2022, the one and a half trillion spending package that we had then, the federal spending had increased peoples quarterly disposable income, even on a per capita basis. by incredibly abnormal rights. things like 14% in the first quarter of 2021. that's well over the average quarterly increase, which is less than 1% during the last decade. so, there's pretty much no way that that sort of spending won't eventually lead to inflation. the result that we've gotten now is not all that surprising. it's just an enormous amount of money relative to what people are used to having on the whole. this is worse of course for anyone on a fixed income or without a study or secure or indexed to inflation source of long term income. they are not giving that money directly or indirectly, at first, they are getting price increases first, in many cases. and in many cases, when they already have some of the income, they're still seeing an even larger price increase now, i think that's due to the magnitude. so, this is bad for millions of people, and i think it's probably obvious that to most people, the lower income, the more volatile your income, the worst fear situation, the harder this is going to be to deal with. so, that's kind of where i would go with that. so, we know that federal spending comes in a lot of forms. >> one of the worst is when we come up with new give away subsidies for people who probably don't need it, which shouldn't get it, one good example is a provision in that build back better bill the house passed in november. the same provision again last week. this provision would create a new first generation down payment fund to give down payment grants up to $20,000 or 10% of the purchase price of a home. individuals making up to 100 and 40% of the median income of the area would be eligible to get these grants if they didn't own a home in last three years. the parents currently done on a home. this means, an individual in california making up to $232,000 can qualify for more than $97,000 and free government money on a 970,000 dollar home. even if they owned the same size home 1000 days earlier. as an economist, what does a subsidy like that due to the market place? why are the, you know, what are the, well, how do you respond to such an irrational subsidy? why is it even required in the first place? >> yeah, it makes no sense at all, it's a terrible policy, it's only a question of how long it will take and how much upward price you're gonna get. very soon, now i would expect sellers know that the first hundred thousand or so is taking care of you can charge more. it's similar to the effect that drop in the interest rate has on monthly payment, it's gonna get capitalized into the pride of the home. if you're gonna do that, you're gonna get price inflation, price increases in the homes. if that hundred million, or that program doesn't get renewed i would expect prices to eventually drop anyone coming into the market late or with lower equity, who is already in is at a very high risk for being underwater. it makes no sense at all in any way. >> thank you very much. the gentleman from california mr. sherman, who is also the chair of the subcommittee of entrepreneurship and capital is recognized for five minutes. >> thank you a few comments, first, it's interesting, we're all in favor of appreciation, we're all in favor of affordability. those are contradictory, there is an irony there. there is reason for us to support both. our committee naturally focuses on financing of housing. we have to look at other government entities and what they're doing for the affordability of housing. our friends over at the ways and means committee have taken away the deduction for property taxes, for an awful lot of taxpayers. they have not index that provision for inflation, so, others 2% inflation or whether it is a much higher level of inflation that provision hurts not only the upper middle class, but will soon hit the middle middle class, the same applies to the limitation on homework is deductions. so, while we're making housing more available, they're making housing more costly. the biggest impact is local government. really control housing. so many areas, and so many areas, people want either open space, or maybe open space dotted by a few rich houses. the effect is, the cost of providing a new structure, we need at least 5 million more of them, it's double or triple what it would be. the physical cost of building the home isn't the cost because they're dealing with zoning, the result an increase in land prices the fees, and all the requirements that are often designed to make sure that communities are not economically integrated, of course, that means in many cases not racially integrated. i realize we're focused on homeownership, not everyone should buy a home. if you are not gonna live there, you're not sure you're gonna live there for at least six years, it is not in your interest usually to buy a home. there ought to be single family homes that are available. i believe one witness said two and a half percent of the homes are owned by institutions that rent them out, that seems reasonable, we have a labor market where people are willing to move around far more than they are in europe. that gives us an economic advantage. our witness from the cato institute points of the government spending increases demand and inflation. why he did not point out is that taxes reduce demand and reduce inflation, that's why -- was fully paid for, why, if we can tax the wealthy appropriately, we can reduce inflation. mr. calhoun, we often hear that fha, owners struggle to compete against those who are borrowing within conventional mortgage. this is explain because sellers one avoid the longer closing times, the tougher appraisal requirements, last year the house passed my bill, which, unfortunately we did not have in the legislature, it died in the senate. the home buyers assistance act. it broadens the types of appraisers that can appraise for an fha purchase to be the same that can do it for the prices for the gses. this is significance because fha borrowers are overwhelmingly first time home buyers, and disproportionately people of color. are there other policies that we can take, whether it's the appraisal requirements, or elsewhere, so that fha borrowers are on equal footing when they go to buy a house? >> yes, congressman, in fact i have one comment to your last comment, i think it's important it's included in my chart in my testimony it's a chart that i'll just show you here. it's the history of housing prices. the colored part is -- >> all ask you to focus on the question, we have 40 seconds. >> okay, yes, there's things you can do. your praise loving, the requirement of certified appraisals makes it hard to find an appraiser and creates more delays. that's one of the most important things. fha is doing a number of other things, increasing their technological sources 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 into encourage lenders to participate in the fha program. as you know, fha is the largest provider of new home purchases for borrowers of color. >> i want to point out home ported is to pass the chairwoman's down payment assistant program for millennial home buyers, they needed family to help them, not everyone has a rich uncle or helpful parent. i yield back. >> thank you very much. the gentlewoman from missouri, miss wagner, is now recognized for five minutes. >> i think you madam chairwoman. today marks the 20th housing hearing that this committee has held in the 117th congress. yet it seems we are not anywhere 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 lame on property owners investors appraisal firms and the mortgage industry. biden blame game. i mean, well the biden administration and democrats and congress have recklessly spent trillions in taxpayer money that has worsened inflation crippled supply chain, and construction markets and ultimately made housing even less affordable. dr. michelle, i represent the second congressional district of missouri, which continues to experience labor shortages and supply chain issues that affect almost every industry from construction to manufacturing. collectively, to the policies offered today by the majority and the biden administration address those issues? >> no, no, it would worsen it. this is, the idea, it's maybe i'm well-intentioned, you want to help people, everyone wants to help other people, that's good. but the fact remains that if you go down this road of just giving out more money it still takes a long time to build a house, you can't build a house and every single location where people want to live. there is not enough land, you don't have enough laborers to do everything you want to do. you've been infrastructure package that's gonna draw laborers to that. so, you're going to be throwing more money allowing people to bid up the same amount of resources over a short period of time. and that is the opposite of what you want to do if you want to make things more affordable and easier to obtain. >> can you describe how the supply chain issues we're facing will continue to drive up home prices and rental rates if left unaddressed? yes, it would be the same sort of situation where you don't have enough of what you want. you don't have a way to get everything quickly. if you talk about things like livestock, labor, you can't magically produce them no matter how much you want to bid up the price. so letting these things go, letting these -- the 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. >> the federal role and housing finance policies has expanded greatly over the last several decades. yet, the american homeownership rate remains at roughly the same level as the 1960s. dr. michelle, is there evidence that would suggest the entrenched role of the federal government in the housing market has played a role and its current state? >> absolutely, it's amazing to hear lots of the other people on the panel who suggest that we just continue doing the same thing that we've been doing that got us in this mess in the first place. the only appreciable increase and for example the black or land homeownership rate was prior to last crisis. that was not sustainable by definition. we want to keep helping people, that's good. that doesn't mean that you help people by giving them low equity long term fix loans that they can't afford. if you have a volatile source of income for example, you are not addressing the underlying economic issues. you're just throwing money at a problem. and you're putting somebody a financially risky category. so, the fact that you take some of that stimulus away or some of that substation away, and it's not sustainable, it ends in a bus. >> dr. michelle, in my short time, your testimony outlines many harmful housing policies that the democrats have been pushing and their build back better, broke plan, whatever you want to call. it while the list is quite a long, could you briefly mentioned some of the most harmful policies? >> outside of the gses, is that -- >> yes. >> i think if you look at the gses, that's 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, hence essentially a federal takeover. with those expansions, we've seen this happen time again. >> yeah, thank you, i yield back the balance -- >> thank you, thank you, thank you so much, miss wagner for recognizing that we may priority. with 20 hearings and no republicans. thank you very much. the gentleman from new york, mr. meeks, the chair of the house committee on foreign affairs is now recognized for five minutes. >> thank you, madam chair, i have to adjust real quickly, i hurt representative wagner and representative henry, they to keep talking about, you know, it seems to me that some of the housing crisis, particular with regards to black america predates all of what they are talking about. it also seems to me that when you help someone, give them a hand up, it's okay. but when you have the huge republican tax cuts that goes to the wealthiest of americans, that is much more money then you see going to regular folks, that's okay. and then to say that the president is not doing the right things when, in fact, we know coming out of the greatest pandemic that this country has seen in over 100 years. yes, the war in ukraine is affecting the economies. which is why the president is in the g7 and that nato now working to gather with our allies. you are also suffering from inflation. and suffering from putin's war. there is no question about that. i would hope my republican colleagues who say that they are supporting ukraine, which we all should do, and make sure that they get the money that they need to defend themselves, we should also support people at home. we had a conversation with chairman powell, who said we if we did not make the investments that we made during the pandemic. our economy would not be as strong as it is now. which is stronger than many other places for most of the places around the world. i just had to get that in. 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. it does not make sense. if you're not going to support ukraine, then say you're not supporting ukraine. because that does cause us to have higher gas prices and inflation and united states of america. let me go to my question to miss pope first. miss pope, i know you are 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 that has confronted black homeowners. including the home appraisal practices, you know, the loans, there are more costly for black households. on top of that, the black homes tend to appreciate less or be valued at a lower value. so, this whole thing in regards to algorithms, you know, maybe, can you explain what role of a blm's are, and what more needs to be done to make sure that calculations and algorithms aren't having negative consequences on what you will be doing to make sure we have equity deals? >> thank you, congressman. makes when it comes to the black neighborhood in the appraisals, you are correct the. housing market is diminishing. the appraisal values of the. what are we doing, not just a national association, but as america. though it's important that when we deal with appraisers and the appraisal society, number, one 1% of the appraisal society are black. we don't have enough of african americans within the industry to understand the values of our neighborhoods. where we grew up. that where we know about, where we know the house across the street, it's worth more value than what the appraiser has stated. the importance of even the pave policy, the payback, i'm sorry, to discuss a lot of the challenges on the training, that needs to happen within the appraisal society, the licenses that need to take place. and addition to that, we need to make sure that we hire an employee more black appraisers so. they can have an opportunity, lessen some of the guidelines for the appraisers to be able to increase that community. so we are able to have true and real appraisers. when it comes to systematic racism, you know, the low access to capital the, health care, the inequality of fooled, the inequality in the racial discrimination that happened over 400 years ago, it hasn't changed. we are seeing now, it's being bought out. it's so important that we as an organization and as america need to make a different appraisal society. we have got to hire and employ more black appraisers. >> thank you for that. i'm going to go to miss choy. just to ask, what role does student loan debt play in serving as a barrier to homeownership? how can we address this issue here in congress? i have put a build out called the home ownership for student debt act. for me coming out of college, with student loans, that was it, prohibited me from owning a home for a while. can you address that, miss chao? >> thank you for the question i. i think this is a very important topic. i think student loans have the same issue. a lot of wealthy young adults who have wealthy parents get access to education without student debt. we are seeing from the data, a lot of black, young adults are having a higher student debt for the same level of education. they are more likely to drop out of college. because they have multiple dirty duties. -- [inaudible] problems of buildings that. home that is also impacted anna been an impact on us. i would love to look more into your text. this is a very important issue to address. >> thank you very much, i'm at a time. i yield back. mr. posey, you're recognized for five men. >> thank you chairwoman waters. mr. michele, the opening lines of the majority policy paper for this hearing suggests homeownership should be a policy for focusing the wealth gap in the country. please tell us what economic research suggests about making reduced wealth gap and objective for home ownership policy? >> i don't agree that it should be, that homeownership itself should be a policy. there are lots of reasons not to own a home. it's an individual decision. if we're talking about something like sustainable hone ownership, there are many iconic conditions and reasons that make that either difficult or easy. there is nothing wrong with ranting. federal policy should not distinguish between granting and. owning the research does not, even though there's a correlation between things like good citizenship and homeownership, it doesn't mean that one causes the other. there's actually a lot of research that shows negative spillover effect from owning, especially low equity. long term low equity loans. negative spillover's like hesitant to move, hesitancy to move, and search of a better job opportunity. just to name one off the top of my head. is that where you are going, i'm not sure if a max answering exactly -- >> no, you're at answering exactly. i was just looking from some balance. you provide that balance. thank you for being so straightforward with me. when secretary carson was the head, we began to appreciate that making housing affordable depends a lot on being able to expand new housing supplies while holding the line that's best way possible building your houses. would have earns to housing prices and affordability when we expand housing demand subsidies without addressing the conditions of housing supply? >> prices go up. as the prices go up, with the fha, through either fha or gse loans that we have, we have more lower equity loans. so, you've got sort of pockets, geographically, throughout the united states that are either more or less constrained than others. and then you basically have got one federal policy that just says, get more loans, get more loans. it's not surprising to get exactly the result that we've had, which is more consumer debt and incredibly rapid increase and home prices. >> what do you think congress should do to help bring down the cost of building new housing, so we can expand supply to make the current demand without driving up prices? >> well, there's very little that congress can do to increases the supply. it has to conserve out with demand relative to supply. that means pairing back on the increase in demand. so, supply is going to be more local driven. you have to back off, literally, back off. we have to shrink the footprint of all the things that are being done federally to increase demand. otherwise you're going to keep getting higher prices. >> one of the bills under consideration this hearing, to provide 25,000 or more in high cost areas to provide qualifying assistance to certain first time, first generation home buyers and purchasing their first home. can you comment on the pros and cons of that approach? >> the pros, of course, are if you do get, if you recipient of that, you get the money for your down payment. the cons to that, you're doing nothing to change the underlying conditions. if you have a african american, for example, that doesn't have a rich uncle, there's, york, you are assuming that simply giving them the money would be good for them. again, while it might be good to be able to purchase that home, you're actually not purchasing the home. you're purchasing the mortgage. the research shows, when we get from spillover's from honer relationship, you could actually be picking up the behaviors that somebody has rebuilds over time. when they do save money. you're taking the saving of money part out of the equation. you're saying, that does not matter. when, in fact, the research shows that part could matter more. now it's not to say there shouldn't be something done to advance, decrease economic opportunity. there's a difference between that and just giving somebody the check. >> got you. >> listen, for the record, madam chair, i've been a realtor for well over 40 years. i can assure you, during the entire time, since the very beginning, the first orientation class, every realtor is aware there should not be any discrimination and how they want so ever. the only color any realtor should be countered with is greed. and that's putting the deal together. thank you, i yield back. >>,,. . >>,. ,. . and my area and my area and atlanta led the nation as the number one area in the entire nation. for invest door purchases of single family homes. and so, miss pope, explain how this investor activity and the subset markets impacts individual buyers and hurts us. thank you, congressman scott. first of all, one lenders hesitate and a low balance mortgage in an area, buyers can't purchase. so when they can't purchase a lot of times opens the doors for investors who pay cash. also, these cash investors they do in bulk. the more properties for less money, it's a wholesale. you know, what happens in this case, it displaces the residents, it creates low inventory, and it creates more inventory for the neighborhood. what happens, you have a high rental market that makes it not sustainable for the homeownership. it makes it difficult for anyone looking to buy a property it's hard to buy because all the properties have been taken up by these type of investors who are buying cash our typical home buyer doesn't have the cash, they just don't have. that's why financing is available. strip that away from the american dream strips him away from that homeownership. >> yeah and to your point, the atlanta journal-constitution, our own newspaper, reported that this activity was linked to a drastic decline in home ownership rates. however, as is the case in so many situations, this connection disappeared when compared, predominantly white neighborhoods with predominantly black neighborhoods. miss pope explain that for me. >> i hope i'm explaining this correctly, 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 first of all, because that borrower can't purchase it at prime price. now, it's excelled, because that investor fix the property, a resold, and flipped it. that makes it difficult in the community because then it becomes unaffordable and possibly having challenges with the appraisals. and that's for finding across the board. i'm from ohio, and we follow the same issues of having all these investors buying in neighborhoods, increasing the sale price or renting. everything is escalated higher 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 can afford it now. it's not the 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's neighborhood and area 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, it strips away the homeownership. so, you're right. the home by, or the school systems that they go, the grocery stores they go to, at the banks that are very little in the neighborhood, it becomes a challenge. now you're taking away the homeownership, the neighborhood that is created to have sustainability. so, that is stripped away when you're lessening the housing market and increasing the rental market. >> so, my time is running out. but here is the part that i want you to answer. is it fair to say that these private equity firms would then charge -- target single family homes in majority african-american neighborhoods more than in majority white neighborhoods? >> yes. >> thank you very much. i yield back, madam chair. i >> thank you very much. the gentleman from texas, mr. williams, is now recognized for five minutes. >> thank you, madam chair. for full disclosure, i am a small business owner and i am an investor. now, as we are having these conversations, some of these questions i hear coming out of left field about the housing market. we should take a second to recognize where the biden economy currently stands. it stands with everyone, not just with one group or two groups, everyone is being affected by the bad decisions coming out of this biden ministration. american saving rate is at its lowest level since the great recession. well credit card debt is hitting all-time highs. supply chains are broken. having visible impact on our constituents go to the grocery store with empty shelves. also on inventory for other small businesses. i'm in the car business. i just said that i'm a small business owner. in the car business. and we carry around 800 units on the ground. today, as i sit in one of my businesses, will have 26 units on a 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 can't find the raw materials necessary to complete their bills. when timelines get stretched out because of unforeseen circumstances and inflation, the overall cost goes up. even if these builders are able to secure all the necessary materials they are having real problems with finding skilled workers to complete these new projects. inflation is that a 40 year high as a result of out of control government spending by the biden administration, and two, a culminated policy. this has forced federal reserve to raise interest rates to get these unprecedented price increases under control. this is led to the 30 year fixed mortgage riding to a 14-year high of 6%. to put perspective, a year ago this, mortgage rate was sitting at 3%. this is a massive year over year increase coupled with home prices hitting all-time highs, they're not making this a buyer friendly environment for anyone. as a result, all of these factors, consumer -- is sitting at its lowest level since the start of covid pandemic. the biden economy simply is not working. so, needless to say, we've a long way to go before americans are confident again in the direction our economy is heading. so, mr. michele, can you give us your opinion on how we got to this point? what's steps do we need to take to get our economy back on solid ground? >> well, i mean, part of it, again, is i think on the inflation side as a fiscal spending. part of the supply chain issues or largely the supply chain issues are due to the covid government shutdowns. you had an incredibly large drop in demand. it snapped back in demand. bigger than anything in the historical record. so, we have to be a little bit patient. we also have to stop spending more at the federal level. it's only exacerbating supply chain problems. we have so many resources to go around, you don't to keep giving them up. on the other side, i think the feds doing what they should be doing, the fed has started tightening. at this point monetary policy is probably the only tool that is going to help long term and there are signs that that starting to work. credit markets are tightening. money growth is coming down. signs of course inflation kind of turning back. so, i think that's, i think are on the right road as far as that goes. >> and we need to quit talking tax increase we need to keep taxes where they are. >> i don't really understand the tax increase thing, but, go ahead. >> i don't understand it either. will move on to that later. excessive regulation for, they can be a major drag, as you know, on the economy and private sector participants. there is been studies that have been shown in president biden's first year in office businesses have spent over 131 million paperwork offers. cer and i can tell you about that i'm in a business is all commission. my business, we didn't even have to hire a compliance officer, to comply with each regulation that we're getting burdened with. this takes away valuable time from protective activities that could be adding value to the economy and helping people buy houses. we must always be looking at ways to free up -- productive activities. so, real quick, you've previously done some extensive research on the act, can you discuss certain parts of the bill that would lead you to believe or holding back the economy, that we could re-examine this committee? >> sure, with -- systemic risks and financial stability regulation, given the fed and treasury a blank check to go out and just do anything in the name of guarding against potential systemic risk and failure. that is showing up in crypto in tech markets right now. >> my time is up, madam chair, i yield back. >> thank you very much. the gentleman from missouri, mr. cleaver, who is also the chair of the subcommittee on housing, community development insurance is now recognized for five minutes. >> thank you, madam chair. let me first deal with some of the issues that have been thrown out. mr. michele, first of all, i appreciate your parents here before the committee and presenting information. would i'd like for you to address is if there is a two trillion dollar drop out of the revenues of the united states, does that contribute to inflation? >> drop in tax revenue contribute to inflation? >> yes. >> no, i would not make that argument. maybe there is another way to make that argument, but i would not make that argument. >> dropping two trillion dollars and tax revenue is not as devastating on the economy as spending one trillion dollars for infrastructure. it's a connected to who does it or why? >> if you ask me if one is inflationary in one is not, i'm gonna say that if you drop two trillion in tax of a new, it is not inflation. if you put one trillion of spending into the economy, that is inflationary. i guess, if that's where this is going, where if we have inflation all we have to increase his taxes, i don't know if that's actually equitable. i don't know it actually works that way in practice. >> i didn't suggest that. i don't think i suggested that. if i did -- >> fairness. >> yeah, i misspoke if i said that. what i am trying to deal with is, you know, we spent one trillion dollars. you know, we had 2.3 trillion dollars hit on the economy with the tax cuts. and the revenue fail or is falling substantially short of the two trillion, 2.3 trillion. so, you know, hopefully we'll get to a point where something is right or wrong, because it's right or wrong, and not who did it. and so, you know, i mean, the two trillion dollar drop is unheard of. let me ask you one other thing, and move along. my assumption is that you oppose the bipartisan infrastructure bill that some of us proudly voted for, republicans and democrats. is that true? >> correct, i don't think that was a good bill. >> okay. and so, would you say to, let's say, the people who are concerned about the 45,000 bridges in poor condition in the united states? let's say this, what would you say to the people in your community who didn't meet the stats and realize we were in trouble, we rank 15th, i'm sorry, 13th in the world in terms of aging invest archer. 45,000 bridges and pour condition. what do you say to all of the people all around the country who believe we are in trouble? what would you say to every president since bill clinton that is said they wanted to pass an infrastructure bill? we need an infrastructure week that the legislative process is going to begin. all those people would have to have been wrong that we desperately needed in the infrastructure bill, is that what you are saying? >> yes, i would say that that's wrong. yes, and i would say that they are politically very popular for every president and senator, yes. >> why is it popular? is it because here in kansas city we're getting ready to put in new bridges, where we are having flooding, or 25 people died? is it something that we should be, i should be apologetic about? i voted for very proudly and i have not heard a single republican or democrat or vegetarian or anyone else complain about it. >> no, if i were you, i would want to get as much money as i could from my constituents, from his many places as i could get it from. >> think, you madam chair, i appreciate the opportunity, thank you for, you know, for your answers. thank you so very much. you could add to that clean water, mystically. or the gentleman from arkansas, mr., hill is now recognized for five minutes. >> thank you, madam chair. i'm certainly enjoying this macroeconomic debate. with our witnesses and our members. it's always rewarding actually. i'm sorry we're not in the committee room together today. i would say to my good friend, i appreciate his work on building bipartisan support for targeted supported ukraine with our european allies. i didn't quite take his messaging that somehow republicans don't support. that i want to thank him for his work to make sure we have bipartisan support there. i do want to correct the record from my good friend cleaver in kansas city and greg on this tax issue. of the tax cuts and jobs acts. that helped all american families, brown, white, black with lower tax rates, easier filing. better child tax credit. we need to make those tax cuts permanent. that should be a priority for democrats and republicans. secondly, on the revenue issue, corporate tax revenues, despite the large cut in the rate, or at their highest level in american history. we are earning more corporate tax revenue than we have in the history of the country. a trillion dollars came back into the u.s. for u.s. investment there. i think the gentleman's argument about revenue loss is quite exaggerated. the real challenge that we are talking about today, the impact on supply chain and biden inflation, and the impacts of housing affordability. it is devastating, as i said in my opening comments. i want to start with doctor chen don, in your testimony, very interesting. you said the analysis shows nationally institutional investors show the market has risen since just prior to the pandemic. but only accounts for two and a half percent of home sales. by comparison, individual investors, mom and pop investors and our towns, cities, counties account for 24% of the market. doctor shannon, is there evidence that this is only in low income neighborhoods? is it across the board in these metro areas? >> thank you, congressman. i think the data that you cite, that i cited in my testimony provided by freddie mac, just recently completed study. well there's always opportunity, here's our, significant opportunity to improve data transparently and -- when we do know, nationally, 24 or 25% of investors and markets that are buying single family homes without the intention of living in them, or reselling them, but i repurposing them as a single family rental homes. it does include a wide range of investors. we should be careful not to conflate large institutions with that entire pool. >> thank you, let me reclaim my time. the margin and individual, it's an individual mom and pop investor. -- number two, i have never seen anything that's disproportionately low in lincoln it neighborhoods either. let me ask you this, a lot of families have kids and a number of kids in the rental market, a lot of apartments don't have multi bedroom units. isn't the best place for a mom with kids who has multiple kids, sometimes a single family home, isn't that a better choice for her rather than an apartment where they don't have as many as much choice of new yard? >> one thing that we absolutely do observe, as households age in their life cycle, and particular as you point out, they have their first children, the set of amenities that they look for changes and expands. in many cases, it will include things like parks, good quality public schools, you get better access to when you live in a home. and large part because of location. -- >> thank you for that. if you have other comments on that, please submit them for the record. this is a key element of what we are talking about today. also i looked at the affordability charge, my favorite -- the federal reserve bank. it shows that minority homeownership skyrocketed under the trump administration from its postcrisis low of basically 2016 and 2017. and then the pandemic knocked off that home affordability and ownership rates for black, brown, and white americans. we need to get back on that. i think my chairwoman and i yield back the balance of the time. >> thank you, the gentleman from colorado, also the chair of the subcommittee on consumer protection and financial institutions is now recognized for five minutes. >> thanks, madam chair, my friend mr. hill, i think you started off on the right track. i'm not sure if he ended on the right track. he started off on the right track. by talking about this being a macro and economic kind of question. that we are asking. it is also microeconomic. i would just say, we've had some questions about supply and demand. listening to doctor michelle, leroy mentioned the supply, he wants to cut the demand. because the demand by making sure people don't have any cash. that will work. all of a sudden, there will be an oversupply. in colorado, long before joe biden took office, we have seen house prices increasing. because we've had our population increasing. and have had not, the supply hasn't kept up with the population. that's really what's happening in colorado. probably other places in the country as well. the ohio's, arkansas, maybe new york, there's been people leaving. and house prices have stayed stable. maybe even dropped. i guess the question to the entire panel, miss pope, i really appreciated your economic analysis of things. probably the best. just a bigger question, demographically, in the united states of america, dewy have enough housing for a population? where do we see our population going over the next ten years. do we think the supply will keep up with the demand? do we see demand shrinking? i will start maybe with you, miss pope, and see if you considered the demographic question. or if you have to look at it on a market by market basis. >> thank you so much for the question. in the future, i do not see the demands, or a supply increase. the man is much higher than supply right now. you have to remember, home buyers in america, when they're purchasing homes, looking to buy, the offers that are coming through the properties, they are at least 5 to 10 times more that has been in the past. those same buyers are now in a rented capacity now. they are sitting ducks. when you look at all the buyers that can't buy because of lack of inventory, the demand is strong, the supply is going to take time. unless we build and we do more housing within the cities within the suburban areas. so that homeowners can be able to buy, so the demand is very low. because supply has to increase. that's the only way that home buyers can purchase the property. when you're talking about the authors that are there, as i mentioned earlier, it just does not work with that. it is just not enough properties. we need the help to have congress, anyone can help, to help so we can increase the supply. so our buyers can purchase. i don't see the supply happening that fast. i do not. >> thank you, mr. calhoun, you had a chart that you wanted to show, the ups and downs of the housing market over the last, i don't know how many years. i'm curious if you have taken a look at demographic trends nationally. it seems to me that the birth rate is down. i don't know about the immigration rate. it goes up and down. talk to me a little bit about how you see supply and demand on a general basis. not the monetary supply. just people and housing stock. >> yes, there are a couple factors that make it clear we have an absolute housing shortage. i note that our fellow panelists in the urban institute, they have done research on this. one factor, we have an aging housing supply. it is not keeping up. there is obsolescence with about one to 2% of dropping out each year. so, even with steady, steady and, you have to take that into account. the big thing is, we are experiencing a huge shift, new households are predominantly households of color. younger households who will be looking to buy homes, in addition, we have a factor with current older households, a trans wards families want to age and place for longer period. rather than sell that place and free it up for recycling. we have got to remove barriers to the construction, particularly for the entry level market. that is an absolute critical part to keep us where we are. we also have to -- >> let me stop you for one second to make a final comment. i know in the western united states, the interest rates have already taken effect on the housing market, development has slowed new construction has slowed. home sales have slowed. any comment on the interest rate increases before my time expires? which expires right now. you're not gonna get a chance to answer, i yield back to the chair. [laughs] >> thank you very much, the gentleman from south carolina, mr. norman, is now recognized for five minutes. >> thank you, first of all, i have for 45 years built houses, departments, properties. quite frankly, some of the responses have been laughable. the democrats can pick who they want. on the 20 some hearings we've had. this is my second hearing. you might want to get people who have been in the business. that can give you some real experiences. the number one issue that's causing housing prices to go up is very simple. it's the war this administration has put on all and gas. the trucks that deliver a load of lumber to our house today -- >> excuse me, madam chair, i cannot see mr. norman. are you on, mr. norman? >> yes ma'am, i'm sorry. i >> don't see on the camera, sir. there you go. >> can you see it now? >> -- can everyone see it? how about now? >> you are good, we lost you again. >> alison, can you come in, magazine -- can get this straightened out? what's going on here? >> mr. norman? the gentleman from south carolina? >> yes ma'am? >> you are on. we can't see you, is your video on? mr. norman? >> the videos on, and let's see. yes, ma'am? >> we need to see you on. can i come back again? >> yes, welcome. back >> i'm sorry, thank you. >> thank you very much. >> let's go to the next person. jonathan allen i, mr. foster also the chair of the task force on artificial intelligence is now recognized for five minutes. >> thank you, madam chair. and my audible and visible? >> thank you, i am struck by the fact very often that it seems like we put a lot of effort into instruction, but not necessarily the right poses. we look around, the number of empty-nester sitting around and mansions with large numbers of empty rooms, i bet we could care cure the problem with people who are homeless in this country. if we could somehow snap your fingers and reallocate that. i'm a fan of the free market. in almost all circumstances. i'm a little bit distressed by everything that's put into place to interfere with the free market in ways that lower the ability of people without a lot of means to purchase houses that they might be able to afford. so, i was wondering, what are the most cost-effective interventions in the free market, or maybe just returned to the free market, that would allow people, that would allow this find manned for low and housing to line up, or removal of subsidies that we have in place, that encourage people to build big houses on big lots instead of small multi family? does anyone want to take, i'm interested, we will have to put some federal money into this. what are the most effective subsidies? where can we put them? either on the spy side or the demand side. >>, if i may respond i have both run billion dollar home lending floor grams to families, and i've also been a private state developer and have experience from that side as well. a couple things that we can do and suggest, they are being piloted now to help families, as i mentioned in my testimony, through the vulnerabilities of today's more volatile world, giga-connally workers, they should not be hypocritical chance of having homeownership. those are things like reserve funds. which our partner lending out since two shun is piloting. as well as loss of income protection insurance, that helps people make up for the efficiencies, quite frankly, and unemployment insurance programs. we are in a differentagain, onet we missed in this hearing, we are in a different world than we were in 2008, thanks to frank. people have affordable mortgages now. we are not facing a dramatic plunge in pricing because of foreclosures, like we did in 2008. we have made lending more sustainable. we now need to make it more inclusive like it was in the 50s and 60s when we brought millions, tens of millions, of white families until the middle class through very affordable fha loans that go up to 100 percent financing. those are properly underwritten with responsible programs, such as reserve funds and the loss of insurance, income insurance. you could do this in a way that is safer and more inclusive, relies on the free market to deliver the housing we need. >> thank you, there is still the short term problem of lumber. it seems like part of the way out of that is to allocate the lumber towards building smaller units, more smaller units. you wanted to say something. >> yes, sir, when we look at the deterioration and the share units that are being built that are small, or, entry level, we're down to about 7% from something that was significantly higher. that average home under construction right now is -- this is not an entry level home, a lot of this is at the local level. the availability of materials and skilled labor is certainly an issue. another's locals owning, that limits the ability to smaller parcels of land or to build smaller homes. another is an allocation issue, where in some parts of the country, local transfer taxes are the cost associated with buying and selling our high enough that, at least on the margin, it will inhibit some families as they grow from moving into a larger home, opening up the high -- used in that small space a little longer than you might otherwise because the transaction costs are high. those are all things, particularly at the local and state level, but we can begin to address that are largely in the regulatory and zoning environment. >> thank you, it looks like my time is up. >> thank you very much. the gentleman from tennessee, mr. rose, is now recognized for five minutes. >> [inaudible]. >> mr. rose? >> [inaudible]. >> all right. >> i should be unmuted, can you hear me? all right. i am doing this remotely, so, i apologize. are you hearing any better? >> yes, i hear you better, go right ahead. >> thank you, thank you chairwoman waters and ranking member for holding this hearing. thank you to our witnesses. before we get into my questions i just wanted to make a few comments, earlier in the hearing the chairwoman referred to this committee as the quote, democratic committee, and quote. i think that this is one of the problems with the committee as it is currently constructed. it should be the financial services committee, of course, not the democratic financial services committee. that's why we get some of these hearing titles that show you before the hearing even starts that it will be biased and not a serious examination. additionally, the democrats build back act is -- this is directly contradicted by the professional budget office. i don't like to echo some comments at the outset that have been made by my colleagues concerning the proposals that are attached to this legislative hearing. we are over 30 trillion dollars and that. we are experiencing the highest inflation in over 40 years, gases $5 per gallon, the majority has chosen to attach proposals to this hearing that would spend money we don't have. build houses that we can afford, and exacerbate the inflation that is hurting every day americans. on december 6th, 2021, the financial network issued and advanced notice of proposed rulemaking on anti-money laundering for real estate transactions. the proposed rules would apply to not financial real estate transactions. [inaudible]. commercial transactions as well as all cash residential transactions. if this were making is finalized, anti-money laundering requirements would be extended to virtually all real estate transactions. dr. michelle, do you see any issues with extending reach in this area? >> i'm sorry, the very last part? >> do you see any issues with expanding regulatory reached in this arena? >> yeah, i mean, it's kind of mind-boggling to me, i don't know why we would do that i don't think there's a regulatory issue here. this is a supply and demand issue, not more than that. so, i wouldn't be in support of them. >> on a similar no, i have previously expressed concern that the federal government uses the -- secrecy act to deputize the private sector to collect personal data from american citizens. dr. michelle, you previously recommended that congress should require financial firms to keep customer records and then have law enforcement abide by the fourth amendment to access those records, could you please elaborate on this approach? >> yes, i think that would be a way of handling this that is completely consistent with the constitutional protections responds to have. if you're accused of a crime, that's one thing, if you're not accused of a crime, then you shouldn't be subject to law enforcement actions. so, the way, it seems to me the way to handle this with the bank secrecy act is to say that the bank will keep records that we can identify customer transactions. if there is someone who is legitimately suspected of a crime, law enforcement will, just like any other criminal investigation, go and get a warrant, and then they can going at that information. >>that is not a problem in any other criminal investigation, it shouldn't be in this case. >> thank you, i entirely agree with that assessment. dr. michelle, is the feds purchase [inaudible]. >> i don't think it's the biggest component, but yeah, the direction has to be upward price pressure. it is increasing liquidity to some extent, the mbs market, making it easier to get loans. it's magnifying that problem, yes. >> dr. michelle, democrats have been trying to expand the feds set of responsibilities to include things like racial inequality and climate change, do you worry about proposals to expand the feds mandate? what impact do you think that could have on losing? should the feds responsibilities be narrower? >> i am worried, i do think it should be narrower, not broader. >> thank you, my time has expired, thank, you chairwoman waters. i yield back. >> you're so welcome. if it make you happy, i wouldn't hesitate to call this a republican democratic committee if you give us a vote on housing, okay? the gentleman from florida, mr. lawson is recognized for five minutes. >> thank you, madam chair, i would like to welcome everyone to the committee. one of the things that i was thinking about here, back in, i think it was 1972, when i was trying to get a house for the very first time, i -- so, i went to fha i. but i noticed today that have ha is disproportionately, the way that people of color sometimes gone borrow money for housing, haven't had a competitive disadvantage in the housing market. the afferent changers mortgages, i have found now to about 18%, it looks like basically in 2020 and to 2021, continued the downward trend toward a lower level, i would say, up until about 2012. if the trend of home purchases continues like we projected, how would sellers be encouraged to conduct business when the cash values can, incentives sizing offers above the asking price? this is to the whole panel. >> this is pope, thank you so much for that question. you, know sellers, you're right, they can take offers firm cash buyers, we can't steer them. as really state practitioners, we can educate your homeowners, your sellers about the different type -- sometimes cash is not the right way to go. sometimes there's a better way to finance because you get more money. sometimes the cash borrowers are charging less than more because you think you can close and seven or ten days. a couple weeks later, you could've given the homeowner a better opportunity to buy a home. so, i suggest that real estate agents educate their sellers on the different options and why it's important for homeownership. >> everyone else on the panel like to respond? >> i will add, the fha can be more user friendly. it has been constrained, as you know, in that it relies totally on appropriated funds for its operation. it has historically been underfunded. it has played catch-up recently, thankfully, through appropriations over the last years to upgrade its technology. fha needs to operate with the same resources that other lending options do, so that they are equally competitive. right now, that are very much still resource constrained, which makes them less user friendly for both borrowers and sellers. >> i would like to add. >> go ahead. >> i would like to add that, so, one of the things that we do have to think about, i think it's also related to the last question about why households are more likely to see a rich uncle in the first place, that is due to the policies i have an in place. the only way to reverse that trend is actually lifted up to the people who have been previously discriminate in the market. -- the racial disparities, as we've seen multiple times in the air. we have seen that the racial disparities have increased over time, the black households were disproportionately impacted during the great recession. they have -- in the market, and one of the reasons is because they have been a target of predatory lending practices and loans made a huge impact on their wealth. the data shows and a lot of academic research shows that these loans have been vending practices, they're more prevalent in the private sector. i don't think that -- every issue actually makes sense, i don't think it's a core reason that we are seeing the racial disparities that we're seeing. >> we get into this next question by recently, i get all these calls from outside people saying that we would like to buy your town house. i'd like to buy your town house. we got the most competitive offer that we can give you you know, those calls coming all the time. there is nothing we can do about that, that really affects the market, whether it's a town house, or other rental units. so i see my time is running, out madam chair, i will yield back. >> thank you, the gentleman from south carolina, is now recognized for five minutes. >> thank, you madam chair. i think all of our witnesses for being here today. in the oversight hearing were democrats attempted to create scapegoats for their left wing policies, ruining the housing market. one of the democrat witnesses advocated for, this was great, for a government takeover of all private property and housing. yes or no, please, from the witnesses, does anyone on this panel believe that the government should own and operate all housing and property within the united states? >> no. >> no. >> let's make it easy does unable to say yes, can anyone entertain me? >> okay, no uses. all right. the same witness for the democrats also advocated during the pandemic that renters and homeowners should participate in a, quote unquote, rent and motor good strike, due to their land lords, whether they can afford to pay them and i. so, i'm gonna make this really specific. do any of the panelists believe that during the pandemic, if someone did not lose their job, if they were not under financial hardship, that it would be appropriate for them to go on a rent or a mortgage strike? so, do you think you have to pay your bills if you can? you should pay your bills if you can. >> you should pay your bills if you can. >> great, thank. you it seems that under the current majorities plan to address a rising mortgage and rent costs, it's just to throw more and more money at the problem rather than addressing the root causes driving these price increases. the federal government has been heavily subsidizing housing for decades. with very little to show for it. in fact, homeownership rates among black families have actually decreased since the fair housing act passed in 1968. yet my colleagues across the aisle, their plan is just more of the same. throwing money at the problem, as if demand is the issue. we all know the lack of supply is what it has long been driving increased costs and finding a home whether that's to rent or buy. just last week, the committee marks up the chairs down payment toward equity act. on a party line vote. this bill would give individuals making over $200, 000, witches more than any of us make as members of congress, almost $100 -- for home purchases. putting aside but a terrible idea that is, mr. michele, how would the housing market respond to this type of grant program were to become law? >> again, it's the same sort of phenomenon. you can look at a major drop in interest rates, what's happened over time is those that decrease, i'm sorry, has been capitalized in home prices. the interest rate drops, monthly payment drops it's the same sort of effect. you would expect that to be capitalized in home prices in a relatively short period of time. maybe a little bit longer than the interest. sellers would recognize that somebody's already coming to the table on a regular basis with that first, stay, 50 or hundred thousand dollars covered. therefore, you know you can increase the price. that's going to get capitalized in prices. >>, you kind of answered it, why would the inflationary impact the? when you go up? >> yeah, that would be the direction. up. in short, it would make inflation even worse than it already is? could you explain to us how housing costs factor into the core price index? >> yeah, it's not directly. it's a shelter based service price. where you have rental prices incorporated into it. and then, i'm sorry, for homeowners had serenity cleveland. it's based on the value of homes. those also affect rents. and then the service that you get out of that component of your shelter it is calculated. it's a statistic part. with a lag, it goes into the cpi. it becomes a part of the index. it is down with a fairly substantial lag. so, we are probably going to see elevated shelter component of this api for at least another year. no matter what. >> is it fair to say that this down payment grant program would directly counteract the actions being taken by the fed to lower inflation? >> yes, it would continue to put up pressure on the cpi, doing that housing component, yes. >> thank you, it is obvious we need to focus on rather than focusing on subsidies when it's already sky-high. especially throughout in my state of south carolina. we need more homes, not more subsidies. thank you, i yield. back >> thank you very much, the gentleman from massachusetts, miss pressley who is also the chair, vice chair of the subcommittee on consumer protection and financial institution. now recognized for five minutes. >> thank you, madam chair. first and foremost for your leadership and for the class, decorum, and fairness that you exhibit every day in this role. housing is offend mental human rights. across the country, in my district, the massachusetts seven, 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 opportunities due to discriminatory lending. now, private equity backed institutional landlords have pushed the stream even further out of reach by gobbling up single family homes and worsening the housing crisis across this country. miss pope, the five largest single family rental companies own almost 300,000 homes, one of the consequences when institutional investors purchase these homes in bulk? often in cash, how are they worsening housing affordability and physique would be home buyers into the rental market? >> thank you for the question, let me start by saying, again, when lenders hesitate, to lend to low bounce mortgages, that means lower properties, neighborhoods, fires can't purchase when they're hesitating. if that does, it's brit states for investors who pay cash. they buy in bulk, the properties for less money, the nurse wholesaling, it displaces the residence and create low inventory for the neighborhood. when you have these cash by, and cash investors, and a homeowner can't have that american dream because they're bought out of a cash deal, it makes it very difficult. and then they have to go back and try to rebuild properties. number one, that makes it harder. now they're against many buyers who they are praising higher that is normalcy. which pushes them out of the market. it brings them into a mode where they have to rent. many of them are in a situation the rental market is getting ready, the rents are getting ready to increase or is getting ready to act. they had the either resigned that lease another year. it does stop a lot of black hammers into buying homes. >> thank, you miss, post these homes and institutional investors are buying, they're in predominantly black neighborhoods. yes or no, based on what you are seeing, is the influx of institutional investors in cash buyers driving up home prices in predominantly backhoe communities? yes or no? >> yes. >> home buyers, miss pope, i'm not the only ones impacted. are these committees saying rents go up as well? >> absolutely. >> miss pope, would you say that institutional investors are accelerating jennifer of communities of color and displacing low income residents? >> yes. >> thank you, that is exactly what i'm hearing from people in cities across my district, like cambridge and boston. where rents have risen by 30 and 27% higher than last year, respectively. this is unsustainable and vulnerable cyst constituents are drowning financially, they cannot afford these rent increases. this hearing is about homeownership. right now, home ownership is it even feasible for many in my district who are being squeezed by predatory rent hikes imposed by institutional investors. mr. calhoun, you mentioned a or testimony that broad student at cancellation would help address the racial home ownership gap. i agree. one of the policies will provide relief to tenants facing unsustainable rent increases. >> again, a couple things we have tucker increase, -- as well. then, one of the provisions that expired in january, the children's tax credit, one of the things we talk about in home ownership producing, also a manifestation of people's existing wealth and existing financial security. another thing, there is recent federal reserve research that shows that expansion of medicaid increases not just general financial security, but homeownership. again, where you have talked about, putting people in a stable financial position so they can either securely brands or purchase at home, if i may, i would like to give a shout out to two programs that we need to lift up that have come out of massachusetts. that is where one of the largest first generation targeting programs was implemented that was the basis for chairman waters provision. and also it has one of the largest statewide income lost insurance programs. which, again, we need those kinds of new approaches to provide a fish and ways to address these housing problems. >> thank you, i was trying not to be too boastful. i appreciate your lifting up the successful models. again i thank you madam chairwoman once again for mere leadership. >> thank you very much, the gentleman from wisconsin, mr. style is now recognized for five minutes. >> thank you, madam chair. i appreciate you calling today's hearing, i have been listening along as we go today. i continue to hear policies by those on the left that are actually exasperated by should. people are getting clobbered. i was recently at a gas station in wisconsin yesterday talking to a couple who were frustrated they could barely afford to fill their cars gas. they are frustrated their grocery bills, their rents are increasing. they are just getting clobbered. they are getting clobbered because costs are going up. when i continue to hear is all sorts of excuses, why cost going, up rather than really looking at the real problem. the real problem, we have runaway spending in washington, d.c. we have an energy policy that is on its head, and we have a contract no supply in particular measure. we have got to leach american energy. people are getting hurt every day by democratic policy. i listen to what we're doing, alison where we are in the mark of, we had this debate. we looked at millions of dollars of spending which would accelerate inflation. we just heard a proposal again we saw it in a testimony about wiping away student debt. of course, it just shift the burden to who pays for it. it shifted into more debt that all americans will pay for to the benefits that some of the wealthiest americans, people that received graduate degrees, doctors, attorneys. that's how it helps. when we to do, it would accelerate inflation. i want to ask you, doctor michael, if i can. as we listen to this debate today, we are looking for real substantive solutions, is the challenge on the demand side that congress should be subsidizing the demand side? 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 partisan? >> the mistake with the supply argument, we just need more housing. and that's a mistake, it's looking at supply without talking about demand. you should be talking about supply relative to demand. we know supply is relatively in elastic and fixed. there are always constrained housing markets. therefore, the worst thing to possibly do is completely, is to constantly increase demand. which is exactly what federal policy does. you are only going to get one result from doing that. and then to go to the underlying issue, this is a a great example. if it is true that private equity firms are predominately buying up foreclosed properties in poor neighborhoods, then the problem to address is the poverty, not the demand side loan and lending ability. of all these government agencies. that's the way to address that. >> let's dive in on what would happen if we accelerated dramatic new federal government spending programs. as we think about the inflationary pressures that we are feeling here in the night. states we marked up a bill to spend another hundred billion dollars or so. what would be the economic impact of pumping in another hundred billion dollars into the u.s. economy, at the start the biden administration democrats on a party line passed 1.9 trillion dollars in new government spending already? but if we took the fire that's been started and we threw on five dollar gasoline on that? >> you're going to get more inflation without playing the supply problems. if you, for example, said, okay from now on everyone gets whatever loan they want. well, they can go do whatever they want. that's fine. everybody is going to be betting on the same amount of stuff. the same amount of real resource constraints. >> if we pump and demand side subsidies to make it clear, what happens to price? >> they go up. >> prices go up, does it make it more affordable, or less affordable to a family in wisconsin? >> makes it less affordable. >> the democratic policy is a pumping a whole bunch more money and are actually, the end of the day, going to hurt the people that we hear them claiming to assist? is that accurate? >> that is accurate, yes. >> it's the same story we see on energy policy. it's an attempt to contract supply on the energy side so we don't unleashed american energy, so we jack up the prices. we have some sort of transformational change, and it's clobbering people, every single. day and then we come over to the housing side. we're getting pinched by higher rents. honorable mortgages. and we see the federal reserve having to raise interest rates because of the democrats are awash in runaway spending. as interest rates go up, it's even harder to go into a new home. it's harder to save three down payment. because inflationary pressure, the hypocrisy is thick. i appreciate you being here. madam chairwoman, i yield back. >> thank you very much, the gentleman from massachusetts, mr. lynch who is also the chair of the task force on financial technology is now recognized for five minutes. thank you, madam chair, thank you for having this hearing. this is probably one of the most pernicious problems they deal with in our district. i represent the other half of boston that she does not represent. we're struggling with housing costs all across my district. doctor -- i notice, looking at the housing data, that the applications for mortgages have dropped off considerably, but, and that is understandable with the rise in interest rates. i also notice that the number of people applying for and adjustable -- has basically doubled. i was there in 2008 on this committee and i saw what happened there when, you know, one adjustable mortgages reset and, you know, people got stuck. the valuations of the home were going down, the payments are going up, winded up with a housing crisis. had there been any protections available now under today circumstances there were not available then that might prevent us from going into a similar tailspin? >> thank you for the question, congressman. i think, as compared to the housing boom bust and financial crisis, there are a number of changes that been made in the market, the adjustable rate mortgages of today, they do not have the same risk profile as those majoring, you know, during the housing boom. we do not see teaser rates, we don't see rapid succession of resets. we don't see penalties on refinancing into a permanent mortgage. that being said, adjustable mortgages ultimately do reset. it is important that borrowers, particularly when they are aspirational borrowers, maybe income constraint, who are reaching for that hosing opportunity, when they're taking an adjustable rate mortgage, they are mindful of and well informed of the potential risks that those products present. >> i appreciate that, there are quite a few projects out there that are seven year resets. so, you know, the buyer has some time there. i think there is an open question of where will be out with interest rates in seven years and the value of their home could be exceedingly greater at that point, they might have a lot more equity, they could deal with it. mr. calhoun, is there concern out there is there a reason for me to be concerned about the increase in the number of adjustable mortgages? i mean, this has doubled pretty quickly in a matter of weeks, it spiked. so, is there a concern out there, is the reason for concern out there? >> thank you for the question, there is reason to watch it carefully. we are in a different world than the mortgages in 2008, which actually had built in increases even if market rates did not increase. mars to borrowers have trouble with shocks to their mortgage payments. i think, perhaps an even bigger risk that we face right now is that there is heavy marketing of cash out refinance is today. they come with the double whammy of not only are you doing that with a high interest rate, you are giving up, typically, a much lower fixed rate to get that. the regulators in our housing agencies need to be very vigilant to protect consumers from that kind of predatory lender loan flipping. i think that is a big risk we face out there. there are, they have done a good job of keeping protections on adjustable rate mortgages. again, this is a place where they have a hard time understanding the impact on increases and being able to absorb the shocks. thank you for keeping an eye on this. >> thank you, miss pope, do you have anything you add on that? i know you are keenly aware of this problem, i just would like to get your perspective. >> yes, thank you. i would like to add to that, you know when the home buyers or the homeowners are looking to get a raise and the higher price, our best advice, especially coming from the national association of real estate brokers, is to look to a housing counselor. it's a free service, educates them, it provides understanding of these mortgages so that they are not going to these default loans. we do have an affiliate and i.d., that's our nonprofit, we look to them to do these so that the homeowners can understand what they're getting. that's what i would add, mr. calhoun, to the statement. thank you. >> thank, you misspoke. madam chair, i will yield back. thank you again for having this hearing. >> thank you very much. the gentleman from south carolina's now recognized for five minutes. i know that 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, miss adams, is now recognized for five minutes. >> thank you chairwoman waters, ranking member mchenry. this is a very important hearing and i certainly appreciate your having it. thank you to our witnesses for your testimony. mr. calhoun, in your testimony, you cite the affordable housing shortages contributing to the issues that renters and buyers are facing. just yesterday, our committee held a hearing on the single family rental industry, the role they have played in snapping up starter price homes, further constricting the already tight market the homes that these firms are purchasing on, not surprisingly, concentrated in predominantly black 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. so, can you discuss why addressing the housing shortages imperative to improving housing security and homeownership opportunities for all americans? >> thank you for the question, representative. absolutely, particularly as others have mentioned, in the starter home market, it's where they are feeling the most crunch for supplies and available homes. should do is our that is where we're seeing a lot of these houses being picked up. the first thing we should do is our federal housing agencies, as well as the gses, should stop their auction sales of distress loans and properties. and instead put them back into individual homeownership, because when they auction them, even set aside programs for non profit, overwhelmingly, these go to institutional investors who are the ones who are able to afford to buy a whole pool of loans, that's where a lot of them get snapped i'm. they were also buying individual loans as you described there. that is a concern, and we need to both provide more affordable housing and not unnecessarily see it siphoned away out of the home ownership market and the affordable rental market. >> okay, that is what we can do to ensure that we don't see this transfer and housing and wealth from americas families to wall street, that is your opinion? >> that would be a big step and at least slowing that down. >> well, thank you, sir. i am proud to be the lead sponsor of hr 70 78, the lifeline act, along with members and senators leahy in collins, a bill that would already appropriate dollars to be used to support funding housing development, and would free up over a billion dollars in fiscal retiree, and for affordable housing. we have over 100 national and local groups endorsing the bill, including legal cities, conference of mayors, national association of counties, and the national association of home builders. so, i do want to encourage all my colleagues to sign on to this common slants legislation. in your testimony you concluded that we need a multi faceted approach to enhancing affordable housing supplies. can you briefly discuss how increasing the housing supply for public housing could immediately blunt the negative impacts to renters that we have observed? >> [inaudible]. >> i think there's some kind of problem madam chairwoman. >> i don't know where that sound is coming from. >> [inaudible]. >> -- >> [inaudible]. >> if it's helpful, i can take it while he's getting. yes. >> i think the sound is gone, were you responding to miss adams, mr. cohen? >> yes. >> please go right ahead. >> your bill 70 78 is a great way to leverage and expand one of the most successful programs with the -- for adding to sustainable an affordable rental properties. allowing it to use the office of, the fiscal recovery funds, it is a very efficient way to do that and we certainly join the endorsement of that bill and urged its enactment. >> doctor, thank you, we have 30 seconds. did you want to respond? >> yes, if you're able to hear me. i think, congresswoman, low come housing tax credits probably the most effective program we have in this country for addressing the housing needs for income constrain families. expansions of that program owed allow for increases in preservation of the low income housing supply are going to be absolutely critical. it's not a surprise to me that there is broad support for this program. >> great, thank you. madam chair, i yield three minutes and three seconds back. >> thank you, thank you very much. all right, the gentleman from south carolina, mr. norman, is now recognized for five minutes. is mr. norman back? >> madam chair, can you hear me? >> yes. >> okay, how about c? me >> all right, you're recognized for five minutes. >> thank you so much. first of all, thank you for this hearing. so goes housing, so those are economy. i think most of congress recognizes that. i've been building houses both commercially and residential for over 45 years. quite frankly, if the problems were having now, and i've heard a lot of people answers, the problems were 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 really wanted to get to the bottom of this, gas, high gas prices affects over 137 different subcontractors within the housing industry. subcontractors, -- the footing, people dig the footings, the painters, the architects, to have 100 and 6% increase in gas, that is what is driving your prices up. secondly, it's not being able to get workers. this administration paying people not to work is a severe problem. thirdly, supplies. i tried to order windows today. a simple window. guess what kind of timeframe we're talking about? 17 months. 17 months for a simple window. those of you who have an ear with this administration, beg them, let's start producing our own oil and gas, and let's get away from buying it from road countries like opec. i have heard a lot of the blame game going around. i have heard the theory that algorithms are involved. i don't understand that logic. i have heard the opinion that appraisers are a problem and that they appraise minority homes less. for those of you that have never done this, the banks, the lenders determine who the appraisers are, the appraisers don't know if they're going to a house of a white person, a black person, read person. they don't know that, they praise with a sea. the fact that i think miss pope that there needs to be more black appraisers, appraisers are needed everywhere. it doesn't matter the color of your skin. i have heard the theory that institutional buyers reduce homeownership and that somehow they are to blame. institutional buyers buy from that mom and dad who've owned the home for years. that young couple, who maybe owned a home for years, they want to sell. tell them that institutional investors are bad. they are just doing what they do best, which is invest in the capitalist success. they help the housing market. i have heard the question why can government get involved to make developers build on bigger lots? the simple answer is people don't want big lots, the reason want -- people rented a lot of cases, they don't want the headaches of owning a home. of keeping it up, of paying the taxes. so, the blame game is directly responsible, the responsibility of this administration, under the trump administration, homeownership forever and was an all-time high. quite frankly, if you want to really get the job done, you really need to talk to whoever is running this country and tell them, we have got to get oil and natural gas back. the blame game has got to stop. putin didn't cause the gas prices to go up. russia didn't cause it. santa claus did not cause it. it is this administration. there are policies that are killing the country. inflation is 100 percent tax on every american. regardless of the color of your skin. let me say this. we really need to have, i appreciate this panel. you need to be having, i would assess just having people who have been in the business. these armchair quarterbacks who have never done it it's like going to a doctor who's never operated. he's read about it, he's never operated. would you get on a plane with the pilot who has never followed a pain? he's right about. it i would suggest if you really want to get to the bottom, get people who have experienced housing at its basic level. they get the problem solved. i would just ask that we have more hearings in person. i apologize for the technical difficulties. the chair, i yield back the balance of my time. like he saw. >> thanks very much, we do decide who are witnesses are. so, that's it the prerogative of the chair. and my staff. thank you, the gentleman from michigan, miss to lead is now recognized for five minutes. >> mrs. pope, before the grass prices when, after we have a housing crisis? >> absolutely, yes. >> yeah, mr. calhoun, right, we have a housing crisis? >> we had a housing crisis and a shortage of production and housing by the national association of home builders, they describe this shortage going back at least 60 years. >> that's right. i think it's important to make sure we push against some of the gaslighting that continues to happen and understand this housing crisis is not going anywhere. has nothing connected to the cost of living. anything, corporate greed, price gouging, many of the political corporate donors that benefit from the high price, even though the barrel of gas is going, on the prices continue to go up. chairman waters, i cannot thank you enough, you talk to me that housing is infrastructure that. housing is a human right. i know during this pandemic, cash buyers, as we all, know have intensified bidding wars. driven up the housing prices. pushed many first-time cash strapped home buyers out of, you know, out of being able to have their own homes. according to red fat, cash buyers were more likely to win about bidding wars against buyers with mortgage financing in 2021. as many of you have already testified to. i know the urban institute also found that three and four homes though priced at or below $100,000 all purchased by all cash buyers and investors. this is very important to communities like mine. this disproportionately affected communities that i represented, more than half of the homes in my district right now, you all, valueless than $100,000. the urban institute has found that it's actually more difficult for borrowers to get an fha mortgage for home value at less than $100,000 then for a loan larger than $100,000. why? we know this doesn't make any sense. that countless home buyers, particular first time home buyers, are being locked out of being able to get home ownership. which really is a connection to economic stability and pulling people out of poverty. this is all impacted communities like mine in detroit. which is over 80% black community. this is resulted in michigan actually losing more black homeownership than any other state in the country. this is so important. so, mr. calhoun, fha borrowers are at -- the home buyers as you know it. impacts people like, in my community, and average, they have less financial flexibility and lower down payments. how can we get the fha financing improved? how can we make it as competitive financing option? >> thank you for the question, first of all, great leadership. great leadership with the former senator for responsible lending in loan. really gordon that fha, totally committed and her career to doing this. a bunch of it is just plain resources at fha. again, by statute, they don't get to use any of the fha premiums for operations. that's to insulate the reserve fund. that means they are totally dependent on appropriations and are tremendously underfunded compared to comparable private enterprises. so, first of, all they need those resources. but they do have a number of initiatives underway. they were able, thanks to summit procreation,'s to upgrade their technology. which will save them in the crisis. >> yeah, i do have, you know, hr 15 32. which is in the senate, it actually directs to be able, there is no you, no, there's no financial impact on this. to be able to look at best practice for fha. to be able to look at these as mortgages. professor, tanden, should we expect this trend to continue? going upward. what can the federal government do to ensure that homes get into the hands of you know individual home buyers instead of these private equity firms. llcs, swelling them up. >> i think the key issue emerging from the data that we have available, while there is a pool, there's a pool of buyers that are positioning homes for the rental market that would otherwise be available for ownership. it is a very mixed, we should not conflate the larger pool with that very large private equity. investor that in fact accounts for only two and a half percent of the buyers. but i would suggest is that when we're thinking about the rental supply in this country, ensuring that we have a diverse supply of rental opportunities. whether it be urban departments, would be single family homes, where someone wants to benefit of being able to live in that home. also making the trade-off, they don't want the obligations of ownership. they're willing to trade off the benefits that come with ownership is. well making that in an informed. way addressing the supply issues. we look at what is being built, the average home under construction today's 2500 square feet. that is not within reach of many aspirational buyers. addressing many of the challenges we face at the local level. to ensure that we're able to build smaller homes that are within reach of some of those otherwise single family renters is critical here. >> thank you so much, i yield, madam chair. >> thank you very much, the gentleman from -- the gentleman from pennsylvania, miss dean is now recognized for five minutes. >> thank you, madam chair. are you able to hear me? i've had some technology problems. >> yes, we can hear. you >> wonderful, thank you, thank you for hosting this important hearing. doctor troy, i would like to start with you. i was struck by your testimony that unless we take action that you said the black white home ownership gap and remain unchanged for 20 years. obviously, we can't sit back and do nothing as policy makers. we have an obligation to try to correct that and close the gap. my district is montgomery and berks county. suburban villa philadelphia. in my district, white homeownership is at a 76% rate. while black homeownership is at a 45, almost 46, percent. according to the national association of realtors. when in the black white homeownership gap at more than 30%. simply unacceptable. we need to take actions to address this tremendous disparity. we know how important homeownership is for families to build wealth. it is not just about having a place to live. it is about being able to have your kid pay for college. to retire with dignity. one of the policy solutions he put forth to address the home ownership gap is targeted down payment assistant programs. i'm proud to be a close sponsor of the down payment towards equity act. which authorizes a new grant program to assist first time first generation home buyers. in purchasing a home. i would love to see people in my's district taking advantage of this. doctor choy, can you talk about how targeted down payment assistant programs such as the proposed hr 44 95 would address the racial wealth gap? >> yes, thank you for the question. the existing program, a lot of them are in come only criteria. [inaudible] the first generation criteria on top of income to actually expand the black and latino households to -- take advantage of those programs. i do acknowledge that in this current market where the home prices are really heated up under the supplies restricted. a lot of people even with down payment assistance programs are really finding it difficult to become honer's, because they are not competitive enough. i do think this policy will have a longer term impact. because it better targeted. but i don't think it will have like inmate income, in the long term, it is one of the policies that can really, really make a change and better targeting black and latino households. who have been discriminated in the housing market for a long time. and i don't think if we come to a very clever way of not trying to distribute money all at the same time, it wouldn't really increase the inflationary pressures. so, if we actually do it in a very clever way, i think long term, then it can actually do a better job of targeting the people who do not have a rich uncle that can support them getting into the housing market. and a more equal society. i do think that this can also have an impact on improving the economic health and resilience of our bone will communities. when the pandemic hits, when the inflation goes, up it's the renters who are hit more harder. because their rent prices go up very fast. if you are a homeowner, you are actually secure in paying the amount of mortgage payments over a long period of time. you are less volatile to the economic shocks. so although there could be some differences in accessing homeownership if a person is disadvantages because they don't have wealthy parents, we do have to fix that issue i do believe that the targeted down payment program is a long term possibility. thank you. >> thank you, and the remaining time i have, miss pope, 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 protected kitchener, correct me if i'm wrong there, can you speak to this, what can we do to mitigate the effects of the current conditions, particularly for minority households? and from your practice, from your work, what do you hear about preferences and the desire to be home owners instead of renters? >> thank, you i'll be quick. the down payment programs, they are very important for black americans as we try to get to homeownership. also, we are dealing with the elimination of low level pricing adjustments. that has been a challenge with the credit score and because a percentage points. it has pulled us out of that. also, with the appraisals, we mentioned earlier, we are on the front lines of appraisals. you know, there's been biases, there's been documentation as a pertains to the appraisals. biases that come within the black industry. as well as what i like to say, student loans. if we can bring that to a level where it's more affordable, blacks would be able to buy a home. >> i see my time is up. thank you very much. i yield back. >> thank you very much, the gentlewoman from georgia, miss williams, also the vice chair of the subcommittee on oversight and investigations is now recognized for five minutes. >> thank you, chair waters for first holding this very critical conversation. it means so much to me for my constituents atlanta and the rest of the nation. my hometown of atlanta, unfortunately, leads the nation in the race a wealth gap. on surprisingly, it also leads the nation and the percentage of a home bought by investors. home ownership is tied directly to the ability to build generational wealth. when individual homeowners are left out of the market by investor purchases, they have fewer opportunities to buy homes and build a type of generational wealth that will help close the racial wealth gap. not only atlanta, but across the country. so, doctor, troy listening to your testimony and the conversation that you are just having with todd representative dean, i'm wondering what specific investments can we make to put into a home buyers on more equal footing with private equity investors? >> yes, that's a really great question. one of the things i would like to also to point out about the. impact of institutional investors. there are various research, but particular in atlanta, there has been recent research, institutional investors are so prevalent. nationally, they might not have a large impact. in santa, specifically, we do find that increase in institutional investors, especially right blocks, and ownership -- >> unfortunately, atlanta is at the top of that list, dr. choy. >> i think the data is really concerning. so, i think we talked about the down payment assistance program. i know that some letters are also 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. i think sbcc p is another good way to bridge the racial equity gap in this country. another thing that i think is important. i know that there is a move in this space of thinking about including rental payment data into mortgage underwriting. one of the things that we also see from the data, more greater share a black and a spanish households do not have fico scores. they have lower ficus. floors if you actually include rental payment history data into mortgage underwriting, our research does show evidence that this does disproportionately help households of color. so, i know that there is some movement in the space but we also encourage more consideration of including rental payments and mortgage underwriting. >> thank, you doctor toy, and that is something that we're absolutely working on under the leadership of chair waters and this committee. i just had an amendment last week that will do just, i allow consumers to opt in at the rental history to their credit scores. also, during the pandemic, the percentage of home sales to first time home buyers has been much lower than the five year average percentage, so, doctor toy, what does this mean for a long term homeownership trends and our ability going forward to address inequities in homeownership? >> yes, i think homeownership is very unique because it's pretty much like a way to build long-term wealth and water research shows 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 black households and black people are less likely to buy homes earlier in their life. so, that is one of the reasons that it's not just access to homeownership, it's the age of accessing homeownership, and sustaining homeownership, all that factors into the wealth disparities. as we mentioned again and again in this committee, it's that homeownership and wealth transfers from parents to children. so, this is not just like one family issue, it's actually creating intergenerational wealth inequality, and that's a key reason that we have persistent racial disparities in this country. >> thank you so much, dr. toy. increasing homeownership, especially among black home buyers is not guaranteed without meaningful policy interaction. doctor dwight, your organization estimates that homeownership could decline by 2040, especially for people who look like me, if action is not taken. can you explain how this projection was reached on what's tapes can be taken to expand government backed loans to first time home buyers particularly black borrowers? >> yes, one of the things that i also wanted to point out about this research is that this is before the pandemic. we did not incorporate the impact of the pandemic. if we actually do, there is a high likelihood that the numbers would look worse overtime. so we do see that every time there's an economic shock, it is actually the communities of color that are disproportionately harmed. so, the pandemic great recession all show evidence that when their economic situation is negative, then people of color are most impacted. we did a projection by looking at the past data, so this is a projection of how households information and income all factor into access to homeownership. and we do find that because and also because, again, homeownership, sorry. >> doctor toy, and fortunately, i'm out of time, i was so intrigued by research that only following up with additional questions. thank, you madam chair, for hosting this. i yield back the zero time they have remaining. >> thank you very much. thank you very much. i'd like to thank our distinguished witnesses for their testimony today, without objection, all members will have five legislative days within which to submit additional written questions for the witnesses to the chair, 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, again, i thank you so very much, and this hearing is adjourned. agriculture secretary, tom vilsack, testified on opportunities and challenges facing farmers and rural communities. he also alliances agencies action to address the baby formula shortage. the senate agriculture committee hearing runs about two hours.

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