[inaudible conversations] the hearing is called to order. I dont know why we faced discussing the house right now. I know we have excitement in her chamber but i want to welcome everyone to does very important hearing and im really excited to hear from our witnesses. At that like to thank Ranking Member lee and his staff are working with us to plan this hearing. So everyone looks at their first house fondly and tape it to first place they have live. For me in 1960 my parents wallpaper the last room wallpaper the last room in their house on a dirt road in plymouth, minnesota. I still remember the whole time growing up we lived in the same house and it had exposed wood ceilings. I had no dishwasher to the end but it had wood ceilings and my grandma who in the iron iron range said would come down to the cities to see the house and every single time my grandma mary klobuchar would say to my mom and dad when he is going to finish the ceiling . The brightly appliances yellow ovens was all part of our lives. My dad paid for that house with the g. I. Loan and today i think we all know that houses are not available to many young families in the same way that my parents could afford them on a teachers salary and a news paper reporter salary. In 1960 the median home value of 11,900 but thats about 123,000 in todays dollars. This was a course in the midst of the postwar housing boom. Today the median singlefamily home costs more than 40,000. If you look at it across america but but this is an increase of e than 500 since 1980 and more than 40 since 2020. I think we know why this is. Affordable options. Freddie mac estimates we need to build 3. 8 million new homes to make up for the housing deficit and according to the National Low IncomeHousing Coalition the Affordable Housing for those with low incomes is more than 7. 3 million. The no rent have always gone up, jumping more than 12 since august of 2022. And in some 20 million households its more than half of their income on housing. So what do we do . Affordable housing crisis involves complex longstanding issues. Many of which are the focus of our colleagues in the banking housing and urban Affairs Committee chaired by senator sherrod and my colleague of the subcommittee. We know issues of workforce the cost of building housing in the Component Parts but today we are going to focus on the role that competition policy changes plays to help address these market failures. Some of the issues i will put on the table that are relevant are renters face real challenges to address the crisis. More and more of the cost through the proliferation of junk fees. All rental struggle to take advantage of price competition because the true cost of housing are not transparent. Second housing is an area in which we have seen of pricing tools designed to raise prices even at the expense of higher rates and a growing number of Companies Offer services that collect competitively sensitive pricing information from competing Property Management committees and feed that data through the algorithm and recommend unified unit prices so landlords can can charge certain rents. Landlords landlord to figure out that its better for them and their bottom line to use these products to price units high so some of them said they its but its easier to have them priced tie for them in the long term. I believe landlord should be competing on price and i dont thank you see that happening when you have this algorithm based game going on. The third families are being boxed of the market for singlefamily homes by Institutional Investors and thereve been wide range news reports about institutions Institutional Investors will buy a pump the neighborhood taking it out over reach especially for firsttime homebuyers. They are often backed by a large equity funds seeking rental income instead of allowing families to achieve the dream of homeownership. The presence of these institutional actors drive up home prices because they can make offers and waived inspections. Unlike momandpop landlords these owners are more likely to charge fees and increase instability in our communities. Finally the fact that we are building enough Affordable Housing in the number of starter homes being built at plummeted since the 2008 financial crisis which put hundreds of thousands of small builders out of business. This is left as relying on fewer and fewer largecompany homebuilders to dominate homebuilding in major metropolitan areas. The builders focus on highend homes rather than starter homes to consolidation in the homebuilding market has been shown to reduce the number of new homes built by more than 100,000 houses every single year. While we recognize the competition policy is no Silver Bullet and i will emphasize that as youve talked about im sure some of the other issues. While its no Silver Bullet resolving our Affordable Housing crisis we shouldnt dismiss it and we should at least explored and look at what solutions we can agree on. The antitrust laws were used in the 1960s to make sure there was fairness in sales of homes and we now need to examine whether antitrust and Consumer Protection laws need to be updated to eliminate junk fees from rental market without anticompetitive tools that facilitate price fixing instead of competition and ensure the market is more responsive to the increased demand for housing. I look forward to explaining the issues with my colleagues and our esteemed Witnesses Today and i will turn it over to the senator. Thank you madam chair and thanks to all of you for coming. This is an important issue and an important hearing. Millions of americans across the country including so many in my home state of utah are paying significantly higher prices to own, rent or otherwise live in the home and 2023. Homeownership is further out of reach for an americans than it has been at any other time in modern history. This has created problems that we hope to address and discuss today. Just since july of 2021, over two years ago affordability of the home has declined significantly during that narrow timeframe. According according to the homeownership Affordability Housing accounted for 28 of americans immediate income in january of 2021. Thats a lot of money up from what it had been a few years earlier. It used to be much lower than that but its a sizable chunk people are spending and a third of their income on housing. Lets look at what has happened since then. Its jumped a whopping 44 in september of 2023. These rates are worse than those seen during the financial crisis of 2008. Homes are less affordable today than at any other time since we started keeping track of this particular set of records back in 2006. We have never seen anything this bad since we began keeping records. The mortgage payment a mortgage payment and median price thomas more than doubled in just two years. And 2021 it was 979 but today that payment is 2059. It cost the family almost 13,000 more per year to live in the same house than it did just over two years ago, 2. 5 years ago since our current president took office and with record highs Many Americans have limited Housing Options available to them. Americans are spending 44 of their income, close to half of what they make on housing and 13,000 more per year than they did just two years ago. Yet that leaves families with fewer resources and less savings left over to pay for basic essentials such as groceries, gasoline, cars all of which have become dramatically more expensive at the exact same time that housing has become unaffordable. So less ability to pay for these basic needs. The money left over from anything else whether thats an emergency or an aunt for seeing expense related to a car repair or health condition. A Family Member has a desire to go on a Family Vacation or buy something that the family needs. There isnt room for because Everything Else has been taken out. The increase share of the familys income is on housing and they take on even more debt to make ends meet in this and turn over time leads to more bankruptcies. Many failures may contribute to the sudden abrupt and severe rise in housing costs. We have a number of things that we could look at but the first one i want to mention involve state and local regulations which account for a significant constraint on housing supply. Anytime we look at the price of a particular thing, whether its a good or service or something as basic as a home you have a look at supply and demand. And how those two interact. These regulations impose significant constraint on housing supply. At the same time when demand is hardly going away and in many states like utah is increasing rather abruptly and dramatically. Cities across america residents are burdened with over burdensome land use regulations at the federal state and local level and these regulations decrease the housing supply and in many cases directly prohibit Housing Development, increased cost, create uncertainty and create significant delays. For example the formidably furthering their housing row originally adopted by the obama and mr. Zhang increased the cost of housing by an additional, by adding additional zoning restrictions. Those restrictions arent always things that show up as obviously the product of federal action. They translate into these local units of government, adopting new regulations, new restrictions in response to the rules. They have the comply with those rules in order to continue receiving federal funds. For example under the Community DevelopmentBlock Grant Program it appears that the same will be true of the bidens version of the same role which is not taking effect but will soon. Americans are suffering from extended period of high inflation generally which has been virtually acute in the Housing Market. Throughout 2021 the inflation rate jumped to as high as 9 . More than four times the Federal Reserve target inflation at 2 . In large part due to federal spending and irresponsible monitoring policies. Home prices rapidly increased over the last five decades. Eclipsing the inflation rate by 150 since 1970. Fact if home prices grew at the same rate as inflation since 1970 the median home price today would be just 177,788 rather than 408,100. Finally the federal Government Land ownership is also a critical factor especially in parts of the United States and like utah or home to vast swaths of federal land. And 2021 the states with the highest increases in home prices yearoveryear were not coincidentally arizona at 20. 8 , idaho at 28. 7 in utah at 24. 5 . It comes as no surprise to us in the west the federal government owns a large percentage of our land. In utah the federal government owns about 67 of all the land in utah. Thats twothirds. A small portion of this land consists of. National parks. Most federal and the list is managed by the bureau of Land Management or the u. S. For service and most of it doesnt look like the picturesque views gave to see associated National Parks. Its just land. Land that the federal government owns and refuses development on and used to lock people out access of all kinds of things including on occasion property. The United States has a record shortage of homes and 2021 the states with highest increases of home prices were located in the west. Finding available land to increase housing supply is a real struggle. Its very difficult. The money is not there because we dont have much of this rare commodity known as private land. You have kept private land to build houses. Ive introduced a bill called the house act to create a process by which local communities could blm managed land to be used to quickly address housing shortages and availability and holdings that are and are immediately outside of the city or town a place where people live. The houses act would help solve the housing scarcity by allowing federal and to be purchased by state or local government at a reduced price giving them much needed flexibility to address housing constraints. It would require that land be subject to a density requirement that would protect against the development of extensive second homes purchased from the federal government of the issue. In utah there almost 23 million acres of federal land that happened to be managed by the bureau of Land Management in the state. It accounts for 43. 24 of the total end of the state. Typical home prices in utah have increased by 89 just in the last five years, 89 in five years. If just 1 of the acreage in utah managed by the bureau of Land Management in my state were made available for housing at leased 774,000 additional homes could be built. Writ large families in utah reproduce rapidly so we will need those homes. This is intended to examine some of the factors contributing to increased costs of home specifically some of the members of the subcommittee might be old to help mitigate or potentially eliminate and i look forward to this conversation. Thank you. Very, very good. We have been joined by senator blumenthal returning at 3m after trip to the middle east so total debate total devotion to her subcommittee. We have with us are witnesses. Dianne yentel is with the Housing Coalition has worked in Affordable Housing for over 25 years. For nasa calder is the director for opportunity and family policy studies at the cato institute. She previously served as executive and staff director at the joint Economic Committee under senator lee. Luis antero is an assistant professor at Johns Hopkins have Business School with a ph. D. And economics from Carnegie Mellon university and his research focuses on the real state economics and Housing Affordability. Ej antoni is a Research Fellow at the Heritage FoundationHermon Center for the federal budget and Maurice Stucke is the douglas plays distinguished professor of law at the university of tennessee and her teaching and research focuses on competition and antitrust law policy and he recently served as a Senior Adviser to the ftc and has years litigating antitrust matters with the department of justice. So with that im going to swear in the witnesses. Here we go. Do you swear the testimony shall be the truth the whole truth and nothing but the truth so help you god . Thank you. You can be seated. Now we will begin safe get started miss yentel pitts chair klobuchar Ranking Member we can senator rob thank you for the opportunity to testify today. Across the nations lowincome renters face severe shortage of affordable and available homes and a significant gap between incomes and housing costs. Theres a National Shortage of 7. 3 million homes that are affordable and available to low income renters for the shortage of longstanding structural feature of the countrys housing system consistently impacting every state in nearly ever committee. For example and senator klobuchars minnesota and rank member lee state of utah there home without Affordable Housing options more than 10 million of the lowest income renters are disproportionately people of color to it least half their limited income on rent leaving them without the resources they need to put food on the table purchase needed medications or otherwise make ends meet putting them one financial shock away from in the worstcase homelessness for low wages have risen in recent years these gains have not closed with consistent and significant gaps between incomes and the rising cost of rent. During the pandemic will say makers responded the growing threat of housing and security by providing unprecedented support to keep renters house. These protections and resources cut evictions in half lowered eviction battle enraged the lowest on record and kept millions of people who otherwise would have lost their homes during the pandemic stably housed but just as these emergency resources are completed and winter protection expired renters reentered the Housing Market with skyrocketing rents and high costs. The gao found that every 100dollar increase in median monthly rent is associated with a 9 increase in homelessness in that same community. In 2021 in the first half between 20 to rent increase by 200 a month and as a result the rates have reached or surpassed prepandemic averages in many communities resulting in increased homelessness. Even with the stabilization of rental prices this year the rapid inflation we saw during 2021 in 2022 has done significant damage to affordability especially for the lowest income renters. Medium rents a newly homes where 20 higher than the beginning of 2021. Rent increases are driven by several factors including a growing demand for rental housing in limited supply. Rent increases can be attributed to a mostly unregulated rental market with you 10 that protections especially in markets where demand outpace supply landlords raise rents as high as the market will allow without regard to impact of the lowest income in addition to high rent land