Hours and 20 minutes. [inaudible conversations] the subcommittee on housing and insurance will come to order. Without objection the chairs other is to declare a resource recess from the anytime. Without objection on members have five legislative days to submit extraneous material to the chair for inclusion in the record. I now recognize myself for five minutes to give an opening statement. Today the subcommittee will hold a hearing to discuss the lack of Affordable Housing in many communities across the country. In particular we will examine governmental barriers as well as marketbased solutions to bring down the cost of housing. Americans spend more in housing than any other household expense representing 33 of that the familys budget. Historically. Families in many areas of the country would love to get back to that level. The rising home prices and rents as far exceeded, as far exceeded the rate of wage growth, so in cincinnati of iowa city once consider affordable to medium home prices 2,270,000 which is approaching four times the annual median Household Income. Such on affordability is spreading far beyond parts of the country in the high cost of living like new York San Francisco washington d. C. Nationwide median home prices are six times the median Household Income. Historically the advice was three times. So this is maybe one of the most emblematic markers on the lack of Affordable Housing. Thats why the committee has held multiple affordability hearings. Last spring on President Bidens misguided policy of increasing mortgage costs on creditworthy borrowers. That idea was an insult to affordability and the house responded by passing her middleclass borrower protection act to eliminate harmful cause and the senate has so far failed to act. The market is facing similar challenges renters are now cost burden than theyve been in over two decades. While rents have gone up in some areas by doubledigit growth in Median Income for renting households went down between 2019 and 2021. For many housing is becoming unattainable across the country. One in three young adults age 18 to 34 still live with parents. This impacts their ability to start a family, build wealth and contribute more intentionally to the national economy. Seniors with fixed incomes and the burden of increasing Health Care Costs are even more cost burden than ever when it comes to housing. In rural areas where land is abundant price pressure still exists. As we confront these affordability challenges which seems to get left out of the conversation and all that expensive efforts of government have not solved this problem. Back to they have added some solutions for neither marketbased solutions where we have remove government barriers construction of housing and encourage privatesector investment in housing. Many of my colleagues on the other side of the aisle in particular are likely to see things differently and suggest suggests we have more government war rules and more spending. Maybe thats their measure of success. I hope we focus on affordability. These solutions have been pushed for years and its interesting they are the same affordability crisis and it continues to get worse but not only have those policies fail but it seems the bite of frustration wants to avoid congressional accountability for the failure of their policies and oversight. Case in point from ostia the committee has requested a housing and urban Development Secretary marsha fudge discusses the Housing Affordability plan. Since may the committee offered it every month the secretary make an appearance here only to have her repeatedly declined to testify for outright refused to respond to our request. If the silence is a poor response to the crisis. Their government operates a special and has to do with their ability to birth a ford housing. Ensuring accountabilitys one of purposes of this committee and i hope the secretary will finally agree to appear before committee next year. In the meantime even without the demonstrations input this committee will continue to explore how Government Policies are contributing to the high cost of housing in what privatesector efforts can do to address the critical issue for those most in need. I yield the balance of my time and i now recognize the Ranking Member for this hearing ms. Presley for four minutes. It shouldnt be news to anyone that we are housing crisis. Millions of americans in urban suburban and burr neighborhoods are finding shelter to be in increasingly unaffordable. Homebuyers are facing record high home prices and millions of renter households are cost burdened. Amounts of income on housing. Several factors to Affordable Housing democrats and republicans agree on the need to address barriers to increasing Home Construction but that is not enough. The joint center for housing studies at Harvard University testified before Congress Even if measured such as zoning reform and land use policies they will not be sufficient to bring down the cost of housing within reach of the lowest income americans. Central to the question of how to address the Affordable Housing crisis is answering the questions, of portable to whom . And to close the Affordable Housing gap to lobree come households there needs to be development in rental income over time. To put this clearly expanded public subsidies will be needed to increase and preserve access to Affordable Housing for millions of americans. I believe housing is infrastructure. We must adequately support and fund federal programs that have been successful in expanding Affordable Housing access but its vital to continue to strengthen and improve others but but this includes federally subsidized housing. I also hear from my constituents across massachusetts a quarter of all residents have had their income spend their income or more and housing. Boston is the second most expensive city to rent in. The median rent for one bedroom apartment is over 3000. 3000. Between 2011 and 20211 data shows the cost of a Single Family homes shot up 226 . I hope today we can have an honest conversation about the Affordable Housing crisis and the extent to which publicprivate and publicprivate solutions are adequate to address these challenges. I look forward to hearing from our witnesses today. I yield the balance of my time. Thank you. Today we welcome the testimony of Seth Appleton the president of the u. S. Mortgage insurers. Dr. And multihamilton is a Senior Research fellow and director of the urban project at the mercado center. Mr. Mitchell is the Vice President director of the center for monetary and financial alternatives at the Cato Institute. Arianna royster, ms. Royster is the present of she is here on behalf of the National Apartment association. And diane yentel. Ms. Yentel is the presidency of the low Income Housing coalition. Thank you for taking time to be here and without objection or written statements will be made part of the record. Mr. Appleton you are recognized for five minutes to give your aura remarks remarks. Thank you chairman davis and Ranking Member pressley thank you for inviting me to testify today. Its great to see my longtime former boss mr. Luetkemeyer on the subcommittee. The previous step i served in policy was including assistant secretary of hud and now president of the u. S. Mortgage insurers. Though companies in the market every day to plan private capitol to ride access to mortgage financing primarily to firsttime low to moderateincome buyers will sum up things they protecting taxpayers from credit risk. But we cannot solve the scarcity of Affordable Housing supply in for hayek as trades we can solve for what its has been the primary impediment for many borrowers the need for large cash down payment. With private and my homebuyers can put down as little as 3 to build intergenerational wealth as homeowners. We are critical partners to lenders agency and another Son Initiative to sustainably be get access to homeownership are getting with a 1. 5 trillion in mortgages are back or private and my improper diet provides borrowers access to incredible credit also protects lenders and taxpayers from credit risk by deploying private capitol. One prominent example is the way private and my his help to derisk the gsa. The conservatorship private and my sustained 60 million in claim and every dollar paid by a private demise of dollar to the taxpayers who stand behind the need to pay. The mouse is from the urban institute found that severity of gse loans without private and my was 11. 2 higher than the severity of losses for loans with it. To that end if Congress Takes up gse reform maintaining the congressional charter provision and establishing standard coverages as a requirement would ensure private capitol would contain just the support safety and soundness and system production talk briefly about steps policymakers could take to ensure private and my supports affordability. While conventional mortgages backed by private mi is most utilized option for low down payment borrowers several u. S. Government agencies directly insure low down payment loans by the federal housing administration. We recognize that target the role of fha and the taxpayerfunded backstop. Its an important complement to private mi work particularly those who may not have access to the conventional market but that Government Agency backed by taxpayers cost of capitol required capitol levels is significantly different than those in the privatesector. Policymakers should permit promote consistent and coordinated that prevents undue competition between different programs in the privatesector. Private capitol is needlessly crowd of the marketplace by governmentbacked programs and leads to increased risk to the taxpayer. In the conventional market that programs can shift risk to the taxpayers who would otherwise be formed by private capitol. Fhfa finalized a rule on approval of products which members of this committee take an interest. We believe papal invitation results in proper oversight and more transparent process for approving new products. One other area of concern is recently proposed basel iii in game resolution. Members of this committee of rightly observed the proposal would negatively impact the ability of certain banks to originate and hold high loantovalue ratio portfolios. U. S. Bank capitol grill should recognize the risk to mitigating benefits of private mi and promote a level Playing Field among the Government Programs and portfolio execution. Whatever Action Congress could take up to this committees jurisdiction is to score in income tax reduction available for textures 2007 at 2021. Congressman buchanan and panetta have legislation to do just that. The act of which several members this committee or cosponsor. Id be remiss if i didnt thank members of the committee for their work with the fec and the conflict of interest rule. We greatly appreciate your engagement on this issue. To close mi inc. Urges policymakers to continue recognize the Important Role private mi place and the protection affords to lenders and the stability of the overall finance. Thank you. Thank you mr. Appel tempered dr. Hamilton you are recognized for five minutes for your full remarks. Thank you chair davis and Ranking Member pressley emirs of subcommittee im Emily Hamilton a Research Fellow at george mason codirector of beer project that local governments have imposed numerous limits on what kinds of housing can be built where. Zoning rules including bans on multifamily housing restrictions on manufactured housing and requirements for minimum lot size can limit how much housing the market can provide and drives up the price of housing. These rules are contributing to securing affordability. While the share of households that rent has held steady since the 1950s the share of income of median renter has increased by 25 pay privatesector homebuilders can play a primary role in addressing this growing affordability problem but only with zoning out of the way. Ill provide two examples of landuse restrictions making it infeasible to build for housing at lower prices. First minimum lot size reduction second multifamily construction for development in the washington d. C. Region and third legalization of units in california. First reducing minimum lot size requirements. In 1998 policymakers reduced minimum lot special permits from 5000 square feet down to 1400 square feet within the citys interlude. These are forms set off a boom in small lot singlefamily construction. Based on success within the interlude policymakers needed this or form to cover the entire city in 2013. Nearly 80,000 small lot houses have been built since then. The median house price is lower than the National Median despite decades of higher population and Economic Growth than the country as a whole. Thats in part due to the small lot construction. Second allowing transit to develop in the washington d. C. Region. Ill be the first to say that the d. C. Region has plenty of opportunity to reach barriers to new Housing Construction however relevant to most other highend coastal regions here we excel at permitting multifamily construction particularly along transit corridors. Beginning in the 1960s officials in Arlington County virginia began planning for multifamily construction in areas that were originally developed with lowrise commercial buildings. In part based on arlington success policymakers in Montgomery County maryland and Fairfax County virginia have also embraced development and more limited areas. We see them follow suit allowing new neighbors to be built in Industrial Areas like the navy yard. Among the regions where many of the countrys highest paying jobs are located including boston, los angeles new York San Francisco seattle and washington washington has the lowest median house price in one recent is because it permits multifamily housing a double or more the rate of boston los angeles new york and San Francisco. And third legalizing accessory units in california. Given the growing housing supply and affordability problem americans are facing state policymakers are beginning to set limits on localities to Housing Construction. California are these challenges are the most dire have led the way. The state has been particularly successful in legalizing accessory dwelling units. Youre typically small apartments located at the site of a singlefamily house. In some parts of the state most notably los angeles adu construction drastically accelerated following these reforms in 2017. Today one in four residential permits in the city of l. A. Is four and a duo. To wrap up local zoning rules are a key contributor to the u. S. Housing affordability challenge. Zoning rules limit Housing Construction especially relatively low cost Housing Construction. Examples from across the country show that where policymakers have lowered these barriers Housing Construction is increased. Places that are more open to Housing Construction and improved affordability compared to their peers with more barriers in housing. The private market can improve access to housing and reduce house prices when and where its allowed to. Thank you dr. Hamilton. Mr. Michelle you are recognized for five minutes for your oral remarks. Good morning chairman davis and Ranking Member of pressley and members of the committee. Im Vice President and director of the center for monetary international alternatives at the Cato Institute and the views i express here today are my own and should not be construed or representative up any official position of the Cato Institute. My test was the best way for the federal government to make housing more affordable is to reverse course on longstanding federal policies. Its true that home equity frequently represents a large portion of Many Americans wealth but it does not follow the federal policy should promote homeownership or especially housing. In fact home equity pitch and this depends on price appreciation and at odds with Affordable Housing. Federal policies make housing as well as other goods and Services Less affordable. Particularly because they artificially boost demand and inherently supply constrained markets. Over proxima in the last decade growth r