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NCSHA Washington Report | May 3, 2024

Published on May 3, 2024

NCSHA Washington Report
Treasury Secretary Yellen recently expressed optimism that “the single largest contributor to inflation is going to be moving down over this year.” She was referring to housing costs, or “shelter inflation,” which for a year now has accounted for half or more of overall inflation.

Without disputing the conventional economic wisdom that “housing supply restrictions also exacerbate inflation,” so more new construction is needed to reduce prices and rents — especially at broadly affordable prices and rents — we’d observe that it’s escalating “ownership costs” that are top of mind for many families and landlords.

For homeowners:

  • Insurance premiums, for which “even a slight uptick … can disproportionately impact very low-income borrowers,” are up more than 40 percent on average for all owners since 2018, according to Freddie Mac.
  • Property taxes “took an unusually high turn upward last year” around the country, an ATTOM study found, with exceptional increases in markets from Charlotte, NC (31.5 percent), to Indianapolis (18.8 percent), to Kansas City, MO (16.8 percent), to Denver (15.7 percent).
  • Home energy bills were missed at least once by 38 percent of families earning $50,000 or less during the last 12 months, a 10 percent jump from the previous 12-month period, a survey by the National Energy Assistance Directors Association showed. “Similar patterns were shown for families that reported foregoing basic necessities to pay their energy bills as well as keeping their homes at an ‘unsafe temperature.’”
  • Home maintenance fees are up eight percent overall and emergency repairs of as little as $500 would force nearly 20 percent of homeowners to take on credit card debt, according to surveys reported in the Wall Street Journal. (The Philadelphia Federal Reserve Bank estimates households earning $55,000 and below have accumulated repair needs of nearly $30 billion.)

For apartment owners:

  • Property insurance premiums increased 28 percent on average nationwide (nearly 36 percent in the Southeast) between April of last year and last month, according to Yardi Matrix, increasingly forcing “reductions in services for residents and deferral of repairs and capital improvements” for some owners, said Michelle Norris of National Church Residences.
  • Maintenance and repair costs spiked by 22 percent for Housing Credit property owners coming out of the pandemic. (A 2023 survey of apartment owners responsible for 2.7 million units found more than half planned to defer or cut back on property improvements as a result of rising insurance costs.)
  • Property taxes and utilities are also up sharply for landlords, according to the National Apartment Association.
  • Labor market challenges, which the National Multifamily Housing Council notes have “plagued the industry for years,” now increasingly include “rising labor costs, resulting from both raises for existing employees and higher wages needed to attract new staff,” according to the Federal Reserve Bank of Minneapolis.

While opportunities for generating more resources to support new affordable home and apartment construction remain in focus for state housing finance agencies and their partners, the reality is that more supply, whenever it comes, cannot be the only answer to shelter inflation.

A more holistic view of the high housing costs experienced today by low-income homeowners and renters, and housing providers, and more comprehensive solutions to meet them are sorely needed.

Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

In This Issue

NCSHA Joins CARH, Others in Letter Asking House Leaders to Support Rural Housing Reform Bill
Last week, NCSHA joined the Council for Affordable and Rural Housing (CARH) and other affordable housing advocates in sending House Financial Services Committee leaders a letter in support of H.R. 6785, the Rural Housing Service Reform Act of 2023. The legislation would allow the U.S. Department of Agriculture (USDA) to authorize permanently the demonstration program established in fiscal year 2024 to decouple units receiving Section 521 rental assistance from properties with expired Section 515 mortgages, preserving their affordability. H.R. 6785 also would authorize increased annual appropriations to USDA for additional staff capacity and information technology improvements. The letter calls on the committee’s leaders to support H.R. 6785 and to hold a hearing and mark-up on the legislation by the end of spring.

FHFA Posts New Fair Lending, Equitable Finance Rule; Seeks Input on GSEs’ Equitable Housing Finance Plans
The Federal Housing Finance Agency (FHFA) Monday released a final rule formalizing many of the agency’s recent efforts to ensure Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (FHLBs) support fair and equitable housing. The rule requires Fannie Mae and Freddie Mac to publish and maintain equitable housing finance plans outlining the activities each firm will undertake to support equitable access to affordable and sustainable housing; the GSEs first published such plans in June 2022 at FHFA’s direction. The rule also enhances FHFA’s ability to supervise Fannie Mae, Freddie Mac, and the FHLBs for potential fair housing violations; requires each entity to submit annual fair housing compliance reports; and codifies a 2022 FHFA mandate that Fannie Mae and Freddie Mac collect information on mortgage applicants’ language preference and whether they received home buyer education or counseling. NCSHA submitted comments in support of this rule last June and signed onto a press release this week from the Underserved Mortgage Markets Coalition applauding the final rule.

Also on Monday, FHFA issued a request for input on Fannie Mae’s and Freddie Mac’s Equitable Housing Finance Plans for 2025 – 2027, with a June 7 comment deadline. FHFA will host a public listening session on June 5 (more information to come). NCSHA would appreciate HFA input as we prepare a response. Please email any feedback by May 31 to Greg Zagorski.

HUD Announces FY 2024 Income, Rent Limits for HOME, HTF, Other CPD Programs
On Monday, the U.S. Department of Housing and Urban Development (HUD) published for fiscal year 2024 updated income limits for programs administered by its Office of Community Planning and Development: the HOME Investment Partnerships program (HOME), Housing Trust Fund (HTF), Community Development Block Grant (CDBG), CDBG Disaster Recovery (CDBG-DR), Emergency Solutions Grants (ESG), Housing Opportunities for Persons with AIDS (HOPWA), and Neighborhood Stabilization Program (NSP). HUD also published rent limits for HOME and HTF. Income limits for CDBG, CDBG-DR, and NSP are effective as of May 1. Income limits for HOME, HTF, ESG, and HOPWA and rent limits for HOME and HTF will be effective June 1.

HUD, USDA Adopt Minimum Energy Standards for Assisted Housing
On April 26, HUD and USDA published a final determination for the adoption of minimum energy efficiency standards for newly constructed HUD- and USDA-financed housing. The new standards will require all new construction of HUD- or USDA-assisted housing, including FHA-insured single and multifamily housing and projects receiving HOME or HTF funds, to meet the most recent standards promulgated by the International Energy Conservation Code and American Society of Heating, Refrigerating, and Air-Conditioning Engineers for single-family and multifamily housing, respectively.

House, Senate THUD Appropriations Subcommittees Hold HUD Budget Review Hearings
The Senate and House Transportation, Housing, and Urban Development Appropriations Subcommittees held April 30 and May 1 hearings, respectively, to review HUD’s proposed FY 2025 budget. In her testimony before both subcommittees, Acting HUD Secretary Adrianne Todman highlighted a number of existing programs and new initiatives included in the agency’s budget request, including more than $81 billion in proposed new mandatory spending ranging from new project-based rental assistance contracts and voucher assistance for veterans and youth to new first-generation home buyer down payment assistance. Todman noted 87 percent of HUD’s proposed budget request is dedicated to renewing rental subsidy and homelessness assistance programs, reflecting the burden of higher rental costs on the agency’s finances.

NCSHA in the News
Novogradac Journal of Tax Credits, 5.1.24, Unprecedented Challenge, Extraordinary Response: How State Housing Finance Agencies Are Filling Affordable Housing Construction Cost Gaps

Looking Ahead

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

  • May 6 – 7 | Mountain Plains Housing Summit | Colorado Springs, CO
    Stockton Williams will speak at this event.
  • May 8 – 9 | Enterprise Housing Credit Investments Convening | Annapolis, MD
    Jennifer Schwartz will speak at this event.
  • May 9 | ULI/Charles H. Shaw Forum on Urban Community Issues | Virtual
    Stockton Williams will participate in this event.
  • May 13 | Early-Bird Discounts End | NCSHA’s Housing Credit Connect & Marketplace | Atlanta
  • May 21 – 22 | Affordable Housing Tax Credit Coalition and Housing Advisory Group Affordable Housing Symposium | Washington, DC
    Jennifer Schwartz will speak at this event.
  • June 10 – 13 | NCSHA’s Housing Credit Connect & Marketplace | Atlanta

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