May 2, 2017; HousingWire
At a recent conference put on by the 501(c)(6) nonprofit Mortgage Bankers Association in New York, affordable housing was a hot button issue. More accurately, nonprofit officials discussed whether the political climate was right to bring the affordable housing discussion to the forefront. In a panel discussion on the matter, a sense that any legislative discussion could be counterproductive led to a discussion of alternative ways to create change.
One panelist suggested administrative action could be more effective, positing that Federal Housing Finance Agency activity was crowding out the private market, which might be preventing some underrepresented groups from gaining access to credit markets. The president of a mortgage insurance company, Teresa Bazemore, suggested the establishment of an oversight organization in the government to make sure this does not happen. Other panelists were skeptical, emphasizing that greater degrees of competition can lead to innovation in credit markets.
The panelists discussing affordable housing are wise to proceed with caution in a polarized political climate. In a world where political compromise is seen as failure, having your cause picked up by the wrong politician can leave it dead on arrival. A partisan legislature where sufficiently large groups reside on the far ends of the political spectrum is not one likely to find healthy bipartisan cooperation. Barring a moderate legislator who’s sufficiently popular across the aisle picking up the cause, it is doubtful any legislation will be passed.
This is not quite as bad as it seems. The most effective way of increasing affordable housing is to increase the housing supply. (NPQ has written about this.) Assuming demand remains the same, more housing in an area will lead to lower prices. This is usually done at the local level, where city zoning is the primary constraint. It is certainly a more promising proposition than rent controls. Rent controls are what is known as a “price ceiling” and will exacerbate the problem rent controls hope to address. Increasing supply is the better route.
In this case, paying attention to the polarization of local administrations will likely be the key to effective advocacy. If there is near-bipartisan support for relaxed zoning restrictions, there is hope for change.
Changes on the national level—in this case, government-sponsored organizations that open credit markets to underserved groups—will likely have to wait until the political climate mellows or one party gains a stronger hold on Congress. Until then, the local level remains ripe for advocacy.—Sean Watterson