Lawmakers, experts squabble over what’s driving up US housing costs
Members of the House Ways and Means Committee on Wednesday agreed that America is facing a housing crisis, but found little consensus on why, or what to do about it.
Republicans blamed inflation, which they say has been fueled by pandemic government spending, while Democrats put the onus on corporate landlords and experts at the hearing highlighted the severe lack of supply.
Housing prices for Americans have shot up 5.6 percent over last year, the largest percent increase since 1991, according to government data. The average price for an urban shelter as of June was above $350,000, up from about $318,000 in June 2019, before the pandemic began.
Republicans repeatedly pounced on eye-popping inflation numbers released by the Labor Department Wednesday, showing the consumer price index has increased 9.1 percent since June of last year, the highest rise since 1981.
“American families and workers are finding that Joe Biden’s economy is a very cruel economy,” said Rep. Kevin Brady (R-Texas) at the hearing. “Democrats in Washington are blaming everyone under the sun for the cruel rise in housing costs.”
Inflation has been a global phenomenon as countries recover from an unprecedented pandemic that has caused lasting supply disruptions and labor shortages. Russia’s war on Ukraine has added to the upward pressure on gas prices and food, in particular.
Democrats on Wednesday refused to accept that their spending policies were partly to blame, instead arguing that rising housing prices were due to a multitude of pandemic-related factors — and corporate greed.
“Just when our homes became more important than ever, a range of forces converged to drive up prices faster than in recent memory,” said Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee.
Democrats blasted the role that corporate investors have played in raising housing prices. Private equity landlords, the lawmakers argued, are outbidding potential buyers and jacking up rent and fee prices for tenants.
In the final quarter of 2021, corporate investors bought a record 18.4 percent of homes that were sold in the U.S., according to data from the real estate brokerage Redfin.
“With ordinary Americans locked out of the market, private equity fat cats are outbidding families and driving up prices,” said Rep. Bill Pascrell (D-N.J.).
Democrats last month at a House Financial Services subpanel hearing similarly railed against the purchasing practices of private firms.
Expert witnesses at Wednesday’s hearing focused on the shortage of affordable housing units available to buyers and renters, arguing government investment is needed to facilitate the construction of low- and moderate-income housing.
The Low-Income Housing Tax Credit (LIHTC), a tax incentive to help fund investments into affordable housing projects in rural and urban areas, was lauded as a success story of federal intervention.
“Affordable housing is affordable because of financing,” said Audra Hamernik, president and CEO of Nevada HAND, an affordable housing developer. “The LIHTC is the nation’s primary tool to create and preserve affordable rental housing.”
Witnesses also agreed the corporate purchasing was an issue.
“Institutional investors are a big part of the surging demand over the last couple of years,” said Elora Lee Raymond, urban planner and assistant professor in the School of City and Regional Planning at Georgia Tech.
“These investors are highly incentivized to very efficiently extract rent through hidden fees, late fees and through increasing rents.”
While Democrats joined the call for increased federal support for housing programs, Republicans cautioned against more government spending.
“We have printed so much money in the last couple of years, I think it’s incredible the fact that we have any ink or paper left,” said Rep. Mike Kelly (R-Pa.). “It’s incredible to me that we could still be adding more fuel to the fire by doing this.”