U.S. Sen. Elizabeth Warren is attempting to put the increasingly expensive housing market into reach for more Americans. To do that, the Massachusetts Democrat is slated to introduce a roughly $476 billion housing bill in the Senate on Wednesday.
It’s unlikely that the bill, focused on creating more affordable housing for low-income and middle-class Americans, would be passed by a Republican-controlled Congress. But the political landscape could change if the midterm elections in November usher in a blue wave of elected officials. Plus, the legislation gives a boost to the national profile of Warren, a liberal favorite who appears to be positioning herself for a presidential run.
The American Housing and Economic Mobility Act of 2018
, which may be more of a wish list than a near-term reality, would provide for the construction of new homes and the rehabilitation of existing ones. It would make it easier, cheaper, and faster for builders to put up new homes by giving local governments incentives to get rid of, or ease, some of their zoning and other land use regulations. The incentives could be used for infrastructure, parks, roads, or schools—and the cost cuts to builders could make homes less expensive for buyers and renters.
The legislation would also provide assistance to more marginalized groups of renters and home buyers. For example, the bill would offer more down payment assistance to predominantly low-income, minority communities where residents were historically denied mortgages due to now-illegal policies. It would invest in rural housing. And it would also expand the Fair Housing Act to make it illegal to discriminate against prospective renters and buyers based on their sexual orientation, marital status, gender identity, and occupation.
“The federal government has for many years not stepped up to the extent that it’s needed to preserve and develop affordable housing,” says Edward Goetz, an urban planning professor at the University of Minnesota in Minneapolis. And while this bill isn’t likely to become law anytime soon, he believes “it’s the beginning of a longer strategy.”
In addition, the bill provides $2 billion in support for homeowners who are still underwater on their mortgages a decade after the financial crash.
“Housing is the biggest expense for most working families—and costs for everyone, everywhere, are skyrocketing. Rural housing is falling apart and decades of discrimination has excluded generations of black families from homeownership,” Warren said in a statement. “This proposal will attack the rising cost of housing by helping to roll back needlessly restrictive local zoning rules and taking down other barriers that keep American families from living in neighborhoods with good jobs and good schools.”
It’s projected to create 3.2 million new units of housing and lower rents for lower- and middle-income tenants by 10%, according to an independent analysis by Moody’s Analytics. The unpaid analysis was commissioned by Warren’s office.
The bill would be paid for by increasing the estate tax along with taxes on the 10,000 wealthiest households in America. That’s very unlikely to happen under President Donald Trump.
“There is a gaping hole in the number of affordable housing units, and this helps to fill it,” says Moody’s Analytics Chief Economist Mark Zandi, who wrote the analysis of the bill. “[But] under most scenarios, I don’t see this legislation going anywhere. We have to wait for the next president, the next Congress.”
“When the political window opens, [this legislation can go] through it,” Zandi says.
The National Association of Home Builders lauded the bill, particularly its elimination of “unnecessary local land use rules that drive up construction costs and harm housing affordability,” said the group’s chairman, Randy Noel.
But Noel is concerned that raising the estate tax to fund these changes could harm family-owned small businesses that are passed down from parents to their children.