At the end of last week, as the clock ticked into Saturday, a massive housing bill, the 21st Century Road to Housing Act, through inaction–President Donald Trump neither signed nor vetoed the bill–passed into law. The bill, which passed both the house and senate with overwhelming bipartisan support, seeks to address one of the more increasingly harrowing issues across the nation: housing affordability.
The National Association of Realtors (NAR) contends that a household earning $75,000 can currently afford approximately 23% of active listings nationwide. In Bayfield County, according to listing data available through Lake Superior Area Realtor’s MLS, the rate of affordability is a bit higher, 30%. The median listing price among current listings in Bayfield county is roughly $392,000; to comfortably afford a home at that price, a household would require a six figure income, which is out of reach for many in a county where primarily teachers, county employees, service workers, tradesmen, and nurses comprise the fabric of the workforce. This metric, listing to income alignment, underscores the county’s, as well as the nation’s, affordability problem, and illustrates the legislature’s drive to address the underpinnings of that unaffordability.
From offsetting regulatory hurdles and high development costs to reforming oversight and accountability for the federal government’s primary housing divisions, Housing and Urban Development (HUD) and United States Department of Agriculture (USDA), the 21st Century Road to Housing Act ultimately seeks to promote the development of affordable housing as well as the rehabilitation of existing housing by examining federal processes, streamlining federal programming, and limiting corporate indulgence in the real estate market.
Of the bill’s 43 provisions, most address programmatic oversight and clarity as well as banking and development regulations. Of the 43, one in particular has gained the most publicity: the “Homes are for People not Corporations” provision, which limits corporate ownership of single family homes, delineates timelines for liquidation of properties, and establishes outreach channels for tenants living in corporately owned properties. While this particular provision won’t likely impact Bayfield County much–our affordable housing issues are more commonly rooted in second-home ownership, short-term rentals, and bifurcated real estate markets–it does set the tone for congress’ primary objective: development.
Otherwise, many of the provisions may either directly or indirectly impact Bayfield County. Here are some highlights:
Section 101 seeks to reform, as a means of improving financial literacy around homebuying and homeownership, oversight of agencies providing housing counseling services. Section 107 directs HUD to publish guidelines and best practices for modernizing local zoning code, primarily to achieve housing density through the development of ADUs and multi-family housing, among other options. Such guidelines and practices may prove beneficial as local municipalities, just as Bayfield County recently did, rewrite local zoning codes.
Section 201 enables HUD to favorably weight grant applications for projects in eligible Opportunity Zones, of which the city of Ashland, albeit not in Bayfield county, is one. Section 202–a particularly helpful section for homes in need of extensive rehabilitation–seeks to provide funding, through a pilot program, a pilot program that extends grants and loans for home repairs far beyond the piecemeal funding currently disseminated through HUD, for holistic home revitalization. Section 204 allows eligible communities to use Community Development Block Grant (CDBG) funds for affordable housing construction; where these funds have historically been targeted for housing repair and rehabilitation, this new provision allows for another layer in a capital stack, thus improving the success rate of a development. Sections 207-208 establish programs to issue grants and additional funding streams for regional housing planning and community development activities. And ultimately, Section 210 authorizes a pilot program, much like USDA’s Vacancy to Vitality program, to convert vacant and abandoned buildings into attainable housing. Of all the chapters in the bill, Title II, “Building More in America” offers Bayfield County residents and developers a panoply of options for addressing affordable housing opportunities in the area.
The bill’s next chapter focuses on modular and manufactured homes, a focus rooted in hastening the timeline of construction and development. Section 302, most notably, seeks to reduce the project risk associated with modular home construction by modifying the financing draw schedule for developers; the section also requires the Federal Housing Administration (FHA) to assess barriers to FHA-insured lending for modular homes.
Title IV, “Accessing the American Dream,” doesn’t do as much to address the American Dream as the title may suggest but does require a study of loan origination compensation as well as an evaluation of current lending regulations on points and relative fees. Within that chapter, Section 404, one of the more innovative sections of the bill, a pilot program seeks to provide up to 5,000 families in subsidized housing an escrow savings program that deposits rent increases, due to personal income increases, into an interest-bearing account on their behalf. They don’t get to manage the account, but the provision seeks to establish a working savings account for use toward future housing expenses, potentially homeownership.
Title V is rooted in program reform, most notably HUD’s HOME program and USDA’s Rural Housing Service program. These provisions, noted in Sections 501 and 502, focus on preserving housing through rehabilitation efforts and financing housing developments. In response to modern housing market conditions, legislators adjusted the income eligibility thresholds upward–elegible recipients may now qualify for funding with incomes at 100% of Average Median Income (AMI) compared to 80% of AMI–to acknowledge the chasm in funding opportunities for a significant segment of the middle class. Under Section 502, legislators sought to streamline programs housed under the USDA and modernize lending practices to offer more flexibility for borrowers.
The next few chapters of the bill focus primarily on oversight, accountability, and mandated studies. Most notably, Section 803 requires HUD to conduct a study on the implementation of work requirements by public housing agencies as a means of understanding not only the effects of these requirements on public housing families but agencies as well.
And while the chapter on strengthening community banks’ role in housing may not have as direct of an impact on housing development in Bayfield County, provisions could allow local banks to supply bridge or gap financing for developments where they may not have been able to in the past.
In Bayfield County, where development costs remain prohibitive to the growth of new housing, new housing that’s desperately needed, many of the provisions in the 21st Century Road to Housing Act could help not only to incentivize development but streamline the federal processes for advancing housing development, in turn addressing the primary issue–housing affordability–a problem for which there is no single simple solution. Through engaging developers, banks, local government, and nonprofits alike in the process of addressing one of our nation’s, and county’s, most pressing issues, legislators across party lines have underscored our nation’s need to address the housing affordability crisis, a problem central to all of us in Bayfield County.