What the ROAD to Housing Act can — and can’t — do for affordability

Miedler also cautioned that the bill provides little relief on today’s affordability front while setting up future opportunities on the supply side.

“Lower rates would allow those with current 3% to 4% rates to consider selling, creating more inventory on the market,” he said. “More buyers would also emerge. In the short term, the increased supply may be absorbed quickly and affordability remains a challenge.”

Many economists agree that housing supply is a critical part of the solution. But they also point to borrowing costs, construction expenses, insurance premiums and property taxes and as significant contributors to today’s affordability challenges.

Pamela D’Arc, a Compass agent based in New York City, said the inventory shortage continues to make itself felt in her market.

“There are more buyers than there are apartments and inventory, and it’s pushing the prices way up now,” D’Arc said. “A turnkey apartment, unless it’s priced ridiculously high, is literally coming in with multiple bids on just about everything I’m seeing. We just had six offers on a rental and it wasn’t priced low.”

She said some of the inventory shortage stems from homeowners who are reluctant to sell due to their mortgage rates.

“Some of it is due to mortgage rates that people have and don’t want to give up,” D’Arc said. “I have clients who said we want to move to a different neighborhood for our commuting time, but our very low mortgage doesn’t run out until November, so we need to time it because we’re not giving that up early.”

Joy Silver, chief strategy officer at the Community Housing Opportunities Corp. — a California-based nonprofit — said the bill does little to address the fundamental economic reality facing low-income households.

“The hardest part for any developer is the gap financing, right between the equity and the long-term financing,” she said. “In order to get that thing going, now you’ve got 75% of the money you have to find, and who’s going to be able to find that money at an affordable rate? So basically, what have we done? We’ve given banks better ways to make more money.

“The most positive piece of this legislation is that it happened at all. Politicians and Congress wanted to let people know they could still do something together.”

Rare moment for federal housing policy

Comprehensive federal housing legislation has been relatively rare over the past several decades.

The modern federal housing system traces much of its foundation to the Housing Act of 1949, which established a national goal of providing, as written, “a decent home and a suitable living environment for every American family.”

Congress later expanded federal housing policy through measures such as the Housing and Urban Development Act of 1968 and the Cranston-Gonzalez National Affordable Housing Act of 1990, which created the HOME Investment Partnerships Program.

Since then, federal lawmakers have largely relied on targeted appropriations, tax incentives and temporary relief measures rather than broad, structural housing reforms.

“This law can take great strides toward reducing the housing supply gap, but it will not completely close it,” said Russell McIntyre, principal housing policy analyst for Cotality. “The housing crisis is part of a broader affordability crisis and solving it will require more than changing zoning rules.

“Still, many of these provisions can lower housing costs and create opportunities for people who might not otherwise have them.”

Housing affordability tied to income shortfalls

Housing costs are only one side of the affordability equation.

Research from RAND has highlighted the growing disconnect between housing costs and worker earnings — finding that affordability has increasingly deteriorated as home prices have outpaced income growth and purchasing power.

Other researchers have similarly concluded that affordability depends not only on the cost of housing itself but also on household income, wages and broader economic conditions.

“The role of stagnant or lagging wages in the affordability crisis has not received commensurate attention in the narrow housing policy debate,” said Noah Breakstone, CEO of Florida-based development and investment firm BTI Partners.

“Much of the public and political discourse focuses on ‘greedy developers,’ institutional investors or insufficient subsidies, which risks scapegoating the production side of the equation while underplaying the erosion of purchasing power.”

Miedler said these economic realities are becoming increasingly difficult for buyers to overcome.

“[The National Association of Realtors] just shared that the median price of a U.S. home is a record $440,600,” he said. “And that’s not the only cost that’s become more burdensome for homeowners — mortgage rates, property taxes, insurance and home upkeep have all increased significantly in recent years.

“In order for buyers to absorb those costs, wages will have to increase at a rate that surpasses inflation to create more opportunities for homeownership.”

Silver framed the affordability challenge in stark terms, saying the very concept of “working poor” should not exist.

“There are two words that should never be put together, and that is working poor,” Silver said. “There should never be the working poor. If you’re working, you shouldn’t be poor, and so the affordability factor addresses that — and that’s sorely missing from this bill, in any understanding of the bill.”

D’Arc agreed that the focus on housing costs alone misses the broader economic picture.

“You have to tackle each scenario,” she said. “I think that if we were able to build and just have more mid-level housing, that would help solve it. But obviously, this is another issue of what people are getting paid and how many jobs there are for people getting out of college.”

She described the affordability challenge as deeply interconnected with other systemic issues.

“There’s not an integrative plan to solve what the future of our country is in terms of people, young people, coming into the workforce,” D’Arc said. “It’s like the doctor that only looks at your thumb when there’s a lot more going on.”

Housing challenges remain local

Despite the national debate surrounding affordability, Miedler said buyer challenges vary significantly depending on where they live.

“We really are back to real estate being local,” he said. “I talk to numerous brokers every day from different parts of the country, and every call has a different take on what the challenges are for buyers in their area.”

D’Arc said the urban experience illustrates how affordability has eroded even in neighborhoods that were once accessible.

“The sprawl of New York City real estate is so immense now in areas like [Bedford-Stuyvesant],” she said. “I have a client who has been unable to purchase a two-family house in Bed-Stuy. He has $2 million and [can’t get anything]. These were neighborhoods that people went to because they were affordable.

“Astoria, Queens, is now becoming a hot market, or has become. There’s nowhere close to the city that people can afford. It has to be the whole package of a lifestyle that is affordable, so that the people that run our city can get to work in a normal amount of time.”

D’Arc also addressed base terminology that she feels exacerbates housing shortages.

“I support changing the name from ‘affordable housing,’ — which has a stigma that needs to disappear — so that people are more welcoming of having what I would call ‘essential housing’ in their neighborhoods and in their surroundings in general.”

The next phase begins now

With the ROAD to Housing Act now law, attention turns from Congress to implementation.

Many of the reforms contained in the ROAD to Housing Act depend on state and local governments, builders, lenders and federal agencies to translate policy into additional housing supply.

At the same time, broader economic conditions — including inflation, mortgage rates, labor markets and consumer confidence — will continue to shape the housing market.

“As developers, we operate in competitive markets and respond to feasible economics,” Breakstone said. “When regulatory barriers, impact fees, environmental reviews and infrastructure mandates add substantial cost and time, the result is less supply and higher prices — precisely what the data shows.

“That does not absolve the industry of responsibility to advocate for and deliver attainable housing, but it does mean that narratives that pin the crisis primarily on housing supply actors overlook the larger macroeconomic and policy failures on wages, productivity and the cost of capital.”

Miedler said lawmakers strengthened the legislation by incorporating industry feedback before final passage.

“A law like this is a foundation, not a finish line,” he said. “Permitting reform and program modernization only count if they translate into homes getting built and families getting to the closing table in actual neighborhoods. And that happens locally, one market and one family at a time.”

Silver noted that the bill’s approach to affordable housing eligibility could leave behind the lowest-income households.

“The cream of the crop that makes the numbers work is 60% to 80% AMI,” Silver said, referring to area median income. “The challenge will be for the 30% AMI.”

McIntyre hopes to see the continued promotion of manufactured housing.

“Manufactured housing can be produced faster and at a lower cost than traditional site-built housing, but outdated regulations have held it back,” he said. “Removing the permanent chassis requirement can reduce manufacturing costs and help communities consider manufactured housing as a more scalable part of the supply solution.”

D’Arc said financial expectations around housing development need to be recalibrated.

“Everybody’s trying to make so much money on housing, and we have to find the people that don’t need it, or that’s not their goal in life,” D’Arc said. “We need them to get engaged and create affordable housing that again should be called essential housing — and not expect some kind of huge financial benefits.”

Whether the ROAD to Housing Act ultimately fulfills its promise may depend on factors extending well beyond housing policy.

While increasing supply remains a central goal, many industry leaders and economists say restoring affordability will also require stronger wage growth, lower borrowing costs and continued efforts at every level of government to make homeownership attainable for more Americans.