President Donald Trump is currently considering a $6 billion funding cut for the U.S. Department of Housing and Urban Development.
As might be imagined, the industry was quick to react, opposing the administration’s budget cut.
Even HUD Secretary Ben Carson jumped in, sending an email to his staff reassuring them that the budget is still under negotiation and that the first number is rarely the last.
But now, Trulia sent out a note explaining what the potential cut could do to housing programs if it is confirmed. Trulia’s report explained it could worsen housing shortages in major markets and dampen economic growth.
“HUD administers programs that support the provision of affordable housing choice, facilitates growth of jobs and public services and encourages redevelopment in communities where they’re needed most,” Trulia Chief Economist Ralph McLaughlin said.
This chart shows the amount number of people HUD houses in public housing and receiving rental assistance.
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However, on the bright side, the Congressional Budget Office’s projection of net outlays for Fannie Mae and Freddie Mac is $13 billion lower for the 2017 to 2026 period than its August projection.
However, McLaughlin insists the $6 billion is needed for programs that would “help the market help itself.” He points out that the funding could be used to help new home construction, which is at 62% of historic norms. He also points out the funds could be better used on local delays in the building approval process that prevent more housing from being built or affordable housing projects.
“We fear that such cuts could ultimately dampen economic growth by increasing housing stress for working-class Americans – teachers, firefighters, healthcare workers and more – who are vital for supporting higher-paying base industries in their respective markets,” McLaughlin said.