The nation’s most influential housing trade groups sent a letter to the House Committee on Financial Services saying any new stimulus package considered would need to have rental assistance, and warned of dire consequences if it does not.
Housing groups including CCIM Institute, Council for Affordable and Rural Housing, Institute of Real Estate Management, Manufactured Housing Institute, Mortgage Bankers Association, National Affordable Housing Management Association, National Apartment Association, National Association of Home Builders, National Association of Housing Cooperatives, National Association of Realtors, National Leased Housing Association and National Multifamily Housing Council sent a letter to Rep. Maxine Waters, D-Calif., chair of the committee, and Rep. Patrick McHenry, R-N.C., the ranking member, outlining their concerns.
In the letter, the trade groups urged Congress to move beyond “one size fits all” federal housing policies in favor of a more tailored approach. President Joe Biden’s American Rescue Plan stimulus proposes a continuation of previously passed policies for the rental sector such as an extension of federal eviction moratoriums. However, the letter states this approach could threaten the stability of the rental sector.
It proposes, instead, a rental assistance plan be considered.
“We strongly support the inclusion of additional rental assistance in the Americans Rescue Plan,” the letter states. “Without additional robust, direct rental assistance – beyond the newly proposed $25 billion – housing providers may never fully recover outstanding debt – whether through the eviction process or otherwise – and the housing affordability crisis will be exacerbated in the long- and short-term. This could devastate the industry and hurt America’s most vulnerable renters.”
In the last few years, the number of existing single-family homes for sale has decreased. But home prices have increased. To make homeownership a possibility for everyone, there needs to be a higher supply of affordable homes.
Presented by: Fannie Mae
The apartment industry faces an estimated nearly $60 billion in lost rent for 2020, according to a recent study released by the Urban Institute and authored by Moody’s Analytics Chief Economist Mark Zandi and Falling Creek Advisors Owner Jim Parrott.
The letter explains this places a heavy financial strain on many in the rental industry, including “mom and pop firms.”
“Functioning under reduced revenue for almost a year has drained reserves, caused deferred maintenance and capital improvements and placed many housing providers on the precipice of economic ruin,” the analysis states.
As part of Biden’s $1.9 trillion American Rescue Plan, the administration proposed an additional $30 billion for renter assistance and $5 billion to help relieve the strain of homelessness. In thier analysis, Zandi and Parrott said this is what is needed for the industry.
“This is exactly what is needed to give this vulnerable population a bridge to the other side of the economic crisis, when most will be able to return to the jobs needed to pay their rent again,” they wrote. “While the entire $1.9 trillion relief plan is unlikely to get through the legislative process, we expect that lawmakers will agree to much of the funds proposed for rental assistance.”
Other economists say that the rental space is being heavily hit, creating concerns for the housing market.
“There are some things that are of concern from a policy perspective and that, in the housing sector, is actually in the rental space,” Fannie Mae Chief Economist Doug Duncan recently told HousingWire. “There is the risk of a significant increase in the level of evictions in that space. The difficulty is targeted these policies so that they don’t distort normal behavior patterns. The devil will be in the details of how that gets put in place. Unemployment is definitely higher among the renter population than among the owner population.”
Congress continues to negotiate the stimulus package as Republicans seek to slim down the $1.9 trillion package to about $600 billion. The White House, however, remains unmoving on that front. The House passed the bill as a budget resolution, meaning it did not need any votes from the Republican party. The Senate could do the same, however it would require every one of the Democratic Senators on board with the new package.
“Renters need additional assistance, including emergency housing vouchers to ensure people in rural, and suburban and urban communities can remain stably housed,” Waters said in a committee hearing titled: More than a Shot in the Arm: The Need for Additional COVID-19 Stimulus. “More funding is needed for persons experiencing homelessness, who face even greater health risks as a result of the pandemic.”
“We must also address the reality that homeowners across America face a foreclosure crisis if Congress does not step in to support modifications before the pandemic ends,” she said. “And this Committee will also need to come to the aid of businesses and their workers who are barely staying afloat, including small businesses, minority-owned businesses, and sectors hit hard like the airlines.”