In Search of the Next Generation of Housing Policy

In Search of the Next Generation of Housing Policy

Todd Richardson, General Deputy Assistant Secretary, Office of Policy Development and Research
Elayne Weiss, Deputy Assistant Secretary for Policy Development, Office of Policy Development and Research

In the summer of 2024, HUD Agency Head Adrianne Todman challenged the department's Office of Policy Development and Research (PD&R) to assemble a panel of academic experts and researchers specializing in various dimensions of housing policy to brainstorm how we might tackle some of the nation's most challenging housing issues. On October 7 and 8, 2024, PD&R hosted the Next Generation of Housing Policy, a roundtable at HUD's headquarters in Washington, DC. The 25 participating scholars, representing a diversity of perspectives, geographies, and disciplines, were asked to leverage their research and expertise and share innovative ideas that have the potential to deliver real and lasting impacts and meet the nation's current and future housing challenges. The roundtable focused on five topics and motivating questions that are among the top priorities for the next generation of housing policy:

1. Expanding the Housing Supply. What would it take to close the housing supply gap in the next 5 years while addressing the nation's affordability, climate sustainability, and resiliency goals?

2. Eliminating Worst Case Housing Needs. What would it take to expand access to rental assistance and eliminate worst case housing needs in the United States?

3. Ending Homelessness. What would it take to end homelessness in the United States?

4. Protecting Renters. What would it take to ensure housing stability and protections for the nation's renters?

5. Increasing Homeownership. What would it take to increase homeownership rates and close the racial homeownership gap in the United States?

Big Ideas

For each of these topics, we asked two of the scholars to write down how they would address the question, after which two to four respondents reacted to these ideas, potentially offering their own ideas as part of their reaction. One of HUD's principal leaders led each discussion.

This PD&R Edge article summarizes some of the big ideas and conversation generated through the roundtable. It uses those summaries as a jumping-off point for exploring themes that emerged in subsequent discussions.

Below are the bold ideas that fueled these conversations.

Expanding Housing Supply

• Supporting housing supply through preservation. One paper proposed creating a comprehensive research and development program for home retrofits to prevent dilapidated homes from leaving the nation's housing inventory and make the existing housing supply more responsive to demographic changes (such as enabling retrofits for older adults to age in place), support energy efficiency and decarbonization, and increase resiliency against natural disasters.

• Establishing a comprehensive federal framework to spur new construction. One scholar pointed out that the market does not build new affordable housing without government involvement. To support development of more affordable housing, they proposed creating a comprehensive framework to make systemic changes in how the nation invests in housing. The framework included the following:

• Developing new funding mechanisms to expand and diversify the affordable housing supply. These mechanisms could include creating federal financing tools to support middle-income housing production (such as medium-sized multifamily rental housing, accessory dwelling units, and condominiums), funding for acquiring buildings for adaptive reuse projects, and funding generated through the tax code for affordable housing.

• Removing obstacles to housing production. These actions could include conditioning existing funding streams (including transportation and infrastructure funding) on local actions to remove barriers to housing production (such as zoning laws, permitting regulations, and fees), improving streamlining and alignment of federal transportation and infrastructure funds toward a housing supply agenda, creating an inventory of federal property that should be prioritized for affordable housing development, and allowing public housing agencies (PHAs) to create more project-based housing choice vouchers (HCVs) to provide the operating subsidy needed to support new affordable housing development.

• Improve the research evidence on what works to increase housing supply, including expanding data infrastructure.

Eliminating Worst Case Housing Needs 

• Exploring direct rental assistance. One scholar proposed experimenting with direct rental assistance (DRA) pilots to learn ways to both improve the existing HCV program and develop complementary programs to expand access to rental assistance. Specifically, the paper discussed simplifying the HCV program by issuing rental assistance payments directly to renters; streamlining inspection requirements through mechanisms such as self-certification and virtual inspections; and adopting policies that improve leasing success, such as those used for the Emergency Housing Voucher program.

• Expanding and strengthening rental assistance. In addition to DRA, the scholars proposed providing an ongoing source of federal funding to support short-term emergency rental assistance (ERA) to prevent evictions because of a sudden crisis. This assistance could entail a locally run program with federal funding; rather than a grant, ERA could be a federally backed line of credit for tenants or landlords that is repaid. Scholars also proposed making the Emergency Housing Voucher program permanent and taking the lessons learned from the program and applying them to the larger HCV program.

• Spurring innovation in the provision of rental assistance. Scholars proposed expanding and rewarding agencies for adopting innovative approaches to administering rental assistance programs. These innovations could include giving landlords renovation grants or loans to encourage them to lease to voucher holders. Policymakers could also make accessing housing assistance faster and simpler by, for example, creating a single waitlist shared by all PHAs, multifamily assisted owners, and Continuums of Care in a region or state.

Ending Homelessness

• Supporting upstream housing interventions. Scholars noted a long-established finding that increasing access to high-quality, affordable housing is an effective approach to reducing the number of people entering homelessness. One scholar noted that HUD should expand several assistance programs, particularly income supports such as housing choice vouchers and direct rental assistance, that have been proven to reduce homelessness when they are provided at scale.

• Addressing the current homelessness crisis through better targeting and partnerships. Noting the nation's recent success in halving the rate of veteran homelessness over the past decade, scholars encouraged HUD to partner with intermediaries to better target assistance to high-risk groups. Just as the U.S. Department of Veterans Affairs identified veterans that needed targeted services and coordinated with HUD to provide those services, scholars encouraged HUD to look to other systems, including the child protective services, early childhood education, and Medicare systems, to identify other high-risk groups and administer targeted interventions.

• Expanding research and technical assistance offerings to be more responsive to current community needs. Scholars observed that HUD's technical assistance (TA) has been critical to the success of jurisdictions implementing and scaling Housing First strategies. They noted, however, that the need for new HUD TA far outpaces its availability. Encampment resolution, for example, was identified as one area in which policymakers need more high-quality guidance. Papers also identified ongoing research areas for HUD to pursue, including questions about the duration, depth, and delivery mechanisms of services and subsidies for various groups at risk of being unhoused. Building on the earlier rental assistance discussion, scholars were especially interested in exploring whether cash transfers are a better form of assistance than housing subsidies considering the flexibility and speed of scaling they offer.

Protecting Renters 

• Reforming eviction court processes through local action. Because landlord-tenant law varies by state, scholars proposed that HUD could better protect renters by encouraging local action while modeling best practices at the federal level. One scholar proposed a federally led renter stabilization initiative through which HUD could convene governors, attorneys general, mayors, and other state policymakers to facilitate the development of best practices for eviction policy, including extending eviction notice periods, increasing eviction filing fees to disincentivize serial filers, and increasing available funding so additional eviction diversion programs, like landlord-tenant mediation and right to counsel programs, can reach more tenants in need.

• Strengthening requirements, guidance, and enforcement around fair housing rules. Scholars suggested that HUD advocate for the broader adoption of source of income (SOI) protections, the wider elimination of crime-free housing policies (CFHPs) and criminal activity nuisance ordinances (CANOs), and deeper landlord engagement to improve landlords' ability to comply with fair housing and habitability requirements. Strategies included modeling implementation of a national SOI protection rule by starting with Federal Housing Administration (FHA)-backed properties, tying HUD funding and incentives to local adoption of SOI protections and elimination of CFHP and CANO policies, and producing more guidance and TA about these policies and habitability requirements so that landlords understand their compliance responsibilities.

• Exploring partnerships with court systems as a point of intervention. Scholars were also interested in partnering with courts to better target renter protection program offerings. They discussed partnerships with courts to streamline rental assistance delivery and to collect better data on evictions, particularly data on the impact of housing navigation resources that could also help identify the most frequent violators of renter protections.

Increasing Homeownership Rates

• Redesigning mortgage insurance. To increase homeownership among low-wealth households, one scholar proposed creating an enhanced mortgage insurance premium (eMIP) to provide a liquidity cushion against an income or expense shock, reducing the credit risk of providing mortgages to these households. Under the eMIP, the upfront FHA MIP would be increased to cover the cost of the liquidity insurance. This liquidity insurance would cover a borrower's monthly mortgage payments for up to 6 months if they experienced a loss of income or sudden expenses.

• Leveraging artificial intelligence (with guard rails) to advance equity in housing finance. One scholar proposed replacing current underwriting strategies with artificial intelligence (AI) to create a more equitable underwriting algorithm that does not rely on outdated methods that favor white homebuyers. AI could help provide evidence-based alternatives to current requirements, such as those related to downpayments and creditworthiness, that make attaining homeownership harder for low-wealth households.

Big Ideas Generate Big Discussion

These big ideas generated considerable discussion that centered around two categories: demand-side themes, which concern getting short- or long-term assistance to households that need it, and supply-side themes, which focus on eliminating state and local regulatory barriers to housing production and providing government incentives and financing to ensure the production of affordable housing.

Demand-Side Themes

1. Protections against short-term liquidity shocks. A growing evidence base suggests that short-term interventions for households in crisis result in fewer foreclosures, fewer evictions, and less inflow into the homeless systems; these interventions are proving beneficial not only to the households in crisis but also to their lenders, landlords, and surrounding communities.

A few data points:

• For homeowners, short-term income shocks cause 94 percent of mortgage defaults. At the same time, the median homeowner has 75 percent equity in their home to borrow against. (American Housing Survey 2023).

• U.S. Census Bureau research found that 34 percent of Americans lived in poverty for at least 2 months between 2013 and 2016, with 35 percent of poverty spells ending within 6 months.

• The inflow into homelessness often is due to an income shock — not one affecting the person who becomes homeless but rather the householder supporting the person who becomes homeless. Helping the current houser of a potentially homeless person would reduce inflow into the homeless system.

As discussed above, the big ideas that involved expanding homeownership, protecting renters, and ending homelessness all leaned into this problem in much the same way: providing a federal guarantee for either an insurance fund or short-term lending that gives households up to 6 months to resolve the shock to their income while still ensuring that lenders and landlords get paid.

For homeowners, the eMIP offered not only the insurance benefit but also the potential of loans with a 0 percent downpayment, which would open up credit for more borrowers. It also addresses the limitation of forbearance policies, which require values to rise.

Along similar lines, a new reverse mortgage product could address an increasing liquidity gap for fixed-income homeowners by allowing them to borrow against their home equity for only costs related to making housing safe and affordable, notably paying hazard insurance and property tax, as well as home modifications for safety (such as grab bars and hand railings). Like other reverse mortgage products, it would have a maximum amount that can be borrowed and only be repaid at time of home sale.

For renters, creating an ERA loan fund that allows them to repay the assistance after overcoming their short-term liquidity problems gives renters protections comparable to the forbearance and other loss mitigation benefits that homeowners with mortgages enjoy. New York City is currently testing rent assistance in response to selected short-term income shocks through its One Shot Deal program.

A federally backed short-term solution for renters also benefits landlords. Just as lenders are on the front line of supporting loss mitigation solutions for homeowners, landlords could administer the loan fund to support tenants. Access to these funds might be connected to registration with a rental registry and participation in landlord training on resources that would minimize the need to evict.

A related topic was the fragility of community-based organizations and how vital these organizations are in many communities. The federal government may also have a role in supporting community-based organizations facing brief financial setbacks.

2. Making housing assistance available when it is most needed and easier to use. Tools to support households in crisis must be readily available and easy to use, not only by the households themselves but also by the trusted intermediaries helping them. Much of the roundtable's conversation focused on ways to make housing assistance easier to use.

A few data points:

• Speed is important: the longer people are homeless, the harder it is to successfully rehouse them.

• In 2022, just 50% of HCV tenants were successfully leasing when issued a voucher.

Roundtable participants discussed several key interventions to improve rental assistance, end homelessness, and protect renters:

• One front door. Currently, households in crisis must seek out housing assistance from multiple sources — including, potentially, multiple PHAs in a single market, each with their own waitlist and preferences; multiple multifamily assisted properties with their own waitlists; and the Continuum of Care coordinated entry system, which typically is not connected to those other programs. Creating a single entry point, perhaps through grants to state housing finance agencies to create a single waitlist that all other housing providers are incentivized or required to join, might improve the speed of service and offer clarity to households seeking assistance.

• Using trusted intermediaries. Related to the one front door, judges in eviction courts, medical professionals at hospitals, social workers, and school officials often see that the solution needed for a crisis is simply providing housing. Making it easy for those intermediaries to connect families and individuals to the housing providers could resolve a housing crisis more quickly. The HUD-Veterans Affairs Supportive Housing program for veterans, for which the U.S. Department of Veterans Affairs administers the referrals, has shown that this can be an effective approach, and the model could be expanded to include other trusted intermediaries.

• Connecting systems. The roundtable participants discussed how some states have used Medicaid to provide housing assistance for those with specific health and social risk factors. Scholars noted that healthcare providers are poorly equipped to navigate complicated housing assistance systems, and HUD's experience and leadership could be crucial to the success of this strategy.

• Making housing assistance easier to use. The roundtable participants offered no fewer than 14 ideas for improving existing housing assistance resources. Many of these ideas centered around giving local implementers more flexibility to use the provided resources along with technical assistance; allowing local implementers to improve worker pay and administration; and fostering partnerships among local, federal, and academic institutions to test strategies that can be rapidly deployed to other practitioners.

• Get greater adoption and effective implementation of source of income (SOI) protections. If passing a national SOI law is not possible, then the federal government could offer a federally backed loss mitigation fund for jurisdictions that adopt SOI protections. Policymakers also could provide guidance on enforcing the SOI protections already required under the Low-Income Housing Tax Credit (LIHTC) program. The roundtable participants suggested that SOI enforcement policies should disallow the use of credit scores.

Demand-side solutions such as housing vouchers, however, work only if adequate supply exists. Next-generation housing policies must also take supply-side issues into consideration.

Supply-Side Themes

1. Making the best use of existing housing. The United States already has a substantial housing supply. The roundtable participants considered the pressures on the existing housing inventory as well as ideas to ensure the livability of that inventory while using it efficiently.

A few data points:

• Of the 145 million housing units in the United States, 133 million are occupied and 12 million are vacant.

• Every 2 years, the United States loses approximately 2 million units from its housing inventory for various reasons, including demolition, damage from natural disasters, and obsolescence, and gains roughly 3 to 5 million units, mostly through new construction. Builders construct or rehabilitate roughly 100,000 units each year with a LIHTC subsidy to keep rents affordable for lower-income renters. Housing production was lower during the decade after the Great Recession and before the COVID-19 pandemic, resulting in a housing shortage. By 2021, 8.53 million unassisted very low-income renter households were paying more than half their income for rent and/or lived in substandard housing — an increase of 70 percent from the 5.01 million households with worst case housing needs in 2001.

One big idea involved creating PART — Partnership for Advancing Retrofit Technology — to advance research on remodeling and adopt a whole-of-government approach to boosting the adoption of new technologies. Other discussion topics included understanding more about factors such as title issues that are keeping vacant units from being brought back online.

Participants discussed how to incentivize downsizing as housing size and occupancy mismatch exists in many markets with older households being house rich but unable to afford home improvements, property taxes, and hazard insurance.

2. Making building easier and cheaper. This credo, of course, has been fundamental to HUD's mission since its creation in 1965, but many aspects of construction have become more challenging and complicated over the past 60 years. At the local, state, and federal levels, both good and bad intentions over time have made it very difficult to build housing.

A few data points:

• The National Association of Home Builders estimates that 21 percent of the cost of a single-family home and 41 percent of the cost of a multifamily home are due to the cost of meeting regulations.

• It was suggested that the reason why Houston and Milwaukee are more successful than other jurisdictions at addressing homelessness (and addressing veteran homelessness in particular) is that they have a good supply of affordable housing, with vacancy rates of 9 to 10 percent.

The participants observed that when the government eliminates regulatory barriers and incentivizes production, the private sector can help meet growing demand. They acknowledged, however, that without incentives, financing, and subsidies, private developers are still unlikely to provide housing that is affordable to very low-income households. Local officials may need short-term rewards to overcome political opposition, such as providing communities with favorable financing and grants for adopting pro-housing policies. Examples of federal incentives for communities with pro-housing policies include financing or grants to support housing developments and funding the municipal staff needed to make housing development go faster.

Examples of pro-housing policies to be incentivized include jurisdictions that:

• Permit higher-density development and smaller minimum lot sizes.
• Offer developers easier access to municipal land.
• Adopt a single stairway policy for multistory buildings.
• Build more single-room occupancy developments.
• Allow developers to build more multigenerational housing.
• Make building modular housing easier.
• Remove minimum parking requirements.
• Increase townhome development.

Beyond creating incentives for local change, the federal government can facilitate more housing production in other ways:

• Supporting a process to effectively create a single national building code.
• Challenging the constitutionality of zoning for any purpose other than health or safety.
• Providing a federal incentive for insurers to reduce rates on new homes built to higher resiliency standards.

Research and Data

Perhaps unsurprisingly, in a room with more than two dozen academics, researchers noted a need for more evidence showing what works. The participants' suggestions included the following:

• Creating a national rental registry — potentially one that requires landlords who own properties receiving federally backed financing to register, similar to how mortgage brokers must register (Dodd-Frank model).
• Improving local data linkages between healthcare and housing.
• Collecting information during Point-in-Time Counts on employment and where people were housed before experiencing homelessness.
• Making data on hospital insurance programs publicly available.
• Tracking by building of all of the subsidies that building receives.

Suggestions for research questions included the following:

• What local policy changes work to increase supply?
• What do tenants and landlords think about changes to the HCV program?
• How does ERA work when a national emergency no longer exists?
• What housing interventions work best for which groups? 
• What are the solutions for clearing encampments that ensure homeless individuals have a home?
• How can we make shelters safer while also not being "police forward"?
• Are tiny homes effective in serving and meeting the needs of homeless individuals? 
• Can a cash subsidy help individuals exit homelessness?
• What are the impacts of various rent regulations and tenant protection policies?
• How do rent-setting algorithms work and what are their impacts?

Conclusion

The Honorable Adrianne Todman concluded the meeting by calling for bold ideas to help HUD become what "HUD should be," meeting the promise of our bold mission with better and smarter policies. The United States faces a growing housing supply shortage that contributes to challenges related to affordability, stability, resilience, homelessness, and access to homeownership. Innovation — combined with evidence — will be needed to rise to these related challenges and ensure that HUD delivers on its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

List of Attendees

• Samantha Batko, Senior Fellow, Urban Institute
• Gregg Colburn, Associate Professor in the Runstad Department of Real Estate in the College of Built Environments, University of Washington
• Martha Galvez, Executive Director of the Housing Solutions Lab at NYU Furman Center
• Edward Golding, Executive Director MIT Golub Center for Finance
• Margaret Hagan, Director of Legal Design Lab and Lecturer are Stanford Law School
• Emily Hamilton, Senior Research Fellow, Mercatus Center at George Mason University
• Peter Hepburn, Assistant Professor, Rutgers Newark
• Christine Jang-Trettien, Assistant Professor, CUNY-Queens College
• Haydar Kurban, Professor of Economic, Howard University and Director, Howard University Center of Excellence in Housing & Urban Research & Policy (CHURP)
• Margot Kushel, Professor of Medicine and Director of the Benioff Homelessness and Housing Initiative, UCSF Medical School
• Carlos Martín, Director of the Remodeling Futures Program, Harvard Joint Center for Housing Studies
• Stephanie Moulton, Professor and Associate Dean for Faculty and Research at Ohio State University College of Public Affairs
• Kathy O'Regan, Professor of Public Policy and Planning and Faculty Director, NYU Furman Center, NYU Wagner
• Vanessa Perry, Professor of Strategic Management & Public Policy, George Washington University
• Tobias Peter, Senior Fellow at American Enterprise Institute
• Christopher Rausch, Assistant Professor of Civil Engineering, UT Austin
• Seumalu Elora Lee Raymond, Assistant Professor of City & Regional Planning, Georgia Tech
• Carolina Reid, Associate Professor of City & Regional Planning, UC Berkeley, Faculty Research Advisor for the Terner Center for Housing Innovation
• Vincent Reina, Associate Professor and Faculty Director of the Housing Initiative at Penn, University of Pennsylvania
• Beth Shinn, Chair, Department of Human and Organizational Development Professor, Vanderbilt University
• Justin Steil, Associate Professor of Law and Urban Planning, Massachusetts Institute of Technology
• Susan Wachter, Albert Sussman Professor of Real Estate, Professor of Finance, Co-Director, Penn Institute for Urban Research
• Brandon Weiss, Professor of Law; Senior Associate Dean for Academic and Faculty Affairs, American University Washington College of Law
• Jun Zhu, Associate Professor of Finance, Indiana University School of Business