Federal housing leaders want to see 'bold action'
HUD and FHFA executives spoke recently about ways the federal government should get more involved in issues like zoning, mortgages, insurance and appraisals.
Housing leaders say a new future is rapidly approaching for real estate in the U.S., one where the federal government asserts itself in areas it previously left to the private market.
At the Mortgage Bankers Association's annual conference in Denver last month, HUD Secretary Adrianne Todman and Federal Housing Finance Authority (FHFA) Deputy Director Naa Awaa Tagoe spoke about how their agencies are working to remove barriers and increase access to housing for all Americans.
A time for 'bold, decisive action'
The speakers said the federal government is focused on areas related to affordability, equity and efficiency: Closing the housing supply gap by addressing local barriers with funding and technical assistance; addressing coverage gaps in the property insurance market; and expanding mortgage access to low-income earners and people with low credit scores.
The changes are being considered at a time when high interest rates and housing costs continue to weigh on American homebuyers. Although single-family housing starts posted big gains in August and continued to tick up in September — one sign of an improving economy — there is still a lot of work to do, Todman said.
"We know the moment before us requires bold, decisive action," she added.
A federal push to 'move the needle' on local zoning
Land use and zoning are two local issues that Todman said her agency wants to be more involved in. It's a topic the U.S. Senate has also recently taken an interest in, and the presidential candidates have both discussed plans to streamline housing development through various proposals.
Experts at Harvard's Joint Center for Housing Studies have suggested that creating more flexibility around land use and zoning codes can make housing more affordable.
To that end, Todman said HUD is working with local government agencies to modernize their housing development processes. For instance, HUD's Pathways to Removing Obstacles in Housing program provides funding for communities that identify inefficiencies in their permitting process, outdated barriers in their zoning code, and deteriorating or inadequate infrastructure. HUD can also provide model zoning codes for jurisdictions that lack the capacity to conduct this work on their own, Todman said.
She described these efforts as "continuous conversations to move the needle."
The fading American Dream?
Removing barriers to create more affordable housing could also have a significant impact on younger Americans, many of whom don't see a future where they can achieve the American Dream of homeownership, Todman added.
A June survey found that among Gen Z voters, housing affordability was the most important election issue this year, and a growing number of consumers now plan to continue renting as the market remains challenging for buyers.
"How do we ensure younger generations and their children can live better lives than we have? That's America's promise," Todman said.
Insurance and appraisal reforms
Agencies like the FHFA are also looking at ways to address insurance coverage gaps and home appraisal disparities for historically underserved communities, said Tagoe.
FHFA has convened talks with some of the nation's largest insurance providers to advocate for reforms like including property replacement cost coverage in insurance policies, Tagoe added. Including this coverage would guarantee that homeowners who lose their homes to covered disasters would receive enough money to replace the home.
Adding this coverage would close the coverage gap that many homeowners experience following a natural disaster like a hurricane or wildfire. For instance, CoreLogic estimated that the damage caused by Hurricane Helene will result in roughly $30-$45 billion in damage. However, insurance companies are estimated to pay a maximum of $17.5 billion for losses.
Tagoe also announced that FHFA and HUD partnered to include improve HUD's single-family mortgage data and address appraisal bias. The new dataset includes mortgages that are insured by HUD's Federal Housing Administration, which include borrowers with limited credit profiles and poor credit scored.
"Far too many families face unfair racial or ethnic bias when they get their home appraised. To truly eliminate this form of discrimination, we need accurate, up-to-date data on the appraisal market," Todman said.
