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Feb. 9, 2026 17:58-18:31 - CSPAN
32:53
Washington Journal Dennis Shea
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Shortage of Homes 00:06:44
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Welcome back to Washington Journal.
Joining us to talk about housing affordability is Dennis Shea.
He is Executive Vice President at the Housing Policy Center.
Sorry, Executive Vice President at the Bipartisan Policy Center and chair of the Housing Policy Center.
There's a lot there.
There's a lot there.
It's a lot.
Welcome.
I agree.
Welcome.
Just remind us about your organization.
Sure.
BPC was founded nearly 20 years ago by four former Senate Majority Leaders, including my former boss, Bob Dole.
And it's designed to be a place where people from across the political spectrum can come together in good faith and try to figure out areas where we can advance the country.
So we have programs not just on housing, but on economics and fiscal policy, on health, on energy, on human capital, and on governance.
So it's a great organization.
I encourage everybody to check out our website at bipartisanpolicy.org.
It's a place where people find you can get the data-driven analysis, fairly written material, and good background material.
And we take positions too.
Well, let's talk about a poll.
This is a New York Times Sienna poll from last month about housing costs.
And 54% of those polled said that housing costs were unaffordable.
Why is that and why has housing costs increased?
Well, I think the short answer is that we just have not built enough housing to meet demand.
So the supply-demand imbalance has led to soaring housing costs.
I work, I lead the Tewillager Center at BPC.
It's named after Ron Tawilliger, a former multifamily developer who's now one of the leading housing philanthropists in the United States.
And he used to call the housing affordability challenges that we face here in the U.S. the silent crisis.
But it's certainly not silent anymore, as this polling information shows.
I mean, if you look between 2020 and 2025, home sale prices have increased about 50%.
The median home sale price is about $432,000.
Rents have increased about 30% during that period.
And about 43 million households, about a quarter of homeowners and half the renters, pay more than 30% of their income just on housing costs.
So we do have an affordability problem with respect to housing in the United States.
And most folks believe that the reason that we have this affordability problem is because we just have not built, we've underbuilt housing by millions of homes, particularly since the Great Recession of 2008.
Now, what impact does the presence of a large number of illegal immigrants have on housing prices?
Because if it's a supply and demand issue, then that would be a large demand signal on housing when there's more people in the country than should be here as far as legal status.
Well, clearly, I mean, the fact that there's tremendous demand for housing, some households have not formed because you have the doubling up effect, young kids staying at home with their parents.
There's just been not enough supply.
Research shows, for example, with respect to undocumented migrants, asylum seekers into the U.S. that led to an increase in unsheltered homelessness, particularly in large cities where they congregated, New York, Chicago, Boston.
So it is an issue.
I know it's an issue that the Trump administration feels that one reason for the housing crisis, the high housing costs, is this influx of new people, new immigrants across the border.
And do you agree with that?
I think there is in certain communities, yeah, I think it definitely has had an impact.
But we shall see now with some of the closing of the border, the more secure border, whether housing prices have gone down.
Some housing prices have gone down in certain communities throughout the United States, Austin, Texas, for example.
But that's because the supply came on board to meet the demand.
People are building to meet the demand.
Well, let's talk about the demand and how much of a shortage there is, because there seems to be a disagreement on how much of the shortage.
I want to read to you from the Washington Post.
They say this, it says, America faces a serious housing shortage, one that Moody's estimates would take more than 2 million new homes to resolve.
Over at Goldman Sachs, the analysts put the number at 3 million.
Zillow's estimate is 4 million.
Brookings projects 5 million.
McKinsey says 8 million.
Meanwhile, Congressional Republicans insist the shortfall is closer to 20 million.
So, Dennis, nobody knows how much.
Well, I mean, the one thing that's clear here is that we have a shortfall.
But don't we need to know how much of a shortfall?
We will never know exactly what the shortfall is, but we do have, because our demographics are dynamic, but we do have a shortfall.
So the thing that ties that all together is that we have a shortage of homes in the millions.
So that is what we should be focused on.
When you're dealing with economists, you're going to get a different view depending on what models they're using.
But the key factor is that we have a shortage of homes.
If you've got a question for Dennis Shea about housing affordability, you can give us a call.
Congressional Housing Bills 00:05:03
So here's how our lines are split up.
If you own your home, it's 202-748-8000.
If you're a renter, it's 202-748-8001.
Everybody else can call us on 202-748-8002.
So you would use that line, for instance, if you're in a nursing home, if you're unhoused, if you're living with family members, that kind of thing.
So owners, renters, and all others are our phone lines for this segment.
So Dennis, there are several proposals now in front of the House, in front of the Senate.
Can you explain to us what those proposals are?
Sure.
Well, there's broad recognition in Congress that the reason why we have a high housing cost is the fact that we have a shortage of homes.
So the two bills in the House, it's the Housing for the 21st Century Act and in the Senate it's the Road to Housing Act.
Both bills try to increase supply, which is where the bipartisan sweet spot is.
There's agreement across party lines that we need to increase supply.
But both bills aim to improve federal programs, streamline, deregulate, incentivize local communities to adopt policies that are more pro-housing, that allow for greater density.
So that's essentially what the bills do.
And it's important to understand these bills are strongly bipartisan.
The Road to Housing Act, which is the Senate bill, passed out of the Senate Banking Committee by 24 to zero.
So you have a conservative like Tim Scott, Senator Tim Scott, and a Liberal like Senator Elizabeth Warren coming together to endorse this package.
And it was part of the defense authorization bill, NDAA bill.
It was added to that at the end of last year.
The House bill, the Housing for the 21st Century Act, is a cooperation between French Hill, the chairman of the House Financial Services Committee, Mike Flood on the Republican side and on the Democratic side, Maxine Water, who's the ranking member of the committee, and Emmanuel Cleaver.
And they've come together and that passed out of the House Financial Services Committee 50 to 1.
So there's really ⁇ the good news is that there's strong bipartisan agreement that we need to address this issue.
And I'll say tonight, the House will be considering the 21st Century for the Housing Act on what is known under suspension of the rules.
So it's just 40 minutes of debate, no amendments, and this is done for bills that are deemed by the leadership to have broad bipartisan support.
But both of those need to be the same.
Obviously, they have to pass the exact same bill.
So are there points of disagreement that could scuttle this whole thing?
Well, there are points of disagreement.
What's likely to happen is that the House will pass their bill this evening, and then the Senate, rumor has it that the Senate's going to repass the Road to Housing Act, yeah, the Road to Housing Act, by the end of this month, February.
So at some point, there's overlap between the two bills.
Maybe the Road to Housing Act is a bit broader.
There's more authorizations of new programs in the Road to Housing Act.
But eventually, both the House and the Senate will have to come together to reconcile the differences between the two bills.
And again, there's a lot of overlap between the two bills.
So they're going to have to decide which provision of road to housing should be included, which provision that's not in 21st Century Act, which provision of the 21st Century Act, which is not in road, should be included.
So we should have a So you're optimistic that this is going to go through.
I am very optimistic.
I think members of Congress are hearing from their constituents that high housing costs is a major concern, and they want to demonstrate that they're doing something about it.
So let's assume it does pass.
How long until we start seeing a difference in housing availability and housing prices?
That's a great question because it's really important to understand.
I mean, I think it's great if Congress passes this bill and President Trump signaled that he'd support the road, the Trump administration signaled they'd support the Senate package.
So I presume they will support whatever comes out of Congress.
But rebuilding, getting the supply shortage, filling that gap is going to be a multi-year effort.
And it's not just the Congress.
It's just not the federal government.
It is state and local governments and counties working together.
It's the private sector.
It's philanthropy.
So it's going to be, there's no silver bullet, there's no magic solution to this problem, but it's very important if Congress takes this action, it's demonstrating that they get it.
They're trying to take some measures that will improve the situation.
But it's going to be a multi-year, multi-actor process.
Let's talk to callers.
Infrastructure Challenges in Housing 00:13:26
We'll start with Lynn in Lowell, Massachusetts on our line for renters.
Good morning, Lynn.
Good morning.
I have a question for your guest in regards to the building of luxury units, high-priced luxury units as opposed to affordable units and how those are affecting fair market rents, whether they sit empty or not.
And also, just your opinion on that and also the tearing down of smaller homes that would otherwise be more affordable for younger people just starting out and building, as they are commonly known, McMansions.
If you wanted to make a comment on that.
Well, you know, I think we need to build more starter homes, no question about it.
A starter home is about 1,500 square feet.
It's smaller than the McMansion style homes.
In the 70s, we used to build about 40% of new home construction was starter homes, so available to people who are trying to be first-time homebuyers.
Recently, the numbers have declined to 10% or less.
So there are a number of reasons for that.
Restrictive zoning and land use policies that require minimum lot sizes and minimum sizes of homes on those lots that restrict density.
So no question about it that we need to build more and we need to build more homes that are affordable to people trying to become homeowners for the first time.
Is there anything in any of these packages in front of Congress that incentivizes more starter home building?
Sure.
I mean, there is a provision that would create a grant program in HUD that would allow, that provides guidance to localities to have pre-approved designs for duplexes and accessory dwelling units and smaller homes.
So they don't have to go through the long permitting process.
They can be pre-approved, the design.
So there's money in there in both bills that would encourage that.
A very affordable source of housing is manufactured housing.
And manufactured housing today is nothing like it was 10 or 20 or 30 years ago.
I mean, some of the homes, if you've been in them, are quite beautiful.
So there is a federal regulation that requires that all manufactured homes have a permanent chassis built under them because the thought was that they'd be moving around.
But in fact, most manufactured homes, when they get to where they're going, are going to stay there forever.
So there's a provision in both bills that would remove that requirement, and that should reduce the cost of that home by $5,000 to $10,000.
And it's already an affordable source of housing.
On the line for owners in California, Roberta, you're on with Dennis Shea.
Yes, I have a couple of suggestions for everyday Americans to afford a house.
They should either get a second or third job or they should be paid a living wage.
Well, your point, at the core of your point is the fact that incomes have not kept up with rising housing costs.
So I think that's actually a fair point.
I mean, but housing costs have gone up so dramatically pre-pandemic to today, 50% for home prices, 30% for rents.
It's understandable that incomes have not kept up with those increases.
John in Connecticut, on the line for all others.
Go ahead, John.
Morning.
I'm a condo owner in Connecticut, and our solution for affordable housing has been a mandate under HB 830G, which says basically every municipality must have 10% affordable housing.
If they don't meet that goal, the contractor or builder can come in and override any zoning regulations if he has 30% of the housing he constructs on the mandate for in order to meet the mandate of that 10%.
I'd like to get your opinion on that.
Well, I assume HB 830G is a state law that sort of preempts local actions.
And I think you're seeing that more and more throughout the country, not just in sort of blue states like Connecticut, but also in red states where the state legislatures and the governors are saying, okay,
if you're a city above a certain size, you have to allow, for example, multifamily development in commercially zoned areas, or you have to allow accessory dwelling units if a property owner wants to put an ADU on their property.
So I think more and more you're seeing that, John, in other states of state governments preempting local activity, local restrictions.
So Adam in Maryland has this question for you.
What about converting existing but now unused large buildings into reasonable affordable housing, either as condos or rentals?
There's a lot of empty retail or business park locations to choose from now with good traffic locations, including Walmart's.
That's a great question.
I mean, particularly in COVID, post-COVID, you go to some city centers and the office buildings are empty.
And so maybe converting some of that to residential housing, affordable residential housing works.
And some communities are trying to do that.
Sometimes the office buildings are not architecturally structured to be easily converted to residential housing.
But you see some cities, for example, like Washington, D.C., that has a tax credit to help incentivize the conversion of office to residential.
And there is a provision in the 21st century for Housing Act that amends the home program.
This is getting technical.
That would create a pilot program for grants to assist communities that want to do this type of conversion.
Loretta is a renter in Cocoa Beach, Florida.
Good morning.
Oh, good morning, Mr. Shea.
I have one question about, it's my understanding that there's a 50% owner-to-renter ratio to be able to qualify for the FHA 3.5% down.
If that one rule would be changed, that excludes so many young people from getting into, from renters into home ownership.
Are thousands of properties below one and two bedroom properties below the 150 mark where those kids would only be paying well below 1500 PITI every month?
I know one complex where my daughter's looking in Gainesville.
There are 15 units available in that complex that are below 150.
Some of them are 110.
Beautiful little units, one bedroom, one bath, nice quality swimming pool, everything a kid wants, right?
But because of the 50% rule, you need a portfolio lender or you need to be all cash to get into those properties.
And that's keeping thousands of young kids from getting into their starter homes and getting their first step on the property ladder.
And if that one FHA rule was changed, all these young people could get into their homes and their mortgage and PITIs would be $15, maybe $1,200 a month, half of what they're paying right now in some of the complexes in Gainesville for rent.
And I'm just wondering why we have all these other programs, really hundreds of programs, but the one FHA rule is keeping all these kids from getting started on the property ladder.
Thank you.
Well, thank you very much.
It's a great point.
I don't know that particular rule, but I am going to go back to my office and check it out.
So I really appreciate your raising it.
Thank you.
John is an owner in Wilmington, Illinois.
Go ahead, John.
You're on the air.
You know, you guys keep talking about we need to shorten up lot sizes, build double houses.
What about the infrastructure?
I mean, you built an infrastructure for 30 houses on one side of a block, 60 houses total, and you want to put on two houses, three houses on two lots.
Well, you're going to raise it by 30%.
So what about the infrastructure that needs to handle it?
I mean, you know, that's the biggest deal in all of the new subdivisions in the southern suburbs in Chicago is who's paying for the wider roads?
Who's paying for the sewers?
Who's paying for the new schools based upon these things?
Y'all look at it from this perspective of we got to build more houses, and nobody talks about the fact that in the United States, the cost of a house is five times more than the average wage earner.
Well, thank you.
I mean, you raise a good point that when you build more housing, particularly in developed areas, you have to be concerned about infrastructure and whether the existing infrastructure can support the additional housing.
You know, is there enough parking around for the additional residents?
So that's a factor that definitely must be considered.
I'll say in the Road to Housing Act, which is the Senate bill, there is something called the Innovation Fund.
And I'm curious as to whether this will make it into the final package that would authorize about $200 million a year in grants to communities that adopt more pro-housing policies, that have adopted more pro-housing policies, and that money can be used for infrastructure, like sewers and other things.
So I think that demonstrates this as a recognition that when you build more housing, there are other things that you have to keep in mind.
Peter is an owner in Walnut Creek, California.
Hi, Peter.
Mimi, I'm a condo owner, and I agree with all the callers who own.
It's affordability.
Who has 20% down, especially in California?
And then our HOAs are going up, too.
And it's inflation because all these young people, they're broke.
Their credit card, you know, they have lousy credits.
They check your credit too.
And it's greed.
I believe it's greed.
Everywhere it's greed.
This is what's wrong with everything.
It's greed.
That's it.
So, Peter, tell me about how much a one-bedroom condo would cost in Walnut Creek.
Oh, my God.
You know what?
I paid $185,000 for my condo here in Walnut Creek in 2002 because I sold my place in Antioch in the 90s.
I bought it for $40,000.
I took over my brother's payment.
And it's right before all the housing sale, and it sold for $107,000.
And so with that $100,000, I bought my condo in Walnut Creek because I wouldn't have $100,000 to put down.
So how much is it worth?
How much is your condo worth now?
Yeah, well, it was worth $360,000, but now because housing has gone down, now it fell to $330,000, $330,000.
Who could put 20% down?
And then what's the interest rate?
7%?
I got that fixed 4.125 because I still owe on it, like 90,000, 100,000.
I still own it.
But it's the association fees, too.
It's just unaffordable.
I feel sorry for these young people who want to own.
It's crazy.
Dennis.
Well, I have a daughter who's graduating from college.
And I'm thinking with you, Dennis.
Put it that way.
No, she doesn't want to.
But it's tough out there.
I totally agree.
I mean, it's tough to find a job.
I think it's a different issue.
The role of AI in disrupting the workforce, particularly at those entry-level positions, it's going to be serious.
And it is, you know, with the average home sale price of $423,000.
And if you have to put 20% down as a young person, that's out of reach for most.
Kevin, a renter in Alexandria, Virginia.
Hello, Kevin.
Yes, hello.
I'm calling to find out if the rents in Alexandria, Virginia for apartments will ever go down.
Rental Market Complexities 00:07:23
Do rents ever go?
I used to live in Alexandria, Virginia, and I know the home prices always went up.
So they will track with the rental will go up with housing.
I mean, Alexandria, Virginia is a desirable place to live.
It's so well located.
There's a lot going on in Alexandria.
So I suspect that with more building there, there could be a softening of the market and rents could go down.
But I'm not going to, that's not financial advice or anything like that.
Dennis, there's building codes, which can be very complicated and very confusing.
Is there any proposals that would nationalize or standardize building codes across the country so that it would make it that builders would be more incentivized to build more?
I mean, that's a great question.
I mean, there was a provision in this 21st century Housing for the 21st Century Act that directed a federal government study of whether there should be a national building code, but that fell out of the bill.
I mean, the patchwork of building codes, some builders say, you know, really increases complexity and cost.
You know, we're strong supporters.
I said BPC takes positions.
We're strong supporters of the low-income housing tax credit program, which incentivizes private investment in the production and rehabilitation of rental housing that's affordable to lower-income people.
It's been a very successful program over the past 30 or 40 years.
But one thing that we have suggested is that there could be a common building standard for LITEC units because that could potentially reduce the complexity.
And how likely is that to get anywhere?
I don't see it in the imminent future, but I think we have a number of ideas for improving the LITEC program, which are designed to reduce the regulatory cost and reduce, try to create more less complexity.
Kelly in Warrensburg, Missouri, owner.
Hello, Kelly.
Hello, good morning.
And thank you for taking my call.
I do agree with everyone that's saying we need new starter homes.
I really do think that would help a lot.
However, from what I understand, the cost to build starter homes has increased so significantly for the builders that it's not feasible for them to build starter homes.
And I was wondering if the guest there, if he also thinks that tariffs on appliances, everything that goes into building a home, lumber, from what I understand, the tariffs have really hurt the capability for builders to build starter homes.
And thank you.
Well, I think the thanks, Kelly.
I think it is correct that many builders find the margins are very tight on building starter homes.
So it's more profitable and makes better business sense to build better homes when the margins are bigger.
The issue of tariffs, we've had tariffs on softwood lumber, for example, from Canada for many years, countervailing duties because our government assesses that the Canadian lumber industry is subsidizing their industry, which is impacting our lumber producers.
So that's been an issue for many, many years.
I think COVID, when you saw when COVID hit, it really damaged the supply chain and the price of lumber and copper and other inputs into the home building process really skyrocketed.
I have not seen the numbers.
I have not taken a look at the numbers recently of whether I assume the prices have gone down, but I don't know how much they've gone down.
Laura's a renter in Starksville, Mississippi.
Hello, Laura.
Hey, thanks for taking my call.
I hear that you're saying a lot of the affordability issues are because there just aren't enough houses.
But I live in an area that should be one of the more affordable places in the country.
And there are homes available, but the problem is they're either way overpriced or the starter homes that were available five or six years ago are all short and long-term rentals now.
The rental that I live in, I could afford the mortgage on, but it's a rental.
And that's pretty much the case with everything near me and most of the places in my state that I've looked at moving to, and even like the Memphis area.
So I was just curious, how much of it is really a housing, like there's not enough houses, and how much of it is that the houses that would be affordable are bought for short and long-term rentals?
Yeah, I think there's definitely a shortage of homes, particularly in communities that are desirable and that afford opportunities.
There's clearly not enough housing that's accessible to middle-income people in those communities.
You can build a lot of housing, but you could put it an hour away or two hours away From where the jobs are, and that's not very desirable.
So, we need to be building more where the jobs are, where the opportunities are.
Short-term rentals, that's a continuing debate.
I know in New York City, they really restricted short-term rentals and did not have an impact on the vacancy rate in New York City.
So, it's a tough issue.
So, President Trump has been moving to ban institutional investors from purchasing single-family homes.
Will that work?
I mean, has that contributed to the problem initially that institutional investors are buying up single-family homes?
Well, he issued an executive order in January.
He carves out single-family rental homes from that executive order.
It's single-family for ownership, directed the Treasury Department to define what an institutional investor means and how many homes are we talking about.
I mean, institutional investment in homes is really concentrated in certain areas of the country, the Southeast and I think parts of the Southwest.
As a total share of the overall single-family market, institutional investment is relatively small as an overall share.
So, you know, an institutional investment is often helpful to rehab homes.
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