Because of the increased house prices, many potential buyers have been blocked out out of the market due to their inability to find an affordable price.
“The average home price has gone up $100,000 since President [Joe] Biden took office,” said Rep. Kevin Brady, R-Texas. “Who can afford that?”
Witnesses offered different takes on what caused the soaring prices.
“The housing market is becoming less affordable not because of institutional landlords or other private sector actors, but due to misguided federal policies,” Edward J. Pinto from the American Enterprise Institute said. “The real culprit is the massive house price boom fueled by federal housing and monetary policies, which is increasingly crowding out lower-income Americans from the housing market.”
“A lot of blame gets put on private investors, private equity, which owns less than 2% of the institutions that we’re talking about,” said Rep. Greg Murphy, R-N.C. “It’s also because Democrats have passed and continue to pass inflationary policies.”
Christopher Herbert of Harvard University testified that he did not think this was the case. Instead, he argued that not enough houses were built to meet demand, and federal assistance helped stabilize the housing market.
“The causes of the rising housing prices, as I said, go back to the fact that even before the pandemic, we weren’t building enough housing. There’s simply a shortage of housing,” Herbert said. “The emergency assistance that was provided to renters and home buyers, rather than cause inflation, I think, was critically important in maintaining stability in our housing market.”
Other witnesses agreed and argued for forming land banks and preventing rent hikes by large private investors to help solve the issue.
Akilah Watkins from the Center for Community Progress argued for passing the Neighborhood Homes Investment act, which she said would create a tax credit to help homeowners.
“What we are advocating for, at the Center for Community Progress, is the Neighborhood Homes Investment Act, which is a piece of legislation right now that is being championed bipartisan that would help produce and develop a tax credit for developers to help homeowners, both that are owner occupied and not owner occupied, deal with the equity gap that exists in so many of the communities in which we work in,” Watkins said.
Some, including witness Audra Hamernik of Nevada HAND, a construction development company, proposed the implementation of tax credits to help create and preserve affordable housing.
“We need more tax credits,” Hamernik said. “If we have more tax credits, I think the state would allow developers to do more deals.”
Pinto argued for an increase in supply, saying inadequate supply results in higher prices. He said federal assistance would not help but instead it would make the situation worse.
“We don’t need more stimulus because if you have inadequate supply, that immediately gets capitalized into higher prices, so we need more supply,” Pinto said. “The solution for that is we have to rely on state and local governments to add to that supply.”