Community Developments: RAD Capital Investment, Housing Finance Reform
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- Yesterday, HUD announced that its Rental Assistance Demonstration (RAD) surpassed $4 billion in capital investment in critical repairs to distressed public housing. Currently, RAD is leveraging $19 in capital for every $1 of public housing funds, significantly expanding the ability of public housing authorities to improve the condition of public housing properties. Without RAD, according to HUD, it would take 46 years for housing authorities to accomplish the same level of repairs and renewal. (HUD, May 11)
- In his testimony to the Senate Banking Committee yesterday, Federal Housing Finance Agency Director Melvin Watt emphasized that reform for Fannie Mae and Freddie Mac is needed soon. “I have said repeatedly…that these conservatorships are not sustainable and they need to end as soon as Congress can chart the way forward on housing finance reform,” said Watt. The director also told the committee that any minor housing market disruption or short period of distress in the economy could cause credit-related losses to the Fannie and Freddie, for which taxpayers would be responsible. (HousingWire, May 11)
- The House Ways and Means Committee will hold a hearing on tax reform next Thursday, its first one this year on overhauling the tax code. According to a committee release, the hearing will focus on “how tax reform will grow our economy and create jobs across America.” Witnesses will be announced next week. (Politico Pro, May 11)
- In his May revision to the California state budget, Governor Jerry Brown proposed no new money or policy changes to address the state’s affordable housing shortage. Currently, one-third of California renters spend more than half of their income on housing. The governor said that California shouldn’t spend new money on low-income housing unless the state also makes politically hard decisions to lower building costs. State legislators have proposed 130 bills this year to address the California’s affordable housing shortage. (Los Angeles Times, May 11)
Low homeownership rates among black households have big implications for retirement plans. In the three decades following the passage of the Fair Housing Act in 1968, the black homeownership rate rose by nearly six percentage points. But from 2000 to 2015, that gain was more than erased as the black homeownership rate dropped to 41 percent, compared to 71 percent among white households. As a result, wealth building has become more challenging. According to Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center, “Homeownership is a forced savings tool, and that’s what folks that don’t have homeownership, particularly in retirement, have missed out on.” (Forbes, May 10)
An analysis by Zillow shows that housing markets in the South and Midwest are most favorable for first-time homebuyers. The analysis suggests that markets with a healthy balance of affordable housing, low competition between potential buyers and strong growth prospects often attract budget-conscious, first-time home buyers. According to the analysis, the housing markets that are most favorable for first-time home buyers are Memphis, Oklahoma City and Orlando. (Zillow, May 12)
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