The Housing Bill Sitting On Trump's Desk Isn't The Game-Changer Many Hoped — Or Feared

The federal housing bill stalled on President Donald Trump’s desk is the most significant housing policy in a generation. 

But while it is a step toward expanding supply, the 21st Century Road to Housing Act will not be a game-changer for the commercial real estate sector.

“I don't see anything that's going to meaningfully turn the tide on the U.S consumer wanting to rent apartments and needing to rent apartments longer versus buying,” Marcus & Millichap CEO Hessam Nadji told Bisnow.

Still, the brokerage boss lauded provisions that seek to streamline the federal environmental review process and cut down cumbersome entitlement timelines at the municipal level.

Those efforts include a $200M annual competitive grant program that rewards municipalities that demonstrate increased housing supplies through density bonuses, zoning changes and streamlined permitting.

If the bill becomes law, manufactured housing players will score a big win with the removal of the permanent chassis mandate. This will remove the requirement for a steel frame that makes the dwellings portable, even though residents rarely move them. It is expected to reduce construction costs by up to $10K per unit and open up the sector to new lenders.

Road to Housing also increases the public welfare investment cap, which governs how much banks can invest in the affordable housing sector, from 15% to 20%.

This should give more juice to the low-income housing tax credit program, which was expanded via the reconciliation bill passed last summer, Enterprise Community Partners Vice President of Policy Liz Osborn said.

She also highlighted the reauthorization of the U.S. Department of Housing and Urban Development’s HOME Program, a uniquely flexible source of affordable housing funds that can help top out capital stacks in a space defined by rigid requirements.

“There’s a lot of goodies in the bill,” TruAmerica CEO Bob Hart said. “I’m not saying they’re significant, but they’re sending the right message to the development community and small cities.”

But Nadji said they are more of a “tangent” for Marcus & Millichap’s multifamily clients than something that would truly move the needle.

The final version of the bill was a relief for many in the build-to-rent industry.

Wolfson BTR CEO Adam Wolfson said he is "generally happy" with the final product after previous drafts of the legislation caused major headaches for him and others in the sector. 

“You have to look at it as what it could have been,” he said.

The U.S. Senate in March passed an early draft of the bill that would have required BTR builders to sell homes to a single-family buyer within seven years.

The news came as Wolfson was working to refinance a project. The number of bridge lenders willing to work with him dropped from 94 to about six over the course of less than three weeks.

Subsequent drafts of the bill took the pressure off BTR, and U.S. Rep. French Hill clarified that lawmakers didn’t intend to hamstring the sector in a set of implementation directions for the Treasury when the final version was passed last week.

Wolfson said lenders are already returning to the BTR space, and he expects that to continue.

“You’re going to see a lot of folks jump back in, assuming this gets signed,” he said.

But he added that the scale and speed of their reentry remain uncertain, which could create a problem for BTR players who need short-term financing.

The bill also includes regulations that would, in some cases, cap the number of single-family homes an institutional investor can own at 350.

The measure came in response to populist rhetoric about investors competing with single-family buyers put forth by the president and some of his political rivals, including Road to Housing sponsor Sen. Elizabeth Warren.

“Homes are built for people, not for corporations,” Trump said in January.

But Wolfson and multifamily economist Jay Parsons said there are ways around the cap.

Investors can skirt it by giving renters the opportunity to buy the single-family home they occupy before it is sold to someone else and sending tenant payments to credit bureaus so they can build their credit scores.

“There’s a lot more saber rattling and window dressing in the legislation in the bill — including several other exemptions allowing large investors to buy homes, the most important of which is the exemption on new build-to-rent construction,” Parsons wrote in a social media post. 

When some politicians talk about Road to Housing, they frame it as the first step in a broader push to reshape federal housing policy.

While the focus in Washington, D.C., is still on getting the president to sign the bill into law, CRE players have ideas for the next steps.

There is broad support for a workforce housing tax credit introduced in the U.S. House earlier this year, according to Bipartisan Policy Center Executive Vice President Dennis Shea.

The chair of the organization’s J. Ronald Terwilliger Center for Housing Policy said the proposal would function in a manner similar to LIHTC but extend beyond the 60% area median income threshold the program is limited to.

Hart floated expanding the private welfare investment fund cap again to 25%.

Wolfson proposed a nationwide property tax abatement for attainable housing in the vein of Florida’s Live Local Act, which gives exemptions to multifamily projects targeting up to 120% of the AMI.

National Multifamily Housing Council President Sharon Wilson Géno said Road to Housing is a good start, but that there is more work to be done.

“No one thing is going to be magical, but put together, they will start creating a better environment,” she said of the bill’s various provisions. “We can now show housing is an important issue, it’s bipartisan in nature.”