With the housing crisis being one of the major challenges Americans face today, politicians have recently put forward various proposals to tackle it. These range from President Biden’s rent increase cap to a new bill from Massachusetts Senator Elizabeth Warren, who has suggested investing $500 billion to make housing more affordable over the next decade.
The American Housing and Mobility Act of 2024 aims to increase estate taxes for wealthy Americans and allocate the funds towards building three million new homes. The tax increase, described as a return to the rates at the end of George W. Bush’s presidency, was not a main focus of the bill’s summary, even though it is claimed that the bill would be self-funding.
An independent analysis by Mark Zandi of Moody Analytics indicates that the bill could reduce rents by 10% for lower- and middle-class families over the next decade.
“The only way to solve our country’s housing crisis is to build more housing so everyone has a place to call home,” Warren stated. “My bill will make significant investments in our country’s housing and promote local innovation to reduce housing costs further — all funded by contributions from America’s wealthiest families.”
The legislation is also sponsored by Sen. Raphael Warnock of Georgia and Rep. Emanuel Cleaver of Missouri. Warren introduced the bill at an event in Roxbury, Massachusetts, with affordable housing developer Urban Edge and received endorsements from over 30 mayors in Massachusetts, including Boston’s Michelle Wu.
Limits on Private Equity Purchases
Once the proposed tax revenue is allocated, nearly $550 billion would support federal housing and maintenance programs, with $445 billion going into the Housing Trust Fund, which developers can access for development and urban renewal grants.
Limiting the availability of government-owned, foreclosed, or distressed homes to private equity firms, including through the Claims Without Conveyance of Title program, would help direct properties to government-affiliated organizations.
Zoning is a crucial element of the proposal, with lawmakers seeking to approve land use currently restricted for development to reduce construction costs. A new grant program would provide $10 billion for community infrastructure spending, available only to municipalities that adopt more progressive zoning rules.
Lenders Would Be Held Accountable
Additionally, lenders would be held accountable for providing credit to low- and moderate-income communities by strengthening the Community Reinvestment Act (CRA) to increase scrutiny on non-bank mortgage companies, encourage investment in activities benefiting poor and middle-class communities, and enforce stricter penalties on institutions that fail to comply with the rules. The bill would also permit banks to engage in activities that further the public’s welfare.
The bill would create a path to homeownership through grants for first-time and first-generation homebuyers via down payment assistance programs, which currently exist through organizations such as Neighborhood Housing Services and NACA. Massachusetts has its own organization, MassDreams, offering similar services.
“Everyone deserves a chance at the American dream. But our housing crisis is worsening the affordability crisis — particularly in rural America. It’s more challenging than ever for people in Vermont and across America to buy a home – or even think about saving enough for a down payment,” said Senator Peter Welch of Vermont in a statement. “This bill will provide historic federal investments to lower housing costs, create grant programs that support borrowers
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