Bipartisan support for the Neighborhood Home Investment Act heightens optimism
There have been scant positive elements to the housing industry in the past year – what with rising rates and a lack of affordability. But mulled legislation designed to mitigate the latter dynamic has yielded optimism for the coming year.
The Neighborhood Homes Investment Act – co-sponsored by US Rep. Mike Kelly (R-PA) and Rep. Brian Higgins (D-NY) – is designed to expand the supply of affordable, single-family homes. The bipartisan support of the legislation – at a time when bipartisanship is a scarcity given heighted political polarization – has further raised the hopes of those helping to solve the housing affordability crisis.
Among the most notable proponents of the legislation is the National Community Stabilization Trust (NCST), which works to increase homeownership by expanding the supply of affordable, single-family homes to stabilize neighborhoods, build community wealth and advance racial equity. For more than a decade, the non-profit has been an intermediary for responsible, locally based buyers and developers purchasing and rehabilitating homes to create affordable homeownership opportunities.
NCST president voices his support of the Neighborhood Homes Investment Act
Mortgage Professional America reached out to Chris Tyson (pictured), president of the National Community Stabilization Trust, to learn more about the legislation and its potential impact on the current housing affordability crisis in the US.
Across America, he said, there is a glut of vacant homes ripe for rehabilitation that could be transformed into affordable housing. “We all know parts of town where we have blighted homes,” he told MPA during a telephone interview. “We pass those and wonder why nobody is doing anything.”
The legislation could help develop 500,000 new homes in the next decade through the creation of a new federal tax credit. Consequently, it would restore vacant land to productive use, create thousands of construction jobs, lift the assets of all homeowners in the community and expand the tax base for local governments, he noted.
The valuation gap poses an obstacle to would-be homeowners
“People are desiring to purchase homes and they’re getting applications for mortgages and they can’t find anything they can afford and they’re having to go against cash buyers,” Tyson said. “The valuation gap stands in the way of renovating these homes and bringing them to market to satisfy that unmet demand.”
He explained the probative nature of the valuation gap: “The valuation gap is the gap between what it costs to renovate a home and what that home can sell for,” he explained. The glut of vacant homes is more often found in mid-tier markets across the US, he noted.
He likened the tax credit at the core of the Neighborhood Homes Investment Act to an existing one designed for low-income multifamily housing dubbed the Low Income Housing Tax Credit, which provides a tax incentive to construct or rehabilitate affordable rental housing for low-income households. The LIHTC subsidizes the acquisition, construction and rehabilitation of affordable rental housing for low- and moderate-income tenants.
“The Neighborhood Homes Investment Act creates a tax credit not unlike the tax credit we have for low-income multifamily housing,” he said. “You can think of this as the single-family corollary to the LIHTC program.”
The Neighborhood Homes Investment Act, coupled with the Affordable Housing Credit Improvement Act which has garnered bipartisan support from more than one-third of Congress, would create 2.5 million new housing opportunities and would address the housing crisis in neighborhoods and communities of all types, Tyson noted in explaining his non-profit’s support of the measure.
Bipartisan, bicameral support yields further optimism for passage of legislation
While it’s hard to predict what Congress will do given increasing polarization, broad support for the Neighborhood Homes Investment Act has yielded further optimism for positive action in the coming year, Tyson suggested.
“It’s bipartisan legislation – bipartisan and bicameral – which we’re excited about,” he said. “I’m not someone to predict what Congress is going to do – there certainly are a lot of machinations underway as the year ends. But we know that the president has signaled his desire to do something on housing to address this problem, and we know that the administration is supportive of neighborhood homes, so we hope that will bear fruit in passage of the bill or inclusion in some other omnibus package.”
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