What statement(s) related to housing—policy, or otherwise—would you want to hear in the presidential debates?
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I understand fully that reviving the American economy is a critical presidential priority, and that we cannot revive our economy unless we have a viable, healthy housing system. Homes in foreclosure and homes that are worth less than people owe on their mortgages are an enormous, multi-trillion-dollar drag on an economy that needs capital and liquidity to fuel job growth. We must, simply must, bring the homeownership markets into equilibrium or growth.
At the same time, we should never go back to 70% national homeownership. In the last decade, many people who are ‘natural renters’ bought homes, thinking they were ‘as safe as houses,’ only to find it ruined their credibility and hobbled their economic mobility. Renting is as American as homeownership, and as president, I will commit my administration to deliver healthy, affordable housing choices through four principal initiatives:
- Creating ‘starter-rental’ housing for new urban workers. With over a trillion dollars in non-dischargeable student debt, our Millennial Generation is carrying debt that is slowing their migration to good and better jobs. They need smaller, more flexible workforce rental housing, and my administration will deliver significant new tax credit resources, aimed at young workers between 60% and 100% of AMI, to give them a boost in their new careers.
- Deregulating public housing. Public housing needs a massive capital injection that it cannot finance now because of our obsolete Federal regulatory scheme. Hence, via Executive Order, I will cancel all existing public housing use covenants for any housing authority willing to convert itself into a non-profit housing association and operate the properties as affordable for the next fifty years. This will give these properties access to billions of renovation funds. I will also aggressively pursue consolidating housing authorities, with the stronger absorbing the weaker.
- Enacting national inclusionary zoning. Too many communities shirk their fair share of affordable housing through minimize lot sizes, setback requirements, and building codes that inhibit innovation and, more importantly, economically strangle any potential affordable housing. Taking a leaf from successful state and local experience such as Massachusetts’ Chapter 40B, we will enact a Federal inclusionary statute enabling developers that deliver 25% affordable housing to override local zoning in any community where less than 10% of the housing stock is affordable to low-income households.
- Comprehensively reforming CRA. In the three and a half decades since the Community Reinvestment Act became law, community lending and investing has become effective and successful business. However, the current CRA statute has never been amended, and it’s obsolete: antiquated, place-specific, too narrow in its definitions of financial products, and covering too few entities. Within ninety days of my Inauguration, a bipartisan blue-ribbon panel I will appoint will issue a proposed definitive CRA two point zero, which my administration will introduce, persuade Congress to enact, and speedily implement.
- Cutting back on the mortgage interest deduction. In times of budget crunches, we should not be subsidizing second homes or high-priced homes, and we can redeploy the scores of billions saved by these common-sense changes into new programs for Millennial renters.
David A. Smith is the founder and chairman of Recap Real Estate Advisors.
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