U.S. Sens. Ruben Gallego (D-AZ) and Dave McCormick (R-PA) introduced a bill in the senate that is designed to increase the supply of affordable housing.
The bipartisan Housing Affordability Act seeks to do this by raising the Federal Housing Administration’s (FHA) outdated multifamily loan limits, among other fixes.
“To tackle the affordable housing crisis, we need to make building homes easier and cheaper. But outdated regulations are holding us back,” Gallego said. “By updating a nearly two-decade old loan limit, the Housing Affordability Act will expand access to affordable loans for building multifamily housing and ultimately bring down housing costs.”
The FHA’s multifamily loan limits have not been updated since 2003. Further, over the last 5 years, the dollar volume of HUD-issued multifamily Firm Commitments has plummeted. Under the current limits, almost all communities are now treated as “high-cost areas.”. Rather than operating as intended, the statutory limits and inaccurate index combine to strangle urgently needed multifamily housing projects.
“One of the biggest obstacles to widespread affordable housing in Pennsylvania and across the country is a lack of supply,” McCormick said. “By making a long overdue increase to the FHA’s multifamily loan limits, we can incentivize the construction of more apartment buildings and, ultimately, increase access to housing for American families.”
The Housing Affordability Act would address this by amending the National Housing Act to raise statutory loan limits. It would also update the inflationary adjustment index from the Consumer Price Index (CPI) to the Price Deflator Index of Multifamily Residential Units Under Construction. This is viewed as a more accurate index to capture the true cost of multifamily housing construction.
The Housing Affordability Act is also endorsed by several organizations including the National Association of Home Builders; National Association of REALTORS; National Multifamily Housing Council; National Housing Conference; National Apartment Association; Institute of Real Estate Management; National Affordable Housing Management Association; National Leased Housing Association Council for Affordable and Rural Housing; National Association of Housing Cooperatives; and Arizona Multihousing Association.
“The Housing Affordability Act would make a long overdue update to FHA’s multifamily insurance programs to capture the true cost of apartment construction and immediately leverage private capital for new affordable homes,” Bill Killmer, senior vice president of legislative and political affairs at the Mortgage Bankers Association (MBA), said. “MBA appreciates Senators Gallego and McCormick’s commitment to remove unintentional and outdated regulatory barriers that constrain and delay workforce housing development across the country.”