ICYMI: Warren Calls for Big National Investment to Lower Housing Costs, Stronger Protections for Renters and Families
Warren: “Massachusetts and the rest of the country shouldn’t be left to address this crisis alone. It’s time for the federal government to step up, not to tell local governments what to do, but to be a good partner for communities that are ready to act.”
Washington, D.C. – RealEstateRama – U.S. Senator Elizabeth Warren (D-Mass.) delivered remarks at the New England Council, where she highlighted her priorities to lower housing costs, including increasing supply and bolstering renter protections. Senator Warren also highlighted the dangers posed by institutional investors for families seeking to buy or rent single-family homes, and discussed actions that the Biden administration has taken to protect renters and homeowners, including the Renters Bill of Rights.
The full text of her remarks is available below.
Remarks – New England Council: “Tackling New England’s Affordable Housing Challenges”
As Prepared for Delivery
December 18, 2023
Hello, New England Council! I’m so glad to be here with you again to talk policy. You know — policy is my love language. I love having the chance for a conversation like this, and I appreciate your being here.
The last time we met, we discussed a range of issues affecting New England: infrastructure, the climate crisis, health care, civic engagement, and immigration. Today I want to stick with one topic that hits everyone: housing.
America is in the middle of a full-blown housing crisis. There are a lot of ways to measure the crisis, but I’ll start with the most basic:
We don’t have enough housing. Nationally, the United States is over 7 million units short of how many homes we need to house our people. 7 million.
Massachusetts is struggling. Experts estimate that we need about 175,000 new housing units right now for everyone to have a place to call home.
The consequences of that shortage can be felt in a million ways.
Forty years ago, a Boston Public School teacher made $17,600—and a single family home in Greater Boston sold for $79,400. In other words, the cost of a house was about 4 ½ times a teachers’ salary. Today, that same public school teacher makes $82,300—while that same single family house in the region sells for $900,000—nearly eleven times a teacher’s salary. Housing feels unaffordable because it is.
And it isn’t just homeowners. From 2020 to 2021, rent in Massachusetts jumped a whopping 21%.
The average home sale price in the same two years increased by nearly 30%.
With 30-year mortgage interest rates [over 7%], the dream of owning a home is farther out of reach than ever for first-time homebuyers. Those high interest rates also hit renters both because developers can’t afford to build new apartments and landlords pay more on their mortgages too.
The cost of housing is the largest contributor to inflation, accounting for over half of the monthly all items increase in the most recent Consumer Price Index.
The problem is bad. And the problem is getting worse. Do you think housing is in short supply in Massachusetts now? Do you think rents are already rising like a hot air balloon and housing prices are already out of sight? Well buckle up for a rough ride. Experts tell us that to address the current housing shortage, we’ll need to build as many as 200,000 new housing units in just the next 6 years.
It’s little wonder that when I meet with constituents from Boston to Pittsfield to the Cape, often the first thing I hear is that the cost of housing is just too high. And when I ask employers their biggest challenge, many mention that they can’t find workers or have trouble attracting top talent because of high housing prices.
There’s one other aspect to the housing crisis that we need to put up front:
This is an equity issue. Racial equity and generational equity.
Homeownership is one of the major ways families build wealth. A mortgage is structured to become more affordable over time, as the homeowner earns more and inflation makes the payments relatively smaller.
Homeownership is middle class America’s number one retirement plan—pay off the house and live on Social Security.
The house is there to cash out if someone needs nursing home care at the end.
And, if Grandma and Grampa are lucky enough to stay in their home until they pass, they leave a nice nest egg that boosts the next generation and the generation after that.
For decades, our federal government subsidized housing. But because we did so at a time of racial redlining, followed by a wave of predatory lending that wiped out many communities of color, those subsidies helped white families that bought homes and who were able to prosper while black families were often left out.
And that racial tilt hasn’t gone away. Today, the gap between Black and white homeownership rates is the same as it was back before the 1965 civil rights laws were passed—the same as it was when Jim Crow strangled economic progress for African Americans.
There is also a generational issue. Subsidies that prompted a big housing supply for earlier generations of Americans have been sharply undercut or disappeared altogether. As a result, young people today watch as the dream of owning your own place—or even affording a decent apartment—slips away into the mists of fantasy. Just. Not. Possible.
Shortages are everywhere. What kind of housing do we need? Every kind. Housing for first-time homebuyers. Housing for renters. Housing for seniors. Housing for people with disabilities. Housing for students. Housing for people who have no homes. Housing for veterans. Manufactured housing communities. Rural housing. Urban housing. Housing for workers. Affordable housing. Housing for pretty much everyone who isn’t already rich and already a homeowner.
The shortages are real, so what can we do?
Increase supply. It’s plain old econ 101. And we need to face it head on: Nothing gets better if we don’t increase housing supply.
Here in Massachusetts, we are lucky to have a governor who has made it her priority to address the housing crisis head-on.
Earlier this fall, Governor Healey introduced the Affordable Homes Act, a set of bold policy proposals to boost the supply of housing and drive down housing costs.
The Healey-Driscoll administration is working to enable municipalities to pass inclusionary zoning ordinances by simple majority, reduce barriers to building of accessory dwelling units, and invest nearly $2 billion directly into housing development.
Each of which will help reduce the affordable housing gap.
Our Governor knows that a one-size-fits-all approach won’t solve this crisis, but flexible options will help our communities make big, bold choices that work for them.
Three cheers for Massachusetts for tackling the housing crisis head on.
But it isn’t enough. Remember, we need 200,000 new homes, condos and apartments in just the next six years. Last year, Massachusetts approved 17,692 housing units—that’s not even one-tenth of the new housing we need. At this rate, we can’t even hold steady on our housing crisis—it will just get worse.
So here’s my pitch today: Massachusetts and the rest of the country shouldn’t be left to address this crisis alone. It’s time for the federal government to step up, not to tell local governments what to do, but to be a good partner for communities that are ready to act.
Here’s my quick pitch on why the federal government should partner up and take a bigger role in increasing housing supply:
The federal government is in the best position to help because it has the power to raise revenue nationally. Look at giant corporations like Amazon that park themselves in states that give them tax exemptions while their customer base is nationwide. Massachusetts can’t fix that problem alone. But using money from my 15% minimum corporate tax on billionaire corporations, for example, would enable the federal government to stimulate a bigger housing supply—and lower housing prices—and the big corporations that profit from doing business here in the United States can help make that happen.
Second, the federal government should invest because housing connects to many other issues that the federal government directly pays for. We know, for example, that access to adequate housing reduces health care expenses for the Medicaid population. Increasing the supply of affordable housing will reduce money spent in emergency rooms.
And third, it’s a matter of our values. For less than five percent of the annual defense budget, for example, we could create a fund that year after year could be used to increase and upgrade the supply of housing nationwide.
And if we’re serious about equity—both generational and racial—then creating more housing opportunities is a great place to start.
Let me sketch out how we might do this.
Once again, this won’t be one-size-fits-all approach. First, we need a federal government that is willing to act to increase housing supply. I use my position on the Senate Banking, Housing, and Urban Development Committee to get more funding into housing, but I’ll be blunt–it’s an uphill battle.
Many of our Republican friends (and some Democratic friends) don’t want the government in this space. Even so, you don’t get what you don’t fight for, and I’m fighting for a bill to inject over $40 billion a year into the construction of affordable homes.
And now, just for a minute, think about how that money might be used:
Create incentives for localities that will modernize their building codes and improve zoning so the cost of building housing drops. Outdated, duplicative building codes and long delays for inspections drive up building costs. So, for example, if a town will change ordinances to reduce building costs by 10%, the federal government could offer grants the town could use to further cut housing construction costs or to revitalize downtown or rehab other property.
Or think about how to launch ADUs. A modest federal grant could help pay for housing advocates to walk homeowners through the local ordinances and look over plans successfully used elsewhere. Federal dollars could also put a sweetener on the table to cover some of the initial design and construction costs.
Or consider how federal help might encourage denser and less expensive housing. When public and private developers are putting together a project for housing on land at Umass Lowell or Hebrew Senior Living, a grant from the federal government for a few million dollars to expand the number of units in the project can boost housing. The price-per-unit for apartments and condos comes down if we make a even a modest upfront investment.
Those ideas aren’t exclusive. There are a lot of approaches we could use, but ideas like this should get us started. The basic idea is simple: Housing is local, but there is an important role for the federal government to be a good partner to help boost the housing supply. It’s time for us to start building out that role, and I’d love nothing more than to start with a pilot project right here in Massachusetts.
I want to mention two other areas we should consider when thinking about the cost of housing. The increasing power of corporate landlords is squeezing renters. While the housing shortage bites deep for families, Wall Street investors have been using it to their advantage. Since the Great Recession, institutional investors have bought up hundreds of thousands of single-family homes, hoovering up a significant chunk of the existing housing supply. By 2030, these big, Wall Street firms are expected to own as much as 40% of all single-family rental homes.
We know how these guys operate. They use their immense reserves of wealth and their deal-finding algorithms to swoop into markets and snap up homes that otherwise would have gone to first-time homebuyers. For someone selling a home, a corporate all-cash offer is often too sweet to pass up. These corporate groups buy up foreclosed homes in low- and middle-income properties in bulk. And sometimes, they buy up entire neighborhood blocks.
But it’s not just about buying up the supply of homes. Once their power is entrenched, there’s little stopping corporate landlords from squeezing families for profits. In communities across the country, institutional investors have hiked rents by double digit margins and jacked up fees, all while letting homes fall apart.
And as the country struggled under the weight of a global pandemic, corporate landlords filed 70,000 evictions on American families, in direct defiance of the eviction moratorium. This fall, I sat down with residents of the Sandcastle Estates in Attleboro who’ve lived this first hand. After private equity bought their community, rents jumped 75%. That forced residents, many of whom are seniors on fixed incomes, to choose between staying in their homes or buying food, medication, and basic necessities.
Unfortunately, meaningfully addressing the Wall Street investor problem will also require Congress to pass legislation. And, once again, Republicans have refused to support investments on the scale of what’s needed. But here there’s hope for more immediate relief. I’ve called on the Biden Administration to use its authority to deliver immediate relief to renters, both from high costs and greedy investors.
In response to my call, President Biden revealed a series of federal agency actions and a Blueprint for a Tenant Bill of Rights earlier this year.
Notably, the Federal Housing Finance Agency issued a request for information on a proposal to implement anti-rent gouging measures on federally-backed mortgages.
The president also tasked the Consumer Financial Protection Bureau and the Federal Trade Commission with collecting information on unfair practices in the rental market to inform their enforcement actions.
The Blueprint for a Tenant Bill of Rights provides a framework for renter protections, prioritizing safe and affordable housing, fair leases, protection from discrimination, the right to organize, and eviction prevention.
Solving this crisis requires creative solutions and persistence from all of us at all levels of government.
And as business leaders, I hope you’ll join me in raising this issue. Talk about housing—and talk about solutions. Let your legislators know that you want to see the Commonwealth make big, bold changes like the Governor is proposing. Help us make the case that affordable housing isn’t just a community or public issue, it’s good business. Together, we can make those big, structural changes that will benefit the Commonwealth and the people who live here.
Thank you.
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