Neal Opening Statement at Hearing on Nowhere to Live: Profits, Disinvestment, and the American Housing Crisis
Washington, July 13, 2022
(As prepared for delivery)
Housing is a basic necessity for every American. It plays a vital role in determining our access to education and jobs, our health and well-being, and our financial stability. Our families and communities can’t thrive without quality, affordable housing. But too many Americans face skyrocketing housing costs, long waiting lists, new pressure from institutional investors, and unprecedented bidding wars that keep them out of the housing market.
The pandemic underscored the importance of having a safe place to shelter, raise families, and—often—to work. But just when our homes became more important than ever, a range of forces converged to drive up prices even faster than before. As we entered the pandemic, there was already a shortage of millions of housing units and the largest generation of adult Americans, Millennials, were entering their prime years for forming their own households. Then the pandemic disrupted global supply chains to create a perfect storm for American families searching for quality, affordable housing. And that storm has continued especially for families who relied on pandemic housing relief programs that have wound down in recent months.
In 2020, the typical American family spent over a third of their household income on housing, and these costs are rapidly escalating. Home prices have risen over 20 percent in the past year, and rents are up over 15 percent. As rental costs rise, it is harder and harder to save for a down payment. With homeownership slipping out of grasp, competition builds up in the rental market. It’s an endless cycle.
To make matters worse, private equity has muscled its way into the housing market. In the first quarter of this year, institutional investors bought up 28 percent of homes nationwide. How can a family trying to buy a starter home possibly compete with a private equity firm offering cash? They can’t, and unless something changes, many families will never become homeowners. This is unacceptable.
The growing concentration of investor-owned real estate doesn’t just affect buyers. It means more corporate landlords, who are more likely to pursue evictions, impose high fees on renters, and fail to perform adequate maintenance. We will hear testimony today that in some areas, they evict 1 in 5 of their tenants, often Black tenants, which in turn is leading to gentrification.
This housing affordability crisis has deepened the already wide racial wealth and homeownership gaps. Today’s racial disparities in housing and wealth grow out of a long legacy of discrimination and unequal access, from redlining to the fact that most Black veterans were denied equal access to G.I. Bill housing benefits. Overheated competition for housing falls hardest on those who already experience the highest barriers, and that’s low-income, communities of color.
Building a fairer, more prosperous nation includes meaningful access to quality, affordable housing. We have the tools to address these needs and turn the tide. Last year, this Committee put forward proposals that would cumulatively create nearly 1 million additional affordable homes:
• The Low-Income Housing Tax Credit is the single largest federal investment in the supply of affordable housing. This Committee proposed an expansion of this program to increase the availability of housing credits and enable the program to do more for those most vulnerable.
• The Neighborhood Home Investment Act would help people afford homes in low- and middle-income communities and revitalize communities suffering from disinvestment.
Both of these programs enjoy bipartisan support, and I hope I can count on colleagues on both sides of the aisle to continue our work to pass them into law.
Today, our witnesses will help us better understand what’s driving exorbitant housing prices, their effects on low-and middle-income households, and how we can better deploy the policy tools available. I look forward to an important and informative discussion.
With that, I will recognize Ranking Member Brady for the purposes of an opening statement.