Weekly update from the National Housing Conference
February 20, 2019
President's Message I By David M. Dworkin
Dear Friend,

Amazon’s recent decision to reverse its decision to move 25,000 jobs to New York has exposed the fallacy of the “zero-sum game,” where one side must lose so the other can win. This is an approach I first became exposed to during my coverage of the Soviet invasion of Afghanistan when I was a reporter in the 1980s. Enaytollah Qadiri, a quiet and humble accountant from Kabul who was my translator, explained that any form of compromise was an act of personal and spiritual shame to the Pashtun tribesmen. In America, compromise is woven into nearly everything we do. But many still cling to the ancient principle of winner take all. And that’s what happened over the last month in New York. 

Moving 25,000 jobs into any community is going to have an impact on housing values as well as employment and development. These impacts can be channeled to support the entire community, or they can lead to displacement. To achieve the greatest good, communication and compromise is essential. What happened instead, is that community advocates concerned about displacement embraced a zero-sum game approach, where any victory for Amazon was a loss for the community. Some argued that $3 billion in tax breaks promised to Amazon for locating in New York were better spent on housing and education. But there wasn’t any $3 billion. It was a discount on the taxes that would be paid on nearly $30 billion of economic activity that won’t be happening. But activists aren’t the only ones to blame. 

Amazon was also playing a zero-sum game that never works in community development. As the New York Times reported on Feb. 14, “the company did not hire a single New Yorker as an employee to represent it in discussions with local groups. Its main representatives traveled between Washington and Manhattan, and only one had moved into an apartment to work with community members and foster support.” Had Amazon spent that money building bridges to local leaders so they could have developed a plan to invest in affordable housing and job training that would have avoided the displacement that has hurt Seattle and made it unaffordable for Amazon’s employees there to live where they work.

Finding common ground around affordable housing is essential to NHC’s core mission. It’s why we have been diligent about supporting both the national Housing Trust Fund and the Capital Magnet Fund, two critical engines of community development set up in the Housing and Economic Recovery Act of 2008. Too often, proponents of housing for extremely low-income housing and developers of low-moderate income housing find themselves arguing the same zero-sum game. This week, we sent a letter to Comptroller of the Currency Joseph Otting, who is also acting director of the Federal Housing Finance Agency (FHFA) to urge him to support this year’s allocation for both funds. I also wrote an op-ed on the funds for The Hill. This letter was signed by a wide range of national and local affordable housing developers and advocates. In his Senate confirmation hearing Thursday, President Trump’s nominee to lead FHFA, Mark Calabria, said that suspending funding “is only going to happen if the GSEs are essentially failing — and my primary responsibilities, if confirmed as FHFA director, is to make sure that doesn’t happen.” That is reassuring, but only if the funds aren’t suspended before he is confirmed. 

Affordable housing is a continuum that stretches from homeownership to homelessness. When the homeownership rate falls, we have more renters, which increases the cost of renting. Higher rents push affordability down the income scale and ultimately contributes to economic homelessness, which is growing in record numbers. The bottom line is that housing should never be a zero-sum game. We all win when we all win.

David M. Dworkin
President and CEO
National Housing Conference
News from Washington I By Tristan Bréaux
House Financial Services Committee holds hearing on homelessness

Last Wednesday, the House Financial Services Committee held a hearing on the homelessness crisis in America. At the hearing, Chairwoman Maxine Waters (D-Calif.) called on Congress to “provide the resources and funding necessary to end homelessness.” Ranking Member Patrick McHenry (R-N.C.), meanwhile, called for new initiatives to “develop holistic approaches” to addressing the crisis through public, nonprofit, and private stakeholders.
IRS holds hearing on Opportunity Zones

The IRS held a hearing last week to seek feedback on the new Opportunity Zones regulations proposed by the Treasury Department in October. At the hearing, which was originally scheduled for January, but was delayed because of the shutdown, Enterprise Community Loan Fund President Lori Chatman testified that “transparency and accountability are the keystone to fulfilling the tax incentive’s original intent of transforming economically distressed communities.” 
Senators question FHFA nominee Calabria

At another hearing last week, members of the Senate Banking Committee questioned Mark Calabria, President Trump’s nominee for FHFA director. Democrats on the committee, including Senator Sherrod Brown (D-Ohio) and Senator Elizabeth Warren (D-Mass.), questioned Calabria’s commitment to affordable housing, while Republicans praised his history in the housing industry. Calabria himself insisted that “it is indeed possible for us to have a well-capitalized, strong system that preserves the 30-year mortgage.” After the hearing, National Association of REALTORS ® President John Smaby issued a statement urging Calabria’s confirmation, praising his “commitment to the 30-year fixed rate mortgage.”
Fannie Mae and Freddie Mac report income for 2018

Fannie Mae and Freddie Mac announced last week that they will pay a combined $4.7 billion in dividends to the Treasury Department as a result of their strong earnings. Fannie Mae reported earning a total income of $15.6 billion in 2018, while Freddie Mac earned $8.6 billion, both increases over 2017. Both GSEs grew their multifamily portfolios, although Freddie Mac’s multifamily income fell. These increasing profits come at a time of uncertainty for the GSEs, as the Trump administration advances a plan to privatize them, and the watchdog groups Public Citizen and Revolving Door Project allege that federal officials may have attempted to boost the GSEs’ stock values by improperly disclosing their intent to release Fannie Mae and Freddie Mac from conservatorship.
New data show one in 11 U.S. properties remain seriously underwater

According to new data from ATTOM Data Solutions, over 5 million mortgaged properties in the U.S. are considered “seriously underwater,” while 14.5 million are considered “equity rich.” “With homeowners staying put longer, homeownership equity will most likely continue to strengthen. Those that are seriously underwater may find themselves coming up for air as they continue to pay off excessive legacy mortgages or sell,” said ATTOM Chief Product Officer Todd Teta. In 27 zip codes, mainly concentrated in the Midwest, the share of seriously underwater properties is over 50 percent.
Homebuilders turn to 'missing middle'

According to new data from the National Association of Home Builders (NAHB), housing developers across the country are starting to cater more toward middle-income buyers by building smaller houses. As the data showed, the average size of new houses fell for the third straight year in 2018 to 2,320 square feet, from a peak of 2,500 in 2015. “We’ve reached the point where the smaller part of the market needs additional inventory,” said NAHB Chief Economist Robert Dietz. “That’s where price growth has been the fastest due to of the lack of inventory. Younger buyers are trying to find entry-level housing.”
HUD comes under fire for handling of recovery funds during shutdown

Last week, HUD acknowledged that the government shutdown impeded the agency’s efforts to provide recovery funds to Puerto Rico. The acknowledgement came to light through the publication of a letter from HUD Assistant Secretary for Congressional and Intergovernmental Affairs Len Wolfson to Senator Elizabeth Warren (D-Mass.), in which Wolfson acknowledged that the “recent lapse in appropriations did impact the pace of the Department’s work.” HUD also last week came under fire for its handling of aid to Louisiana homeowners recovering from 2016 flooding during the shutdown. In a statement, Senator Bill Cassidy (R-La.) said, “Regardless of the shutdown, HUD’s delay is simply unacceptable.”
The National Housing Conference has been defending the American Home since 1931. We believe everyone in America should have equal opportunity to live in a quality, affordable home in a thriving community. NHC convenes and collaborates with our diverse membership and the broader housing and community development sectors to advance our policy, research and communications initiatives to effect positive change at the federal, state and local levels. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.
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