Why save HUD?

Solving America's Housing shortage requires it

You could be forgiven for missing how much housing policy is shifting under the Trump administration. (There’s been a lot going on.) But over the last month, the Department of Housing and Urban Development has been targeted for dramatic cuts, and the department is now planning to lay off half of its 9,600 workers. These cutbacks would cripple the department’s ability to carry out core functions, including spending Congressionally-appropriated money on disaster recovery, Section 8 housing vouchers, public housing, and research and policy development,

Alarm bells have begun to sound. “Without sufficient staff to run these programs, community and economic development projects, disaster recovery efforts, and housing development across the country will be delayed and could come to a grinding halt,” warned a group of Democratic senators.

But it’s not just liberals (or people concerned about a constitutional crisis) who should be worried. Thanks to the Urban Institute, you can see exactly where HUD spends large portions of its money. Federal housing spending supports tens if not hundreds of thousands of people in every state—red and blue, urban and rural, in every part of the country. More than a hundred thousand people in Mississippi receive some kind of aid, almost the same number as in Oregon. And Republican states receive more disaster relief funding (which includes money spent through HUD as well as FEMA) than Democratic states do. These cuts would hit the entire country, both directly and indirectly as housing production takes a blow.

The proposed cuts would destabilize the housing market, increase homelessness, stall reforms, and reduce the number of new homes being built in every state. As one anonymous HUD whistleblower told the press, “there will be no one left to run the programs.” That would hurt not just low-income people and people experiencing homelessness, but a huge swath of America’s struggling middle class. Millions of working people live in housing that was helped by a HUD program, and that pipeline of new housing construction is a vital part of any potential solution to the housing shortage. The scale of these cuts would exacerbate the housing shortage and jeopardize millions of housing related jobs. The ripple effects throughout the economy will extend well beyond the affordable housing industry, as banks pull back and workers are less able to live near jobs and opportunity. Even the rhetoric of austerity is already having an effect. Banks are already calling affordable housing developers and putting projects on ice, freezing thousands of new homes and housing rehabilitation projects.

The YIMBY movement is all about reforming burdensome regulations, so the rhetoric of reform and cuts doesn’t trigger an immediate negative response from me. But the metaphor that seems most apt right now is “When you want to lose weight, you don’t cut off your leg.” The proposed cuts in staff and funding at HUD will only exacerbate the national housing shortage and will be a dramatic setback for potential pro-housing reforms at the federal level.

Over the past ten years, the growing pro-housing movement has been a bipartisan one—almost every national pro-housing bill has been authored by both a Democrat and a Republican. Housing production packages have come out of Republican and Democratic Governors and State Legislatures. Even President Trump spoke about bringing down the cost of housing during the election. So when new HUD Secretary Scott Turner expressed interest in broadening the housing supply by reforming land-use and zoning restrictions, I was cautiously optimistic that some positive motion on housing production would be possible.

But these cuts to HUD would make progress on housing production impossible. Even setting aside the blow this will send to subsidized housing, the promise of pro-production policy work will be off the table. They just won’t have the staff. Instead of a new and improved HUD, the department is poised to become a shell of its former self, unable to carry out its core functions, let alone tackle our most important problems and broaden its mission.

It’s important to stress that the proposed cuts to HUD aren’t just bad policy or potentially illegal—they’re also unpopular! Right now, a few critical voices are leading the charge (shoutout to the National Low Income Housing Coalition). But there’s a broad range of interest groups and individuals who should join the call to oppose these cuts.

In order to solve the national housing shortage, we need both market rate and subsidized affordable development. We need to increase government spending AND we need to cut regressive regulations that block housing production. And to get to the promised land of abundant, affordable housing, we need both Democrats and Republicans. Democrats are slowly waking up to the fact that high housing prices have lost them elections. On the right, Republicans like Congressmember Mike Flood have been speaking out in favor of the bipartisan consensus to increase housing supply. Housing is the rare issue that unites employers, city planners, urbanists, social justice warriors, libertarians, organized labor, banks, and everyday people.

My organization, YIMBY Action, is currently running a petition to get more individuals to speak out. But that’s not going to be enough. If there’s any hope of averting drastic cuts in the coming weeks, it’s likely going to require action from large, institutional groups recognizing that this policy will hurt the economy and their bottom line.

The list of powerful organizations that could take (self-interested) action is long. It includes the banks that loan money in the subsidized affordable housing space, who are poised to lose billions. Then there are the various industry groups that represent large construction companies and developers who will likely see the impact of these changes for a decade. Employers like Walmart and the healthcare industry, who are starting to get louder about how the cost of housing impacts their bottom line, will see this show up in labor costs and shortages in countless markets.

Haphazard drastic cuts to HUD will negatively impact housing supply and the US economy for decades to come. It will further impoverish America’s struggling middle class. That’s not good for anyone—and everyone ought to have something to say in the department’s defense.