New law aims to help make home ownership easier

By U.S. Sen. John Kennedy
R-Louisiana

When moms and dads lie down to sleep at night and can’t, it’s primarily because they are worried about the cost of living in America. And the largest expense most Americans face each month is housing.

Roughly half of all Americans spend more than 30% of their income on housing, including the 16% of individuals whose rent sucks up more than half of their paycheck. When rent claims most of your income, it becomes incredibly difficult for a family to save even $1,000 for an emergency expense, let alone a down payment on a home. In turn, the average age of a first-time homebuyer has increased from 30 years old in 2010 to 40 years old today.

The cost of housing has spiraled out of control for many reasons, but one problem is obvious: We aren’t building nearly enough homes. Demand exceeds supply. New home construction starts fell by 40% over the past two decades. Meanwhile, the country’s population increased by 15%. We have too many people competing for too few homes, and it has driven housing prices to the moon.

Some cities responded to this housing crisis better than others. Raleigh, North Carolina, and Austin, Texas, for example, cut regulations to make it easier for home builders to build. These two cities lead the nation in new home construction.

Other cities spent more time regulating than building. In Los Angeles, for example, homeowners waited for months for the city to approve new building permits following the devastating Eaton and Palisades fires. By the first anniversary of the blaze, Californians had rebuilt fewer than a dozen of the roughly 13,000 homes that burned to the ground.

While it is painful to watch the incompetence in Los Angeles, Congress does not control local regulations or zoning policies — and that’s a good thing. A housing policy that works well in New Orleans may not work in New York City, and that’s OK. Washington’s one-size-fits-all policies have a long history of making matters worse.

But Congress should not reward cities and local governments that are making life unaffordable for American families. The federal government has many tools at its disposal to incentivize good policies and punish the bad.

One example is the Department of Housing and Urban Development’s Community Development Block Grants, or CDBG, program. This program distributes $3.3 billion in grants to state and local governments to support economic development and community improvement plans.

Local leaders have a lot of discretion to choose how to use these grants, and they love this money like the devil loves sin. They’ll do just about anything to keep this money flowing into their communities, and that gave me an idea: We could use the CDBG program to reward cities that build lots of new homes, and we could take some funding away from those that fail to increase new housing starts.

This idea turned into my Build Now Act, and it just became law as part of the larger 21st Century ROAD to Housing Act.

Here’s how it will work: Cities that fall below the national median rate of home building will lose 10% of their CBDG funding. The funding we take away from cities that fail to build will then go into a big pot that we will proportionally distribute to the cities that outpace the national median rate of home building. Cities that face natural disasters or other hardships will receive an exemption, and their CBDG funding won’t change at all.

It’s both a reward to cities that increase their supplies of homes and a penalty for those who enjoy burdensome regulations more than affordable housing. It’s a carrot and a stick — and it could unlock the American dream of homeownership for the families that have struggled to afford a place of their own.

The only way to bring down the cost of a new home is to increase our housing supply. I don’t care how cities do it, but they better get serious about cutting red tape if they want to keep the federal funding they have grown to love. The days of rewarding bad policies that make life too expensive for American families are over.

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