| November 22, 2019

The HOME Act’s Approach to Housing Affordability

Written by Mike Kingsella and Melissa Winkler

Reading time: 5 minutes

Last month, Senator Cory Booker (D-NJ) and House Majority Whip Jim Clyburn (D-SC) introduced the Housing, Opportunity, Mobility, and Equity Act of 2019, otherwise known as the HOME Act. The bill is similar to legislation of the same name introduced by Senator Booker in the previous Congress. The legislation addresses the housing affordability crisis through two channels: eliminating exclusionary zoning policies and providing relief directly to renters.

The nation is experiencing a severe housing crisis, which is evidenced in the 7.3 million home underproduction from 2000 – 2015 and the fact that approximately 50% of renters are cost-burdened, which is itself the product of our nationwide shortage of homes. The impacts of the housing crisis are felt across the country, from rural areas to major urban centers. The HOME Act’s co-sponsors represent two ends of the housing spectrum; New Jersey is the densest state in the nation, while South Carolina is in the middle third of state density and contains large swaths of rural areas. Given the depth and breadth of the housing crisis, federal proposals that seek to address housing affordability are welcome developments.

The HOME Act recognizes the current role of exclusionary zoning in creating artificial barriers that dramatically limit the production of much-needed housing. Much like the YIMBY Act, the HOME Act calls upon Community Development Block Grant (CDBG) recipients to establish a plan to address and to work with local zoning and land use authorities to implement a number of provisions to end exclusionary policies in the CDBG service area. Recognizing that each municipality has unique concerns, the bill covers a variety of strategies and programs that lead to the creation of more housing. Importantly, the HOME Act also calls upon Surface Transportation Block Grant (STBG) recipients to take a similar approach to enacting pro-housing policies which, like the Build More Housing Near Transit Act, represents the importance of aligning housing and transportation policy.

However, unlike the YIMBY Act and the Build More Housing Near Transit Act, the HOME Act conditions federal funding on these reforms rather than encouraging local government policy changes through modified evaluation criteria and transparency.

The HOME Act’s renter provision would create a new renters tax credit that would be made available to renter households that pay more than 30% of gross income on rent. The credit covers the difference between 30% of household income and the lesser of either the fair market rent for the area or the actual rent paid. This section of the bill is, in effect, a stop gap measure; the tax credit is meant to help alleviate financial strain until the availability of housing increases and the cost of housing decreases.

Senator Booker referenced his support for the HOME Act during the November 20th Democratic Presidential debate, focusing on how the legislation helps renters. Booker said:

“My plan is very simple. If you’re a renter who pays more than a third of your income in rent, then you will get a refundable tax credit between the amount you’re paying and the area median rent. That empowers people in the same way we empower homeowners.”

While Senator Booker did not use his limited time to focus on the sections of the HOME Act that focus on exclusionary zoning, other candidates, in particular Senator Elizabeth Warren (D-MA) and Tom Steyer, made the case that one of the primary causes of our housing affordability crisis is the lack of new home construction. Based on the debate and other candidates’ housing proposals, the HOME Act’s two primary sections should enjoy broad support across the field of candidates.

Introduction of the HOME Act continues an important federal policy conversation. While it is not clear if federal leadership will take the form of carrots, sticks, transparency, or some combination of approaches, the HOME Act builds to a growing array of legislative proposals on housing in the 116th Congress.