The Rent Roll with Jay Parsons

Episode 51: Dennis Shea | Rate Cuts & Pro-Housing Policy
September 18, 2025

Episode Overview

This episode of The Rent Roll with Jay Parsons focuses on the intersection of national rental housing policy and economics. Host Jay Parsons explores the latest market trends, capital market challenges, headline news, and policy developments. The main feature is an in-depth interview with Dennis Shea, Executive Director of the Terwilliger Center for Housing Policy at the Bipartisan Policy Center, on bipartisan strategies to expand housing affordability and supply, reform of the Low Income Housing Tax Credit (LIHTC), and upcoming legislation at the federal level.

Key Discussion Points & Insights

1. Interest Rates, Inflation & Housing: Why Metrics Matter

[00:44–06:51]

• Fed Rate Cuts & Sticky Inflation:
  • Jay discusses the potential for imminent rate cuts, noting that inflation—specifically as measured by shelter in CPI—is misrepresented due to lagged rental data.
  • “If you strip out that lagged version of rents, then inflation is in the Fed’s target range of 2% for two plus years… nothing the Fed does can expedite the pace of shelter inflation cooling any faster than it will.” —Jay Parsons [03:45]
  • The lagging shelter data is “like an 18-wheeler riding its brakes down a mountain.” [05:13]
  • Paradoxically, low interest rates previously fostered supply and curbed rent inflation; today’s higher rates are stifling development, setting up potential rent pressure in coming years.

2. Commercial Real Estate Survey: Bid-Ask Gap & Capital Accessibility

[06:52–07:48]

• CRE survey data highlights a significant bid-ask gap:
  • Investors say they’d only deploy capital aggressively at a 6.6% cap rate for multifamily—about 100bps over current averages, keeping much capital sidelined.
  • Access to capital remains tough (Index at 41 in Q3 2025), though modestly improving. “Still very, very tough to access capital... though improving incrementally.” —Jay Parsons [07:50]

3. Rental Data Chaos & Reporting Confusion

[10:08–16:32]

• Headline Spin:

  • Jay compares conflicting headlines on rent growth, showing how data discrepancies among different providers (Redfin, RealPage, etc.) fuel marketplace confusion.
  • “Not every property is listed on every Internet site. Every data provider has different aggregation methodologies… Cross-reference, and understand limitations.” —Jay Parsons [11:21]

• Single Family Rentals (SFR) & Institutional Ownership:

  • NPR’s Planet Money analysis is cited for showing nuanced impacts from institutional SFR owners: while institutional SFR investors get blame for limiting homeownership, data shows their presence increases economic diversity and integration, especially granting access to better schools for disadvantaged families.
  • “Institutional investors were reducing segregation… I think I was most surprised with the fact that the effect was so sharp and immediate.” —Researcher quoted via Jay Parsons [15:54]
  • Jay notes that large SFR owners still comprise a tiny share of the market, and their impact is often overstated.

4. Recent Housing Headlines

[16:33–24:20]

• Brookfield Eyes Massive MHC Acquisition:

  • Brookfield Asset Management in talks for $10B+ purchase of YES Communities, reflecting strong institutional interest in manufactured housing despite prior market headwinds.

• Amazon’s Affordable Housing Fund Progress:

  • Amazon surpasses its 20,000-unit goal across Seattle, Arlington, Nashville; now targeting 34,000 total units across those metros, typically at 50–80% AMI.

• JBG Smith Nixes National Landing Project:

  • Over 1,400 apartments in Arlington won’t get built; delay in approvals and high-rise costs, tariffs, and high rates cited as key factors.

• Labor Shortages from Immigration Policy:

  • Contractors increasingly impacted by immigration enforcement, with 28% reporting workforce disruption—underscoring ongoing construction labor concerns, especially as completions outpace starts.

Feature Interview: Dennis Shea, Terwilliger Center for Housing Policy

[26:33–61:30]

Background and Center’s Mission

[26:46–29:42]

• Dennis Shea’s background spans policy, founding work with Ron Terwilliger, and senior HUD leadership.

• Housing affordability, once a “silent crisis,” is now a top-tier national concern.

  “It was silent… largely ignored by policymakers… Now it’s one of the top issues in Congress.”
  —Dennis Shea [29:01]

Federal Housing Policy: Deregulation and Supply

[29:42–31:05]

• Discusses rumors about a potential national housing emergency and what federal action may look like.
  • Likely focus: incentivizing states/localities to cut regulatory barriers and speed permitting, not supersede local control.
  • Exploring tying LIHTC funding to efficiency standards and state reforms.

Reforming LIHTC: Efficiency and Accountability

[31:05–36:32]

• Shea and BPC support LIHTC but are concerned by high—and rising—costs per unit.

  • Advocating for:
    • National “common building standard” for LIHTC allocations
    • Exempting some LIHTC projects from Davis-Bacon (prevailing wage) and NEPA (environmental) requirements
    • More cost transparency and data collection, including parsing hard vs. soft costs

  “If you’re spending more per unit for an affordable unit than for a market-rate unit, there’s something wrong here.”
  —Dennis Shea [34:19]

• Jay notes mounting bipartisan recognition for these reforms, especially regarding costly regulations and environmental hurdles.

Renters’ Tax Credit for Essential Workers

[38:58–44:21]

• BPC proposes a national renter tax credit for essential workers, designed as a four-year, $500 million pilot:

  • Targets renters at ≤80% AMI with an essential worker in the household (teachers, police, healthcare, EMTs)
  • Benefits delivered via landlords in both multifamily and SFR
  • Aims to support ~53,000 households and promote community integration

  “A lot of people in the moderate and middle income are really struggling… you want these families in your community, not traveling far.”
  —Dennis Shea [43:50]

• Key distinctions: Unlike vouchers, minimizes red tape and appeals to bipartisan sensibilities; BPC actively seeking congressional sponsors.

National Workforce & Middle-Income Housing Proposals

[44:21–46:56]

• Discusses:

  • Middle-Income Housing Tax Credit (MIHTC) proposals
  • The Neighborhood Homes Investment Act, focusing on affordable starter homes.
  • Growing bipartisan awareness that housing supply impacts labor mobility and national economic growth.

  “There’s recognition we need more supply for workers. Housing affordability is connected to labor mobility, and labor mobility is essential for economic growth.”
  —Dennis Shea [46:40]

One Big Beautiful Bill Act: Grading the Recent Legislation

[46:57–48:57]

• Michael Novogradac previously called it “the most impactful housing legislation in at least 25 years.”
• Shea gives it a “very good” grade:
  • Substantial expansion of LIHTC
  • Steps toward 1.2 million new affordable units in the next decade
  • Emphasizes the “remarkable” bipartisan support for housing in this Congress

Preservation: Affordable and Physical Quality of LIHTC Inventory

[48:59–51:58]

• Large cohort of LIHTC properties nearing or past their 30-year compliance window

• Preservation not just about affordability but also physical condition

  • Need for rehab credits tied to long-term affordability commitments
  • More investor/owner incentives for reinvestment

  “We need to get the units out, the homes built as much as possible… there’s such a need among lower-income families.”
  —Dennis Shea [35:35]

The “Road to Housing Act” and “Small Ball” Approach

[51:58–57:44]

• The Road to Housing Act: 27 bipartisan provisions—no “superstar” items but many solid, pragmatic reforms like:

  • Modernizing rules for manufactured homes (removing permanent chassis requirement)
  • $200 million innovation fund for localities adopting pro-housing reforms
  • Incentivizing landlords to accept housing vouchers by streamlining processes and inspections

  “No Shohei Ohtani or Judge… but a bunch of .260, .270 hitters. Collectively, a really strong team.”
  —Dennis Shea [52:20] “Maybe like the Milwaukee Brewers—no superstars, but all working together.”
  —Dennis Shea [57:00]

Other Federal Priorities: GSE Reform & National Debt

[57:44–61:14]

• Preparing for new developments in housing finance (Fannie Mae and Freddie Mac potentially leaving conservatorship)
  • Shea flags the critical multifamily financing role GSEs play and the risk of political demands (e.g., national rent control measures) being embedded in GSE policy
• The challenge of the $37+ trillion national debt’s impact on future borrowing costs and available housing program funding

Notable Quotes & Memorable Moments

• On Fed Rate Policy:

  “It’s like an 18-wheeler riding its brakes down a mountain.”
  —Jay Parsons [05:13]

• On Confusing Rent Headlines:

  “Cross-reference it with other data providers… understand the limitations of any data source.”
  —Jay Parsons [11:21]

• On Institutional SFR and Diversity:

  “The most surprised I was was with how sharp and immediate the effect was [of reduced segregation].”
  —Jay Parsons, paraphrasing researcher Connie Chang [15:54]

• On LIHTC Reform Needs:

  “If you’re spending more per unit for an affordable [LIHTC] unit than for a market rate unit, there’s something wrong.”
  —Dennis Shea [34:19]

• On Housing Bill Pragmatism:

  “No Shohei Ohtani or Aaron Judge… but a bunch of .260, .270 hitters. Collectively, a really strong team.”
  —Dennis Shea [52:20]

Important Timestamps

• Interest Rate & Inflation Trends: [00:44–06:51]
• CRE Survey Data: [06:52–07:48]
• Rental Data Confusion & Market Headlines: [10:08–16:32]
• Housing Policy News Roundup: [16:33–24:20]
• Interview – Dennis Shea Intro & Background: [26:33–29:42]
• National Housing Emergency Reaction & Federal Policy: [29:42–31:05]
• LIHTC Reform Priorities: [31:05–36:32]
• Renter Tax Credit for Essential Workers: [38:58–44:21]
• Workforce/Middle-Income Housing Proposals: [44:21–46:56]
• One Big Beautiful Bill Act Reaction: [46:57–48:57]
• Preservation Challenges (LIHTC): [48:59–51:58]
• Road to Housing Act & “Small Ball” Provisions: [51:58–57:44]
• GSE Reform & National Debt Concerns: [57:44–61:14]

Conclusion

This episode delivers an insightful, highly practical conversation on the realities of today’s rental housing market and federal policy landscape. Jay and Dennis dive deep into the tensions between regulatory barriers, funding mechanisms, cost challenges, and the nuanced impacts of new policies—grounded in data and bipartisan cooperation. For any professional or policy-watcher in housing, this is a clear-eyed look at where the industry and federal policy are heading in 2025 and beyond.