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The Rent Roll with Jay Parsons
EP#90 Congressman Josh Harder | Inside The Road To Housing Act
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Welcome. It's episode number 90 of the rent Roll, your podcast on all things rental housing, apartment, single family rentals and Build to Rent. We got a good one for you. This week we have the honor of being joined by the US Congressman from California's 9th district, a man who helped lead the push to save build to rent construction from the chopping block, Congressman Josh Harder. And we'll talk Road to Housing act with Congressman Harder now that the legislation appears to be sailing through Congress and of the President's desk after a rather long and winding road, no pun intended there. So the Senate and the House have hashed out their differences. We now have a compromise bill that appears likely to become law very soon. So what does that mean for the single family rental business and for Build to Rent? I'll give you my thoughts today on how four ways that four big takeaways, I should say from from the Road to Housing act and how it impacts the rental housing business as well as renters. And then later in the program we'll talk to the Congressman about it and we'll also get the Congressman's thoughts on the boogeyman chasing activities for all those who blame America's housing ailments on Wall street and private equity. Now before we do that, I gotta do a quick correction from last week's podcast. I realized after the fact that I was mispronouncing a keyword all throughout the podcast when I was talking about udr, which originally was United Dominion Trust. We had recently had on this podcast a guest from Dominium, the affordable housing developer. And so clearly I had Dominium on my mind, even though this one was Dominion, it got myself all crossed up very similar words that have two different end letters. So I butchered the pronunciation. Just had to clear that up here. So please forgive me. Okay, so let's jump in. Episode number 90. Here we go. Big shout out to our sponsors, first and foremost to jpi, a leading apartment developer. The state of purpose to transform building, enhance communities and improve lives. Check them out@jpi.com JPI is the cutting edge of some exciting developments and innovations in apartment development and construction. Trying to bring efficiencies in and really build more efficiently than we had than than we have for generations. And so JPI is building from coast to coast. Now check them out@jpi. Also big thank you to Madera Residential. Check them out@maderaresidential.com Also big shout out to Funnel, the AI and CRM platform you could find@funnelleleasing.com all right. So, as always, we kick it off. A little section we call. Here's a chart instead of a chart. Today we got some big news and a list. A list of three things, all about the Road to Housing act and what it means, parental housing and for investors as well. We'll do some narrative busting with that. But we're going to start with some breaking news. So, unfortunately for me and for my friend Tyler, who produces these podcasts, we had just wrapped up episode number 90 when President Trump came out with a huge announcement via tweet on Truth Social. He wrote, quote, today's housing news at conference and signing is hereby canceled until such time as we pass the desperately needed Save America act, which I consider to be a national emergency. All right, so that's the voter ID legislation. So the White House had previously signaled its support for this bill. So this comes as yet another unexpected plot twist for the Road to Housing Act. So what does that mean? What's next? And it depends. The Wall Street Journal reported that if the President does not sign or veto this bill in the next couple of weeks, it will become law according to the US Constitution. That's what it dictates. So we'll see what happens. And if the President lets this become law via inaction, or if he vetoes it. And if it is a veto, does Congress vote to override the veto? The bill passed in both chambers with overwhelming bipartisan support. Enough votes to override a veto. However, there's no telling how many of them would change their votes to support the President's position on the Save America Act. So the long and winding road for the Road to Housing act, pun intended, this time it continues. And the extended uncertainty likely keeps some BTR and SFR capital on ice until we get some clarity. Okay, but let's talk about what's actually in this bill. Okay, so first things first. Number one, this bill is being hailed as a ban on large investors buying homes. But that's not actually in the final version of this bill. That's what was essentially in the Senate's original version. But after the House made its version, what ended up in the final legislation, at least final as of what's not on the President's desk right now is no actual ban. Rather, I think a better way to frame this is it's a new compliance process, no actual ban. And I don't know why some reporters and politicians keep calling it a ban, because it's not just read the bill. It's in title 10, section 1,100. No longer section 901 in the final version, by the way, section 1,001 titled Homes are for people, not corporations, which I always kind of gag a little bit whenever I read that. Obviously it's implying that renters are not people. It starts on page 360 of the legislation. It defines large investors as any group with 350 or more single family homes. And that's defined as any structure with one or two units in them, aside from manufactured housing. And, and for these types of investors, they basically just face a new compliance process. You can buy houses, but you have to do it under certain scenarios. And by the way, one of those scenarios provides a very clear and fictionless path to buy houses and rent them out and doing some things that they've been doing that these SFR operators are already doing. And so it really doesn't change much aside from adding that compliance detail. So again, it's not really a band. Now, before we get into that kind of magic bullet, that one clear, frictionless pass to buy by houses path to buy houses, I want to highlight quickly some, some of the other exemptions from this legislation. Exemptions meaning like it's a ban, but you can buy houses if you do these things, which in effect is not really a ban. Again, they just kind of worded it that way, probably for some window dressing purposes. So first things first, anything newly constructed is now, is now allowed and just basically keeping what we already do. So build to rent. And that could be a BTR community on a multifamily plat, or it could be a newly constructed single family home in a traditional subdivision. You can buy directly from the home builder or you can build it yourself. Now, it does not explicitly define new construction, and there may be some messy edge cases there, but most BTR is likely to be considered safe. And by the way, before I go further, I should point out I'm not a lawyer, a legal expert or whatnot, so definitely consult with such person before making any investment decisions. I'm not giving you investment advice, just telling you how I read this bill. So unlike the Senate version, there's no forced disposition requirement, no mass eviction as part of a forced sale. If you build new construction, who builds rent? You can build it, you could keep it, or you can build it and sell it to another large investor, no problem. All right. Second, carve out renovate to rent. This was a huge win to see renovate to rent carved out. You know, one of the worries I had was that when this bill was originally put together, the Senate version, once again, it left this out. And, and, and that was, I think, a mistake at the time because a lot of investors are buying houses that are in bad shape. And most, most individual home buyers, you know, for a house in rough shape, they may be able to afford the purchase price, but they can't get a mortgage on the house because of the home's condition and they may not have the cash needed to make it livable. So investors do play a big role in restoring the condition of aging homes and the bill protects that. But it does make it a bit messier and riskier to go this route with this exemption. So I'll get into, I think a different exemption is a better use case even for renovations. For a home to qualify as renovate to rent, you need to do two things. One, the house at the time of purchase must not meet structural or core system elements of local building codes, which obviously could lead to a lot of subjectivity. What's structural, what's core. And number two, the investor has to invest at least 15% of the purchase price into renovations. So again, it's a nice carve out, but I think it becomes a little bit less relevant in the final version of the bill with some of the language get into later. Third thing, you can purchase homes for other large investors in most circumstances. So that protects portfolio sales and trades. But, but if that fellow investor is below the 350 threshold, so you're going from large investor to small investor, that's a different ballgame. Those sales, they can happen for the next two years or so after the enactment of this bill, which goes into place 180 days after it's signed. So let's say next two and a half years. Again, that's how I read it. So that could impact the strategies and exit plans for some smaller firms and whatnot. But generally I think that's again more of an edge case. Fourth thing, a rent to own program. Now, the bill doesn't actually call it rent to own, but it refers to a homeownership program for the renter to eventually buy the house. So we typically call that rent to own. But you know, I think this exemption is probably not going to get a lot of use because there's a big catch. You can't charge a premium for this rent to own model. You have to just basically charge the base rent or more accurately, your rent has to match that of similar properties. So your comps. And that's going to make a program like this tough to pull off. I mean, rent to own is already hard and so it's one of those ideas that's a good idea in theory, on paper, but it's always been kind of a hornet's nest or sorry, been just difficult to pull off even with best intention. So that's a better way to say it. So I think this is important to call out, but I think given the, the, the restrictions and that rent owned scenario, I don't know why you would use that clause even if you're doing a rent owned program. So here's the, there's several other things here, but here's the key exemption, accepted purchase as the bill calls it, that I think will become the simplest and cleanest path to buying houses. And again, I think all these other categories are nice to have, especially new construction, but the simplest path with all, without all the bureaucratic red tape and regulatory risk and you know, is your rental program good enough? Is your renovate to rent program, Was it really structural? Did you really spend 15%? Was it cosmetic? I mean, there's a lot of ambiguity associated with that that an overeager bureaucrat could exploit. So there's another category, another possible exemption that investors can use that is a pathway to homeownership program. So it's not rent to own, but it's more about helping renters eventually become homeowners. So that this section means that in practice, large investors can still buy existing homes if they do two things that many of them already do. Number one, they got to provide rent reporting to the credit bureau so renters can get credit for paying rent. That helps them build their credit scores, which is a win, win good program many already offer. Number two, provide renters the opportunity to buy their rental house before it's sold to somebody else. And so it's a first look and a first right of refusal for renters living in the home to buy the house if and when the investor decides to sell. So that's a pretty simple route. And again, it's two things that many SFR companies already do. Now again, I'm not a lawyer and I should note that there's a third bullet point in that section of the bill that such a pathway to homeownership program also, quote, may entail the meaningful financial support from the large institutional investor, including purchase, sorry, including price concessions for the purchase of a single family home by the renter, whether it is the home occupied by the renter or another home. So the word may may entail, you know, that implies some optionality that could be interpreted differently by regulators downstream. So we'll see where that ends up going. But assuming that it remains an optional program where it's just a broad, you know, hey, some type of financial, you know, benefit to, to, to those renters who want to be home. Home buyers. Home buyers, you know, that provides a pretty broad route, a pretty frictionless path for investors to buy homes without worrying about some of the other kind of bureaucratic red tape associated with other categories other than the build to rent one. But again, I'm not a lawyer, so call, consult your attorney for better advice. Either way, in effect, the entire section on Singapore rental investors. You know, I think a lot of this could have been written in far fewer words just to say, hey, look, investors, when you're buying houses, make sure you offer a rent reporting program to help renters build their credit scores and make sure you give renters first dibs on a house should you decide to sell the house. And I think that would have saved a lot of time and headache because, you know, many of these investors have been doing that for years and it would have prevented the BTR development freeze that stalled out, you know, at least 10,000 units of construction this year. So again, consult your lawyers and I'm not giving you investment advice whatsoever. I think there's a lot to work through here. But I think that there's a lot of noise here that boils down to a pretty simple and clear path, assuming I'm interpreting this correctly. Now, all that said, large investors, again, they can still buy houses. There's no flat ban, but there is a whole new bureaucratic layer over the SFR market. Unfunded bureaucratic oversight over the single family rental market. And that is our second big takeaway from this bill. It creates a new federal bureaucracy over sfr. Okay, so this is a section of the law that things gotten, or the bill, I should say, that's gotten scant media attention, but it's pretty interesting and could have some real impact on things. So the Road to Housing act requires HUD to create a renter compliance hotline and quote a toll free telephone number. Toll free. And I don't know when was the last time I used the term toll free. I thought that pretty much all phone plans were national these days, but maybe local plans still exist, I don't know. Anyway, I digress. Anyway, there's a requirement to create a website as well, which I assume would be a lot more useful than a toll free number. And HUD has to do this within 180 days and then they have to field all these complaints and investigate and resolve them. So this is specifically a hotline for renters in homes that are owned by large investors. So I think there's two very obvious and huge unintended consequences of this. Number one, this is a special service that's exclusive to the use of the privileged few renters of single family rental homes owned by large investors with 350 plus homes. And so we're talking about a tiny fraction of renters, it excludes apartments and that's the majority of rentals. And then we're talking about, you know, and then most single family homes are owned by small, small investors with I mean 90 plus percent of homes are owned by small investors with fewer than 10 houses. And so we may be looking at something like 1 or 2% of renters who get access to this complaint line. But how is that going to work? I mean, HUD's inevitably going to get lit up from renters who aren't supposed to have access to this special service. You know, most especially single family renters who have, who, who aren't living, you know, are living with a mom and pop, not an institutional investors. I'd imagine some of them are going to be calling this hotline too. In fact, I bet most of the complaints they get are probably going to be from non qualified renters. And those renters are probably going to be rightfully ticked off that they don't get the same rights and access. And so maybe that just becomes a perk of living with this large, with a large investor. It's an added layer of accountability. And so that's going to be a problem for hud. And then the second thing is, the second issue here is that HUD has to feel these can field all these complaints and investigate and resolve them. And that is a massive task. It's a whole new massive bureaucratic arm over the singeth lane rental market. And yet it's not funded in any way whatsoever. So that's a big problem for investors and for renters, not just hud, because such an unfunded mandate mandate could inevitably lead to huge headaches getting issues investigated and resolved. And then what happens while these things are being investigated? What if the renter refuses to pay rent until the complaint gets resolved by hud? You know, what if the property owner seeks to evict the renter renter and the renter uses the complaint line as a delay tactic? Or what if the renter just, you know, is just kind of perpetually waiting for HUD to do something in a legitimate case? I mean, so it's hard to see how this can really play out, especially if there's no funding for this new arm. So and HUD has to keep track of all this and write reports to Congress on top of all that. Final thing is I want to pilot the real heart of the bill, which is all the good stuff. What the bill was originally designed to do for the conspiracy theorists hijacked it with the SFR stuff is it helps remove red tape and streamline new housing construction. That's what it's really all about. And the way I describe the substance of ROAD is like this. It's a bunch of small things that together add up to a big thing about a death by a thousand paper cuts. This is life by a thousand little nutrients. Or more accurately, I think this bill includes something like 40 different supply provisions that collectively add up to something material. So I'm not going to cover all those things in great detail. There's been others who have covered those in more detail and I really stick to my world of the rental housing space. But some of these things are going to be great for kind of just broader housing production for sale and for rent. And we'll highlight some of the big takeaways with Congressman Harder later. So I would give you a really quick rundown here. It incentivizes cities to build more housing. It reforms federal environmental laws that are blocking housing or slowing down housing. It removes several barriers to building manufactured housing specifically, and also incentivizes more of it. It promotes the rehabilitation of existing homes. It boosts various affordable housing programs. It makes it easier for banks to lend for housing construction, and it speeds up reconstruction of homes after a natural disaster. And then we also have some incentives and incentivizing and streamlining adaptive reuse projects, which are conversions of commercial buildings into housing. So again, I know I'm doing this a bit of a disservice just hitting the highlights here. Others have covered some of these measures in more depth and you could find a lot of those online. And I'll probably link to some of those when I put out my next newsletter@jparstis.com Newsletter all right, next up, it's time for Rental Housing Trivia. Today's trivia is presented by Authentic if you're an owner, asset manager, or developer running multifamily, here's the truth about leasing in 2026. A couple of ILS accounts and cross fingers won't get you to stabilization. The properties that are winning are running a tight ship across paid search and social retargeting, email and SMS nurture. All coordinated with one accountable team. Authentic built that system. They call it Demandador. And it's one platform, one partner, one monthly number that scales to your Velocity targets. Pod listeners get 50% off setup fees for a limited time. Head to authf.com d2d to see how it works. Okay, so today's question is going to resonate with some policy wonks and urban developers. Many of you know you've heard by now in my talk about the Road to Housing act that environmental protection laws can be thorns in the sides of housing developers and also pro housing yimby groups. So we've seen anti housing activists and labor groups weaponizing some of these environmental laws just to block and slow down housing production. The Road to Housing act seeks to address that. So here's today's question. Which federal housing laws environmental review process does Road to Housing aim to streamline or exempt from certain lower impact housing projects like infill development? Is it the Superfund sites like cercla? Is it the Clean Water Act? Is it the Endangered Species act? Or is it nepa, the National Environmental Policy Act? Which one is the Road Housing act working to reform for housing production? Okay, next up in the news. Okay, this segment is sponsored by telecloud. If increasing NOI is a priority, your telecom contracts may be one of the easiest opportunities in your portfolio. Telecloud. Telecloud helps multifamily asset managers consolidate Internet voice and dial tone across properties. And the average cost reduction is 40% and it is often higher than that. To make it easy, they'll start with the free telecom audit to show you exactly where savings exist before you make a move. Learn more at telecloud Multisite. Com. Okay, our first headline is going to come from WBUR in Massachusetts. It says high Court Derails Rent Control Ballot question citing Mention of Religion okay, so this we've talked about the Massachusetts rent control ballot measure in the past. This was all set to become the biggest election of 2026 for rental housing professionals and advocates, and it ended abruptly before it even started. This week, the Massachusetts Supreme Judicial Court threw out a ballot measure on rent control that had been planned for November, and it came on a technicality. The ballot measure included a carve out for religious institutions that the court said violated the state constitution. Now, obviously it's a big win for pro science and pro housing groups in Massachuset, but don't get too excited yet. This is clearly just a temporary speed bump for the state's rent control advocates. And here's the thing because it was thrown out on a technicality and not on substance. It means rent control advocates will surely just regroup and run it back at some point in the near future. And why wouldn't they? So I think most will keep. I think that this will keep most development capital on ice and probably for good reason. Now remember, developers still love the state, especially suburban Boston, but who's going to invest eight or nine figure checks in a market where your pro forma could get torpedoed in one election cycle? So if you haven't followed this, you should know that this ballot measure, it was especially draconian because it was going to cap rents for both renewals and new leases at the greater of CPI, or 5%. So that's vacancy control, which is particularly destructive to supply and would have obviously created real problems for Massachusetts. Use this in the future. Now, at the same time that the court shut this down, there's been a lot of reports about an effort to build a compromise, and those efforts may very well continue. Some have floated the possibility of a rent control system similar to Oregon's, which is caps rents at CPI plus 7% and only for renewals, not new leases. And compromises could be good in theory, but it's worth reminding that not all compromises are productive. In fact, I saw a research paper recently and this wasn't about rent control, but more, more on conflict resolution. And it makes the case the compromises are easier, but suboptimal, and a suboptimal path that's often taken. And Jeff Bezos, I saw him make a similar comment talking about how he ran Amazon, and he said that, quote, when truth is a knowable thing, you shouldn't allow compromise to be used when you can know the truth. And the truth is certainly a noble thing when it comes to rent control. The reason economists of all political stripes hate rent control is because it's been proven to backfire on the very people it's intended to protect. And I cite this all the time. There's a great Freakonomics podcast episode on this and it concluded that academic economists, quote, they think it's a terrible idea because it helps a small, albeit noisy group of renters, but overall keeps rents artificially high by disincentivizing new construction. So we'll see. This goes positive news for Massachusetts, but the fight is by no means over in Massachusetts. All right, one more article for you. This one comes from Politico. It says rent collections are down in New York and no one's sure why. The issue has exposed thorny questions for the city's affordable housing sector. And you know, it's interesting, this article talks to a bunch of city leaders saying they're not sure why people aren't paying rent as much in affordable housing, even nonprofit affordable housing. And for some reason the so called experts are perplexed as to why. But I'm guessing they didn't really talk to the property managers who know exactly why, which is this, that when your city's policies make rent payment essentially optional, there's less incentive to pay rent. And in turn, when rent payment is essentially optional, that makes it hard to identify true need, which then makes it harder to really help those struggling to get by. And this holds true regardless of who the owner is. If it's privately owned, if it's social housing, nonprofit housing, public housing doesn't matter. Now obviously some people are truly struggling to pay their bills. But somehow rent collections have improved and have come back to normal in many parts of the US While still lower in places like New York City where local policies have made rent payment in effect essentially optional. So those results shouldn't really surprise anybody. Next up, it's time for good news. And that's to highlight good news happening across rental housing industry. Because there's plenty of good news happening too, even if it doesn't get as much attention. And good news is rented by my friends at Apartment Life. Apartment Life coordinators help apartment owners care for residents by connecting them into meaningful relationships. And that helps everybody from the residents well being to the on site staff, to the apartment community's bottom line. So check out apartment life@apartmentlife.org and today's good news does come from Apartment Life. It's about an affordable housing community in Denver. So at this community recently two kids showed up to the kids club this community had and they were in tears. Their mom had just been taken to a hospital by ambulance. The children were just 8 and 10 years old. They were scared. They're confused, they're not sure what's happened next. But fortunately they weren't alone. The Apartment Life, the Apartment Life coordinator on site, a guy named Wayne, he just stepped in comfort the kids. He bought them lunch, helped them process what was happening. He then worked to locate the hospital. Their mother had been admitted, got connected with a trusted local neighbor who could help with the kids while their mom got some treatment. And that's what Apartment Life's all about. And that's what a community should be all about. So because of that, the kids were cared for, they're eventually reunited with their mother and so big shout out to Wayne and to apartment Life. And if you've got good news to share, you can send it to infojparsons.com all right, now back to today's trivia presented by Authentic. The question was, which federal law, environmental process did the ROAD Housing act aim to streamline or exempt for certain infill development housing projects? And we gave you four different choices. The correct answer was NEPA, the National Environmental Policy Act. So NEPA was passed back in 1969 and with good intentions. It requires federal agencies to evaluate and disclose potential environmental impacts of major federal actions before improving something. And that came to be applied to pretty much any housing project that involves federal funding or subsidies or loans that could be HUD grants, FHA insurance, insurance, litech, affordable housing, et cetera. And NEPA had really been hijacked as a tool to delay new development or urban revitalization projects over the years. People say, hey, we need a federal study first, not just a local study. And that of course, those federal failures, they could take years. So NEPA had been weaponized just to add costs and delays and friction and uncertainty. And that can kill housing projects and slow housing production. That's not a. And that just hurts communities. So ROAD helps streamline much of that through various exemptions, assumptions and process improvements. All right, next up, it's time for today's interview sponsored by Funnel, the CRM and Agentic AI platform trusted by four of the six major REITs whose AI recently beat three major competitors. Across six independent third party conducted blind studies. Nearly three in four renters preferred funnels, chat AI, and two in three chose their voice AI. So visit funnelleleasing.com to see it in action and try it yourself. Okay. Today's guest is the congressman from California's 9th district, representing the Stockton area east of Oakland. He comes from a family of fifth generation peach farmers, worked in private equity, focused on growing businesses, and did some time teaching at junior college as well before being elected to Congress in 2018. Congressman Josh Harder has made a made housing an issue of focus and played a key role fighting the Senate bill that would have nuked build to rent housing and costing us tens of thousands of new units each year. He helped organize a letter from 76 different members of Congress pushing to save build to rent. And they were successful in doing so. And I'll tell you, I've come to appreciate Congressman Harder's approach on federal housing policy. In chatting with him, it was clear to me he knows his stuff. I was struck by how well he can separate fact from fiction. The research based realities versus conspiracy theory narratives. And so we need more of that. So Congressman Harder is going to take us behind the scenes in the Road to Housing act, how it came together, how the sausage is made and what could come next. So here's our conversation. All right. We are joined by Congressman Josh Harder from California. Congressman, thank you so much for coming on the podcast today. I really appreciate it.
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B
That's great to be here. Thanks for the work you do.
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A
Thank you. Before we talk about housing, can you tell us a little about your background and leading up to your time joining Congress?
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B
Yeah. I represent Stockton, California, the 9th congressional district, essentially a couple hours southeast of the Bay Area, one of the fastest growing parts of California. We've got many of the fastest growing cities across the state. A lot of people being priced out of the Bay Area. I'm a fifth generation resident. My family started a peach farm here in 1850, 170 plus years ago. I never thought I'd do anything in politics, but after the 2016 election, really felt like the things that I cared about most on economic development and growth and opportunity were really being bottlenecked by political leadership more than anything else. So I decided to jump on into the political rink and try to save the country one day at a time.
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A
I love it. And Congressman, obviously there's no shortage of important issues out there that you could focus on, but you've really, and I know there's several things you obviously care about, but you've really chosen housing as one of those policies or one of those topics that you've spent a lot of time on or you're passionate about. And so can you share a little about just the origins of what fueled your passion for housing policy, the importance of increasing housing supply of all the other issues out there?
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B
Yeah. Like many young people, I really ascribe to the housing theory of everything, or almost everything. In other words, that the root cause of so many of the problems we have, especially in states like California, are because we've made housing too expensive. A third of young Americans are living with their parents because they can't afford a place of their own. 30% of renters are rent constrained or more. I mean, there's 12 million Americans paying half of their monthly income in rent or their mortgage. And so we have to be able to build more homes if we're going to allow a new generation, my generation of Americans, to really live out the American dream. We've seen some great progress in particular cities, in particular states over the yimby movement over the last decade. But Congress has really been absent in that conversation until right now. Congress has not passed a major pro housing bill since 1974. And so that's what we've been focused on, is trying to make sure that we are getting something done that makes it easier to build housing and hopefully create more affordable homes for all Americans.
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A
Such a great point. And Congressman, you know, before we get into the details of the Road to Housing Act, I gotta tell you, and I'm curious your thoughts on this is that one of the things I love about housing is that it's really an issue that crosses party lines and we're seeing just bipartisan support where, you know, candidly, there's good ideas on both sides of the aisle, there's bad ideas on both sides of the aisle, but the upside means it's maybe easier to come together on real solutions. So I guess, just big picture, what is it about housing that really seemed to cross the ideological lines?
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B
I think there's a couple things. One is it affects everybody. Obviously many issues do, but it's something that is absolutely existential to most families because it's usually the largest line item in any household budget. And so it's the first thing that people think about when they try to actually figure out where they can live. The other thing is the political coalition to get housing legislation done, especially in most cities that are very housing constrained, is very different than the polarizing battles we may be used to on cable news and at a national level. If you're going to do housing legislation in San Francisco or New York City or California, you got to get something done with mostly, frankly, Democratic support. And so because of that, you have to make some unusual coalitions that you might not see in a typical battle in Congress. And I think that's really helpful because as you said, nobody has a monopoly on good ideas here.
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A
Yeah, absolutely. So let's talk about one aspect of the Road to Housing and that to your credit, some of you helped lead, which is the removal of the supply killing provisions out of the Road to Housing Act. I was personally really encouraged to see the bipartisan push to do that from people like yourself and Congressman Hill, Congressman Walters, Senator Schatz, among others. So first of all, how does something
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B
like that even happen?
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A
And specifically, you know, build to rent essentially being nuked in the original Senate bill? And how did you first become aware of the problem had created?
- [34:37]
B
Anytime there's a really big issue going on that Americans are really frustrated about, there's going to be a real attempt to try to simplify that issue and create an easy villain. And that's what we've seen with housing. Because almost every American is unhappy with how unaffordable it's become. People are going to look for somebody to point a finger at. And in the case of housing, that has pretty much been Wall street. And the idea that hedge funds are coming into the single family market, buying up homes across the country, overbidding and outbidding ordinary Americans, and that's the reason why it's become so expensive. We know in the data that's not the case. Institutional investors own an incredibly small share of our total housing supply. Way, way less than 1% even. And that, that's absolutely not the reason why housing has become unaffordable. It's because we simply have not built enough homes. We're about 10 million homes short of what we need across the country. And every single year, we're getting farther and farther behind because the rate of new constructions versus housing formations is going in the wrong direction. But there was a bipartisan effort that President Trump talked in the State of the Union about that some senators and a bipartisan basis were excited about in the Senate to put in some safeguards. And I agree, we absolutely need guardrails to make sure that some billionaire hedge fund isn't coming in and outbidding somebody who just wants to own and live in their own place. But because that's not happening, the way that it was actually enacted in the Senate was going to have enormous unintended consequences. And so essentially, the provision that was put in place would ban the entire build the rent industry. And unfortunately, in the ensuing last couple of months, as we've been working to try to fix this, it's actually had a really negative effect already, just because folks were concerned at what this could be. And We've already seen 10,000 units that have been canceled, $3 billion in investment that we desperately need in housing has been lost just because of the, the, the Senate draft that came out, or there wasn't even a draft, it passed the Senate with a wide vote. That would have, you know, this, this really negative impact. The way that I explained it to my colleagues is if you're in a food shortage, you don't ban farms, and if you're in a housing shortage, you can't ban builders. And yet that's exactly what this proposal was intended to do. It would have led to the loss of about 72,000 new homes every single year. At a moment when we desperately need every single unit we can get. And so the good news is we've basically won on trying to fix this. I led a letter with 76 of my other colleagues that joined on. It was the single largest bipartisan push we've seen on any policy issue on any topic so far this Congress because I think we were able to win a debate on its merits and folks were able to understand that this well intended effort was actually going to have huge consequences and was ultimately going to make housing more unaffordable for everybody.
- [37:54]
A
Oh yeah. And to your credit, it was a great letter. And so by the way, how did you and I read the letter? I've shared it before. But how did you get 76 members of Congress to sign it? That's pretty significant achievement to get so much support.
- [38:06]
B
It is. And you know, again, that's a pretty Rare deal in D.C. it feels like Republicans and Democrats can't agree on what to order for lunch, let alone how to solve really big problems like housing. And if you look at the folks who signed on, I mean, this isn't just the usual suspects of the most moderate members. This really spans the ideological rainbow. And I think that's really fantastic. Ultimately, I think we won because it was a terrible idea because banning the build the rent industry was going to ultimately raise costs for everybody. And this was not going to achieve what people wanted to achieve, which is again, understandable safeguards. And some metros where there have been high rates of institutional ownership is just a complete, a completely different issue from what the build the rent industry really does. And so we tried to do our best to disentangle that for folks, and I think we were able to make the case. And the proof is in the pudding here.
- [39:01]
A
Yeah, and you're right about the ideological rainbow. You had everybody from libertarians to progressive Democrats that had signed onto this. So obviously this week looks like we'll finally get this passage of the road to housing. I know it's been a long winding road to get here, started more than a year ago, well before the President's tweet in January that drew some attention to some of the issues that we're talking about. And of course, we had the long and narrow winding road. The Senate passing its version, trying to strong arm you guys in the House to passing its version with no questions asked. Then the House passes its version. Now we got a hot compromise. And before we get into the specific winds of legislation, I do want to get there. Can you talk to us a little bit for those of us who aren't in D.C. don't understand how the sausage gets made. You know, can you take us behind the scenes and educate us on how this all played out and why it took so long to get it done?
- [39:53]
B
Yeah. You know, frankly, this is a pretty unusual bill. It's unusual because it's also the only major bipartisan legislation that's not a reauthorization of something to pass this entire Congress. And I think since we're getting close to the election, this is going to be pretty much it as a new idea. It's also unusual because we played a lot of ping pong between the House and the Senate at times. This was not a debate between Republicans and Democrats. This was a debate between the House and the Senate on really important legislation. And so we can finally put our paddles down today after this ping pong match has finally been resolved. But ultimately this is a bottoms up process. A bill like this really originated in dozens. I think there's 27 different pieces of housing legislation that are all combined into this bill. And so the roots of this actually go back many years in small bipartisan conversations, working on a bill that's got a lot of support and then adding that to another bill that deals with a different topic around housing and trying to jam them all together. And so it can seem a little bit like, you know, Frankenstein type of bill, but ultimately that's how legislation is getting done in this day and age. And so in that case, it's actually quite typical of what legislation looks like where it's a lot of different ideas stapled together instead of some coherent vision. The good part about that is that it actually can solve a lot of different problems. There's no silver bullet we found on housing. It really is silver buckshot. And so it takes a lot of different pieces to deal with incentives with red tape, with categorical exemptions from NEPA and all the rest, which is what this bill is going to be able to do.
- [41:37]
A
Yeah, no, it's, it's great. And yeah, it's. I was talking to somebody recently about this where sometimes I see even the media articles about it. It's like they struggle to explain exactly what it is because it's like a. It's not like it's one magic button, like you said. It's a bunch of things that collectively add up to something significant. So let's get into some of the details. Like as you review this, you know, bill that's 300 plus pages, whatever it is, like, are there specific provisions or pieces of it that you're most excited about?
- [42:05]
B
The three Most important buckets that this bill is going to work on is accelerate manufactured housing. If you go to many other countries in the globe, they build a lot of homes and factories. We don't do that in the United States, although there have been some efforts. And the biggest reason for that is we've got a lot of rules that don't make any sense. For instance, the chassis rule, which essentially requires you to build a chassis underneath a manufactured home. It almost doubles the cost of most manufactured homes without creating an ounce of benefit for most homeowners that don't want to move their house after they actually get it in location. One of the biggest issues we've got in the housing market is that construction productivity has barely budged. It hasn't moved at all in the last couple of decades. If we can build more homes in factories, I think hopefully we can do a lot to improve our productivity and ultimately lower costs that'll be passed along to home buyers and renters. The second thing is it creates more incentives for cities and counties that build more. And this is one of the things that you hear about sometimes when you talk to folks that, you know, haven't been following this. They've been following it at a state and local level is, well, housing is mostly about zoning reform in a particular city. And there's certainly a lot to the powers of different. Different cities and jurisdictions. But this bill is going to create a $200 million innovation fund, as well as incentives around community development block grants, which are a major source of funding for almost every city across the country. And now, because of this bill, cities that build more housing are going to get more money, and that has the opportunity to create a race to the top type of dynamic where you actually see competition for growth between different cities because they're going to get more federal dollars towards that. That makes a ton of. That makes a ton of sense. Ultimately, the federal government should be incentivizing communities that actually want to grow and do that in a responsible manner, as opposed to, you know, essentially some of these museum cities where it feels like no new house has actually gotten built in decades. And then the third thing that this does is it takes out a lot of red tape throughout the system. And so it's going to allow HUD to create new building codes and new zoning platforms that it can then create as blueprints for particular cities if they want to adopt that, as well as HUD's own codes to make it easier to build. And so those are the three major categories that I think about. It's manufactured housing, its incentives, and it's cutting red tape, all of it combined, is going to ultimately lower construction costs and make it easier to build more homes for folks that really want it.
- [44:42]
A
Yeah, no, all great points. I agree with all those things. So I want to ask about the incentives because as I understand it, and correct me if I'm wrong, that was one of the kind of controversial things in Congress that the House and Senate had to agree on. And I looked at, maybe it must be ignorant, but what was controversial about it? It seems common sense. You want to incentivize more housing.
- [45:00]
B
The controversial part is if you do that, there's going to be winners and losers. And it doesn't take a rocket scientist to look at the text of the bill and be able to game out which type of jurisdictions are going to be gaining from that and which type are actually going to be losing community development block grant resources. I think that's an understandable concern for a lot of folks that are in areas that, you know, aren't seeing that type of growth. But to my mind, that's the entire point is let's make sure that we're redirecting our federal resources towards the type of areas that are making homes more affordable. That's the entire point of this legislation. And so I think that incentive is going to be big. But no question, it was one of the toughest pieces to get across the line because, you know, some folks are going to be left with fewer resources because of that and because they actually have made it more difficult to actually build homes.
- [45:53]
A
Yeah. And I guess that leads up to another question, which is that, you know, whether it's a, you know, red or blue area, a lot of people want to say that real estate should be. These are local decisions. And so how do you, I mean, obviously you represent local cities, but in a national level, so how do you think about the balance of, like, the federal government's role and the city's versus the city's roles in housing?
- [46:14]
B
You know, local control is really important. And ultimately that city council, that mayor, they're going to understand what's going on in that community better than anybody in Washington, D.C. but if you look across the last couple decades, local control doesn't always seem to be working out for us. I think most Americans are pretty disappointed by the state of our housing market. And the reason is if all you are looking at is one particular block, it's very easy to say, well, this block shouldn't have any new housing built. And obviously, if everybody takes that Attitude, nobody benefits anywhere. And so one of the things that we found in all of these BIMBY debates that have been percolating at a state and local level over the last many years is the higher you are in terms of aperture, the more you're thinking about the, the needs of a community as a whole instead of one particular location, one particular block, and that's your sole myopic focus, the better you are to make those important trade offs and say, well, we have to build housing somewhere. Where's the best place to do it? And if you follow that logic to its conclusion, the federal government is probably the most incentivized of any political body anywhere in the country to think about what's actually good for the United States as a whole. We want our economy to grow, we want there to be more opportunity. We don't want a third of young adults to be living on their parents sofa. And so let's try to fix it by making sure that we're building more homes. And that incentivization package is going to be really crucial. Nothing in this bill overrides local control. Nothing forces the hand of any city who doesn't actually want one thing or another. What this does is it tries to take away some of the bottleneck and the roadblocks that have crept up in this process and that have crept up over a long time because again, Congress hasn't done something like this in decades and it creates those incentives. So it says, hey, if you do want to build, or if we can push you and nudge you a little bit in the right direction, using the vast federal resources as an incentive, then let's try to make sure that we're rewarding folks that are doing it right.
- [48:24]
A
Absolutely, that's well said. So there's obviously a lot to like about this bill. I want to go back to something you talked about earlier, which is the section 901 homes are for people, not corporations. And even seeing that title, I always cringe a little bit because I'm like, hey, renters are people too and they need a house. And as you alluded to some of the stats earlier on institutional ownership, we've also seen that investors as a group have been selling more houses than they've been buying the last 10 years. But the narrative still persists. And so I guess there's a little more of a philosophical question is like, why do you think that, you know, boogeyman narrative is so deeply rooted and what does it take to really, you know, change the conversation with, you know, more of A fact based conversation to get us to real solutions.
- [49:04]
B
When people are real upset, you're going to look for a villain. And you know, it's ironic that I think in most industries, in most parts of our economy, people understand how supply and demand affects their lives. But in housing, it often seems like there's a real big blind spot. And there's actually been some academic research on this that people are very skeptical that if you build more homes in a particular area, it's going to make it more affordable for everybody. You know, obviously if you follow the opposite logic, then, you know, in fact, we should be building a ton. We should be taxing it. You could have incredible amenities to Americans if you're building all this, all this housing and it doesn't lower the price. But obviously that's not how a market economy actually works. In practice. What I tell folks is if you really hate Blackstone, if you really hate institutional ownership in homes, the best fix is to build more housing. Because if you actually look at the disclosures of institutional ownership, they will say the largest risk to their business model is that it is, you know, possibly could be easier to build more housing because, you know, obviously that's the Achilles heel. And so if you're frustrated, well, then let's fix our zoning issues. Then let's actually deal with some of the fees and some of the permit challenges that we have in siting, and let's actually put more shovels in the dirt. That is the best way to reduce institutional ownership and profitability in this market. The opposite is also true. And so I'm very understanding because I talk to voters every single day. I hear from a lot of folks. But ultimately this is an issue where it's important to get it right. Because let me tell you, if we don't and we have unintended consequences and housing prices continue to escalate, people are not going to care how that actually happened. Ultimately, they're going to hold the person responsible who contributed to it.
- [51:00]
A
Yeah. To your point, and by the way, a couple of things, that study is so good for everybody listening that's seen this. Basically they survey people saying, hey, if we build more cars, we'll get cheaper. Yes. If we sell more, build more televisions and computers, it'll be cheaper. Yes. Build more homes, it'll be cheaper. No. So it's pretty amazing. And then the second thing, you know, I always point people to, obviously a different part of the country. In Austin, Texas, one of the hottest growing places in the country, rent's been falling for three Years. And why? Because they built a lot of housing. And so you're absolutely right. So I guess another kind of philosophical question for you here. Single family rentals, for whatever reason, seem to be kind of a trigger for some people. Is there a role for single family rentals still in America's housing supply? Or do you think we're, you know, are we being steered toward a world where apartments are for renters and houses are for people who could afford a home and buy and get qualified for a mortgage?
- [51:51]
B
Yeah, look, we have to have an all of the above approach to our housing situation for a couple of different reasons. One is when you have a 10 million unit deficit like we have right now, we need everything. You know, we obviously need the missing middle that a lot of folks talk about, but we also need a whole lot more single family homes. We need a whole lot more multifamily. We just need more of absolutely every different type because we've not been building for so long or not been building at the rate that we absolutely need. The second issue is, you know, America today looks pretty different from the 1950s. White picket fence, one single family home. Ideal. Young Americans are moving a lot. They have, you know, lots of different types of jobs as they're, you know, climbing the jungle gym of their particular career. And so oftentimes, a rental is going to be a better approach for folks, especially, you know, a new generation of Americans, a younger generation of Americans that maybe have a different idea over assets. And, you know, if we have an Uber and an Airbnb, where you don't, you can still do lots of different ways to get to places and go on vacation, then housing should also adapt to the needs of this generation. Obviously, the big question there is not just what we build, but what we incentivize in our tax code and the mortgage interest deduction, which ultimately incentivizes people more towards home ownership because we essentially pay them more for it. And that has much more to do with people's conception of the American dream. I think we can put those questions on a hole that's kind of above my pay grade. My goal is whatever type of home you want, whatever is right for your avail, for your lifestyle, that it's available. And right now, that's not the case almost anywhere. And the root cause of why we haven't built single family rentals is the same as why we haven't built single family homes of any type. It's that we've made it too tough to build and we have to fix it.
- [53:42]
A
Yeah. So it seems like a lot of the frustrations around just the lack of end shovel homes of all types. When you all put road together, was there any discussion around some type of incentives for starter home construction or just some way to produce more starter homes?
- [53:59]
B
Yeah. So let's talk about what's not in this bill. So first, there is not a whole lot on the demand side. So, you know, money for first time home buyers. Right. Which is something that a lot of politicians often go towards, is not really included here at all. I think that makes sense because we've seen the demand side measures don't actually lower the price because you're only given to a handful of people. It's very expensive to to do. And if you're not actually increasing the supply of available homes, it's just going to get eaten up in a lightning second. But there's a lot of other pieces that are not included in this bill that I do think are really important. And my hope is that there is a 2.0 solution here. Now that we've proven out or almost have proven out that the coalition here is broad. This bill passed the House the last time 396 to 13. I mean, think about that. On the most meaningful, important, bipartisan new initiative, new legislation that's passed this Congress, 396 to 13 is incredible. It shows how broad the coalition is to get something done here. My hope is that we're able to continue to build on that momentum with a couple other areas including how do we lower the cost of construction? Because so much of the cost of actually buying a home or renting a home is how expensive it is to build it. We've just seen construction costs go up and up and up. I talked a little bit about manufactured housing, which I'm optimistic about, can lower those costs. But we need to deal more with the cost of inputs, obviously the cost of labor and our immigration problems, but also the cost of timber and what's gone on with tariffs. That's not really here. I think that deserves a really solid look. And then the other is around the financing side. And so everything from, you know, right now accessory dwelling units do not have a mortgage backing the same way that single family homes do. That doesn't make a lot of sense. We permitted a whole lot. You know, California is a great state where we permitted a ton of ADUs. That's been fantastic. Very few of them have gotten built because not a lot of people have half a million dollars in ready cash available to actually go out and build that. Right. You need Financing the same way you're going to have for any type of new housing unit, if you're building new housing for somebody, if it's your parents that are living so they can help you out with child care and you can take care of them, then that deserves a mortgage guarantee the same way that any other house in America does. So there's that side of the financing and then there's also the construction financing. You mentioned Austin. Austin is no question a great success story, but it also has had a little bit of a boom and bust cycle where there's been periods where there's been tons and tons of housing construction, but because then they built so much, rents have actually gone down and then you're seeing a real fallow period of housing. And this is something that you see in the housing market again and again and again. It's just really cyclical. And so given that we are in this long term deficit in terms of housing supply, are there ways to thoughtfully try, especially in a high interest rate environment, smooth that over time for developers and builders that actually want to be invested in the community for the long haul? So there's a lot that's not here. And my hope is once we're able to get this done, we can move on to some of these other topics as well. And we're going to be putting out some ambitious ideas on that later this year.
- [57:26]
A
Oh, good. So I was asking that, do you think there's political will in Congress to do another round, a V2, or is it kind of like, hey, we did
- [57:35]
B
that, you know, look, look, certainly sometimes in Congress you check that box and you don't go back to it for another decade. I think in the case of housing, that would be a big mistake because this bill is not going to fix our housing crunch. It's going to do a lot. It's a huge step forward again. It's the most important step forward we've had for decades. It's not going to fix everything all at once. And I think if you look at state legislatures, which, by the way, it's so much easier in almost every state legislature in the country to pass a bill on any topic.
- [58:06]
A
Right.
- [58:06]
B
I mean, Congress is uniquely broken and polarized compared to so many state legislatures. You often see, you know, the California legislature, I've lost count of how many housing bills have been passed over the years. It's again and again and again. Once you solve one problem, you find, you know, it needs a tweak. You find there's another bottleneck. You didn't Even anticipate we have a lot of work to do. And I think that there's a going to be a real case for that at the federal level, because a lot of topics are actually not included in this, even though a lot is. And so we want to pop the champagne. We absolutely want to celebrate this important win, but then we want to make sure we get back to work. And I think especially because we've proven that there's a lot of folks that care about this issue, next time, hopefully it'll be even easier.
- [58:50]
A
I hope so. And, Congressman, if I could ask one more question, kind of building on that, you know, for those stakeholders out there, from advocates to people in the industry to, you know, others who just want to see all sides of this issue, how can we all just better work together toward lasting solutions on things we all agree on? Because I feel like we kind of bicker about the areas we don't agree, but there's a lot we do agree on. So how can we do a better job working together?
- [59:13]
B
Yeah, I think that's the entire idea behind our caucus, is we have folks that don't agree on any issue except for the one that we're talking about right now. And that's been, I think, a really important success story for getting legislation like this done. You know, some issues are going to be solved at the ballot box. Some issues aren't even going to be solved. They're just going to be fodder for folks screaming at each other on cable news all day. But we have really important issues across the country. We have to be able to work together on issues of common ground. And something like housing that affects everybody, that is that biggest line item for most household budgets is something that I think is very easy to work together in because again, we want the same things. We want housing to be affordable. We want this really important nest egg for most older Americans to be protected and supported. And so let's do what we can to work it. I think one really important piece that hasn't been the case on housing is we need engagement from the private sector and many of your listeners. I think a lot of folks have been counting the federal government out on housing, and of course they have, because something like this hasn't happened for a very long time. And you've seen a lot of people try to rediscover those muscles for the first time in a while over the last couple months, as we've been working towards that. If you don't have a seat at the table, you're ultimately going to be on the menu. And so if we are going to continue to do really important housing legislation we need the folks that are on the front lines that are doing this work day in and day out to have their voice be heard. And I think especially now that we've gotten this done and folks realize it is possible the federal government can actually do things even despite all of the broken politics you see every day we're going to need to have more voice from folks on what else we can be doing to help.
- [60:59]
A
Well said. Well Congressman thank you so much for your leadership on housing issues in D.C. and thank you for your time today. I really appreciate it.
- [61:06]
B
Thank you.
- [61:26]
A
Thank you again to Congressman Harder for joining today's podcast. Thank you to all of you for spending part of your time with us. Also big shout out to our sponsors to jpi Madera funnel, authentic tele cloud and apartment life. We'll see you next week. It.