Even David Crowe, senior vice president and chief economist for the National Association of Home Builders (NAHB), a Washington, D.C.-based housing trade association, sees this. “If anything, the political winds seem to be towards renting,” he says.
To its credit, the Obama administration seems to be trying to help make housing more affordable to those in need instead of trying to doctor the homeownership rate. Much of that is being driven by multifamily alumnists at HUD, including director Shaun Donovan, who previously served as Commissioner of the New York City Department of Housing Preservation and Development (HPD), and Carol Galante, who spent 13 years at the helm of San Francisco-based affordable housing developer BRIDGE Housing Corp. “Clearly at HUD the word of the day is balance, and you have a director that comes from the multifamily side,” says Nic Restinas, director emeritus of Harvard University’s Joint Center for Housing Studies.
In the past few months, HUD and the Obama administration have hosted a number of rental housing conferences, including October’s Next Generation of Rental Housing Policy forum, where a number of housing advocates came to deal with issues such as the Low-Income Housing Tax Credit, an affordable housing incentive program that is trying hard to avoid extinction. Under some recent tax proposals, there would be no need to buy tax credits, which would essentially end this fairly effective production program.
“It’s good to see the administration talking about multifamily and talking about how to make it more relevant as a housing choice,” says Bob Nielsen, president of Reno, Nev.-based Shelter Properties and the NAHB’s first vice chairman of the board. “I can’t think of another administration that put that sort of emphasis on multifamily housing and, specifically, affordable multifamily housing.”
In fact, it makes sense in some respects. “The question is how federal policy should operate to rebalance homeownership and rental,” McIlwain says. “If people were to decide we should have more emphasis on rental and less on homeownership, what would that mean and how would the federal government go about doing that? No one has defined that clearly.”
Cisneros says that, absent creating jobs and keeping interest rates low, there’s not a lot more that can be done for the single-family sector without drastically altering programs that can’t be “tweaked easily.” “I think you’ll see a greater emphasis on rentals because there’s some frustration that the for-sale market is not out of the woods,” Cisneros says. “It’s not clear what policies would help on the for-sale side because the structure is not one that lends itself to intervention.”
Protecting the Programs
Ultimately, even with demographics, mortgage lending issues, and some of the current administration’s actions suggesting that the United States is entering a renaissance for the rental industry, there are some major policy decisions coming in the next year or so that could trump all of these trends and tip the homeownership scales once again.
Consider the government-sponsored enterprises (GSEs). As commercial banks, commercial mortgage-backed securities (CMBS) lenders, and insurance companies (until recently) backed off their multifamily lending, Fannie and Freddie came to the rescue. In 2008 and 2009, the GSEs picked up 90 percent of the market, according to Bibby.
And Fannie Mae and Freddie Mac aren’t the only federal programs bolstering multifamily business. Just look at HUD’s 221(d)(4) and Section 8 programs. Or the Federal Housing Administration, when it comes to new development. “The only option developers have is FHA,” explains Claudia Kedda, director of multifamily finance for the NAHB.
