▶ 0:16:56and he's also known as the big O in his district uh to lead us in the pledge of allegiance and a prayer.
▶ 0:18:12Good morning to everyone. Uh I now call the committee on small business to order. Without objection, the chair is authorized to declare a recess of the committee at any time. And I now recognize myself for my opening statement. Uh good morning and welcome to today's hearing titled Building the Future: How Small Home Builders Are Closing America's House Housing Gap.
▶ 0:18:34I want to thank our witnesses for joining us today and for lending their time and ex expertise so uh to this important conversation and home ownership remains a cornerstone of the American dream. Home ownership represents more than just a roof over your head. It's the foundation of personal stability and freedom and a place where families are formed, children are raised, and memories are made. It's where much of America's small business activity begins with millions of entrepreneurs launching and operating businesses from their homes.
▶ 0:19:04Roughly half of all new businesses start in the home. But that dream for too many Americans feels increasingly out of reach. Our nation is facing a serious supply and affordability challenge. Today, more than half, one half of the American households cannot afford a $300,000 home. And when housing construction slows and housing becomes unattainable, uh, communities stagnate, growth slows, and young families are placed out, priced out.
▶ 0:19:29Uh, Main Street across the country feel that, uh, the consequences as fewer people are able to plant roots, start businesses, and invest in their neighborhoods. Amid these challenges, small home builders have become essential. They have often the most agile, responsive, and innovative builders willing to meet that moment. Across the country, small business and small home builders are pushing the boundaries of what is possible in housing delivery, whether through modular or manufactured housing or emerging methods like 3D printed construction.
▶ 0:20:00Small home builders are reimagining how homes are built from the concept to completion. These innovations offer real promise. By reshaping our approach to housing construction, these innovations can deliver faster construction timelines, lower material costs, reduce waste, and offer greater efficiency in bringing homes to the market. Yet, despite this momentum, significant barriers remain for the small home builders across the country.
▶ 0:20:27Key challenges such as overregulation and access to capital continue to drive up home costs and constrain supply. In some cases, as much as 40% of the cost of multifamily home development is tied to is not tied to brick and mortar, but to navigating layers of compliance costs locally and uh state and federal requirements. At a time when many uh families are struggling to find an affordable place to live, we must ask hard questions about whether our current system is helping meet those moments.
▶ 0:20:57Because often the solutions already exist in the ingenuity of builders and entrepreneurs across this country. What they need is a space to build, the clarity to plan, and the freedom to innovate as they can deliver their homes to Americans uh that we need urgently. Local officials across the country are beginning to realize this. And needless to say, whatever local regulations have been loosened, like in Austin, Texas, the housing market has boomed.
▶ 0:21:24And you also will hear from our witnesses today, small uh business home builders are continuing to press forward despite their barriers. But it is time to stop hamstringing our best and our brightest. When small home builders are constrained, uh the affects people far it affects people far beyond the housing market and other industries feel the pressure. Local economies lose momentum and worker mobility becomes uh restricted.
▶ 0:21:50Housing is a driver of economic growth and when workers cannot find affordable homes near job near their jobs, certain employers struggle to recruit and maintain talent. Productivity suffers and economic expansion slows. A shortage of housing does not just limit where people live. It also limits where people can grow, where workers can move and how strongly local economies can compete.
▶ 0:22:15So as a committee, it's a respon our responsibility to look at the challenges that facing small homebuilders and bring their their obstacles to light with clarity and with purpose. It is also our uh our duty to empower the people who build America to do what they do best. And our role is to ensure that the commerce the committee is a is a partner in progress, not a roadblock to it.
▶ 0:22:38Just yesterday, the ranking member and I along with our colleagues voted to pass the Houseled bipartisan housing bill that we passed out of this chamber yesterday. We need to work together to ensure that small home builders can compete, innovate, and deliver the housing this country is counting on. I want to thank all of you again for being here coming. It's a big deal that you will come. I look forward to the conversation ahead today. With that in mind, I now yield to our ranking member and my friend from New York, Miss
▶ 0:23:08Thank you, Mr. Chairman, for calling this timely hearing on one of the most important issues facing our economy. And let me take this opportunity to welcome all the witnesses and to thank you for being here. Nowhere is our affordability crisis more evident than in housing where half of renters are rent burden and a quarter pay more than half of their income. In New York City, our rental market is out of control.
▶ 0:23:36On average, New Yorkers who rent are paying 41% of their income. But this isn't a red or blue state issue either. Cities in states like Texas and Florida also face rental affordability issues. Similarly, home ownership is drifting further out of reach.
▶ 0:23:57According to the Atlanta Fed, the salary needed to afford the median home is roughly 116, 36% higher than the actual median income of $85,000. Over just the past six years, the median home price has surged over 30% and elevated interest rates are keeping many locked into the low in uh low rate pandemic era mortgages.
▶ 0:24:27As a result, an entire generation has been priced out of home ownership. According to the National Association of Realtors, the firsttime home buyer share is now at a record low and the typical age of a firsttime home buyer is an all-time high of 40 years old. We are not building enough housing to meet demand. Experts estimate we lack between three and 5 million units nationwide.
▶ 0:24:57Tackling this issue will mean addressing shortages of both single family and multifamily housing developments. And I hope this hearing can identify causes and address solutions to this crisis, including by leveraging the power of small firms across the nation.
▶ 0:25:17Yesterday, the House began addressing some of those issues by passing the 21st Century Road to Housing Act, which makes important reforms, federal housing programs, and includes language I offer on cooperative housing developments and oversightes of monitors and receivers of public housing authorities. This bill is an important first step, but it's not a complete answer. I urge the Senate to act quickly and pass this bill.
▶ 0:25:46Yet, we must all recognize that we still need substantial investment in housing programs to tackle this issue. While the issues low housing construction is caused by many structural problems from labor and materials to financing to land regulations, it is clear that the administration who campaigned on affordability is making the problem For instance, this administration's cruel
▶ 0:26:17and racist immigration policies has specifically targeted a large portion of the construction workforce. As a result, threats of I rates have deterred even documented workers and legal resident from showing up to job sites, extending timelines and growing costs.
▶ 0:26:40Tariffs enacted solely by the president are adding costs to building materials, including Canadian softwood, lumber, steel, aluminum, and copper, and even kitchen cabinets and furniture. These tariffs are inflating prices from foundation to finish.
▶ 0:26:59And to make matters worse, the war in Iran has caused diesel to surge to over $6 per gallon in many states, causing builders to face additional fuels search charges in transporting building materials. High prices and growing influ inflation threaten to keep interest rates high while further straining the budgets of renters, home buyers, builders, and sellers.
▶ 0:27:27Just last week, we received inflation data that confirmed price hikes are once again outpacing incomes driven primarily by the president's signature policies, tariffs and the Iran war. The CR CEO said this plainly to the Wall Street Journal last week, consumers are literally running out of money at the end of the month.
▶ 0:27:54Meanwhile, the administration is proposing to gut the very programs, rental assistant, community development grants, and home investment partnerships that help fill the gap between what the market can deliver and what families can afford. Taken together, these policies and economic conditions are in alleviating the housing shortage. They are making it worse.
▶ 0:28:21Rather than focusing on the issue he was elected to solve, the president focuses on securing a billion dollars in taxpayer funds for a ballroom and even spending $13 million on a notbe contract to paint the reflecting pool. Not to mention spending $1.7 billion on a sludge fund for his insiders and cronies, some of whom ransack the capital on January 6.
▶ 0:28:48A billion dollars could build a lot of houses and go a long way toward helping small businesses fill this gap. I look forward to hearing from witnesses about how we could better allocate our resources to address this crisis and make life more affordable for everyday Americans. Thank you. I yield
▶ 0:29:11Gentle lady yields back. We'll now move to the witness introductions. Uh our first witness today is Mr. Bill Owens. Mr. Owens is chairman of the board of the National Association of Homebuilders. Mr. Owens is also the principal of Owens Construction, an Ohio-based residential construction firm he established in 1982 that is recognized for award-winning energy efficient home designs. Mr.
▶ 0:29:35Owen has also held numerous leadership roles uh across the home building industry including chairman and positions with the NAHB remodelers uh council homebuilders institute and the new American home and remodel task force. Mr. Owens is a longtime ministry leader at the local state and national level. He has served on the NAHB board of directors for more than 20 years. Has previously served as president of the Ohio Homebuilders Association. Mr.
▶ 0:30:01Owens is also a member of the Harvard uh joint center for housing studies remodeling futures steering committee and remains active in professional education, workforce development, and community uh service along with his wife Betsy. I want to thank you again for being here today. It's pleasure. Uh our next witness is Dr. Ivon Rupnik. Uh Dr. Dr. Rupnik is founding partner of Mod X, a researchbased advisory group focused on accelerating the underutilized housing industry.
▶ 0:30:31Dr. Rupnik is also a professor of architecture at Northeastern University. His research focuses on industrialized housing delivery, particularly the regulatory and institutional barriers in and off-site construction in the United States. Dr. Dr. Rupnik's work has been featured in the New York Times and he has presented at HUD the Harvard Kennedy School and the National Association National Housing Summit.
▶ 0:30:55The uh through multiple uh HUDf funded projects, ModX has produced major policy reports, their work has uh identified regulatory reform as a top priority for scaling in u industrialized housing. Dr. Dr. Rubnik holds a PhD in architecture from Harvard University where his doctoral research examined the relationship between building design, industrial management and housing policy.
▶ 0:31:20And he's also holds a master of architecture with distinction from the Harvard Graduate School of Design and a Bachelor of Architecture Suma Kumlada from Louisiana State University. I look forward to our discussion. Our next witness today is Mr. Eric Schaefer. Uh Mr. Schaefer is the chief business uh development officer at Falling West Development or Fading, sorry, Fading West Development, a Colorado based modular home builder focused on providing affordable high-quality homes.
▶ 0:31:49And he also helps uh lead Fading West innovative uh modular housing projects focused on meeting the needs of uh communities. Mr. Mr. Schaefer also is a plays a key role in building partnerships with developers, nonprofits, and municipalities across Colorado, Hawaii, and the broader western region.
▶ 0:32:12Since the company's manufacturing facility opened in 2022, he has helped advance 25 projects, resulting in the creation of more than 500 homes across the western United States. Mr. Mr. Schaefer has testified before the Senate Banking Subcommittee on Housing, Transportation, Community Development in 2024 and the House Financial Services Committee on Housing and Insurance in 2025.
▶ 0:32:35He holds a Bachelor of Science in Communication from Florida State University and a master of divinity from Colombia Theological uh Seminary. So, I look forward to your testimony. I now recognize the ranking member of Velasquez uh to briefly introduce our last witness appearing before us today. Thank you, Mr. Chairman.
▶ 0:32:58Our final witness today is Emily Devidito, senior advisor for economic policy at Groundwork Collaborative Collaborative, where she manages the work on the housing crisis. Prior to grant work, she was the director of finance, corporate regulation and consumer protection at Roseville Institute and a policy advisor at the US Treasury Department. Her research has been featured in the Washington Post, the Garden, and Bloomberg.
▶ 0:33:28She holds a bachelor's degree from Wesley College and an MPA from Columbia University. Thank you for joining us today, Emily. We look forward to your testimony. gentle lady y heels back and I want to also say thank you to our witnesses and we appreciate all of you being here today. Now before recognizing the witnesses I'd like to remind them that their oral testimony is restricted to five minutes in length. That's an important number here. Five minutes.
▶ 0:33:55Uh if you see the light turn red in front of you it means your five minutes has concluded and you should wrap up your testimony. And if you continue on you'll hear this. That means you got to stop what you're saying. Okay. I know you'll do fine. So, with that in mind, I now recognize Mr. Owens for his fiveminute opening
▶ 0:34:17Chairman Williams, Ranking Member Velasquez, and members of committee, thank you for the opportunity to testify on America's housing supply crisis. I'm here today representing NHB's members, most of whom are small businesses who build 10 or fewer homes per year. Yet collectively they construct roughly 80% of all new housing in the United States. At its core, today's affordability challenge is driven by a simple imbalance.
▶ 0:34:47The nation is not producing enough housing to meet demand. NHB estimates a structural shortage of roughly 1.2 million homes. Vacancy rates remain historically low and the resulting supply demand mismatch has pushed both home prices and rents beyond the reach of too many households.
▶ 0:35:10To explain why it's so difficult to build enough attainable housing, NHB often points to the five L's lending, lots, labor, lumber, and laws. These interrelated constraints make clear that the crisis is structural and cannot be solved by addressing a single factor alone. First, lending. Housing production depends on access to capital and for many small builders that means financing from community banks.
▶ 0:35:40Credit conditions remain tight with borrowing costs elevated, limiting the ability of builders to move projects forward. We are encouraged by recent efforts to highlight projectbased working capital options for homebuilders and look forward to working with the committee and the SBA to ensure these programs are available to all builders. Second, lots.
▶ 0:36:05A shortage of buildable lots remains a major obstacle as land development costs continue to rise. Restrictive zoning, infrastructure limitations, impact fees, local opposition, and federal permitting delays all constrain the ability to bring land to market. These challenges are especially acute for small builders who cannot spend or who cannot spread high fixed development cost across largecale projects. Third, labor.
▶ 0:36:36The skilled labor work workforce shortage continues to significantly limit housing production. At any given time, there are more than 200,000 open positions in residential construction. In 2024 alone, labor shortages prevented the constructions of roughly 19,000 homes and added nearly two months to project timelines.
▶ 0:37:02Congress can help by strengthening workforce development programs, expanding training and career pathways in the skilled trades, and ensuring legal and efficient workforce access where domestic labor supply is Fourth, labor and materials. Construction input costs remain elevated with continued price increases in 2026 compounding the challenges posed by financing costs, labor shortages, and delays.
▶ 0:37:33Even modest increases in material prices can determine whether a project is viable or not. Finally, laws meaning regulation. Regulatory costs act as a hidden tax on housing production. NHB research shows that regulation accounts for nearly 25% of the cost of a new single family home and over 40% of multifamily development costs.
▶ 0:38:02These burdens increase carrying cost and financing risk. Permitting challenges are particularly burdensome for small builders. For example, under the Clean Water Act, the difference between a streamline na streamlined nationwide permit and an individual permit can add hundreds of thousands of dollars and more than a year in delays, directly reducing the number of homes that can be built. The bottom line is clear.
▶ 0:38:32There is a supply problem. Small builders are ready to help meet the challenge by delivering housing in local markets and underserved communities, but progress will remain limited if costs and delays continue to escalate across financing, land, labor, materials, and regulation.
▶ 0:38:51Congress can play a role by advancing supply focused reforms that expand access to capital, strengthen workforce pipelines, increase the availability of buildable lots, and reduce the excessive regulatory costs and permitting delays. If we want to make housing more attainable, we must make it easier and less expensive to build. Thank you, and I look forward to your questions.
▶ 0:39:15Thank you. Gentleman yields back. I now recognize Dr. Rupnik for his fiveminut opening remarks.
▶ 0:39:23Uh Chairman Williams, ranking member.
▶ 0:39:26Thank you. Um thank you for the opportunity to testify. Um this year I co-authored or published a co uh report from HUD uh that examined why the United States has persistently struggled to industrialize housing delivery while our peer economies have not. What we found was that much of what the work that has been uh that was that was done abroad was first proposed in the United States but never fully implemented.
▶ 0:39:52The industrialization of housing delivery is the integration of design, off-site production and on-site assembly into a coordinated system. Most American industries operate within this regulatory framework that supports this kind of integration, including automotive. Housing does not. In 1968, HUD documented exactly this issue and concluded that the federal role is to incre to create an enabling conditions within which companies can innovate to address housing affordability.
▶ 0:40:18In response, Congress authorized HUD to pilot a form of regulatory streamlining called housing system certification. That pilot, Operation Breakthrough, validated this approach through work in eight different states and 20 different companies. Six years later, Congress concluded that the lack of uniform housing and building regulatory provisions increases the cost of construction and thereby reduces the amount of housing and other community facilities which can be provided.
▶ 0:40:47The 74 housing and community development act then produced two performance-based regulatory reform actions. The first was the HUD code which has been discussed extensively. The second is the more exciting part for me uh was the establishment of the National Institute of Building Science or NIBS mandated by Congress to continue the work HUD had piloted developing a performance-based fasttrack for small innovative companies to deliver housing. That problem the problem had been identified and measured.
▶ 0:41:17A solution had been demonstrated. An institution had been established. But uh the what was never completed was implementation. Uh our recent report renewed a call for housing system certification for three concrete reasons. It is it was proven out at a pilot level uh in the United States through operation breakthrough. It has been operating successfully in Japan for more than 50 years.
▶ 0:41:42Uh today uh more than 28% of Japanese housing goes through this fasttrack route and has serious benefits. Um and it is also the same framework that we already use to govern every other conse consequential American manufactured product. Automobiles, aircraft, medical devices, our food, our pharmaceuticals. Uh a housing system is essentially a product definition.
▶ 0:42:07the design logic, the structural and material systems, the off-site manufacturing and on-site assembly processes, quality assurance and quality control of a defined, repeatable housing offering treated as a unified whole rather than a collection of discrete decisions made project by project. What defines it as a system is the integration, the design from manufacturing, assembly, coordinated supply chain, serial production, and continuous improvement. In other words, industrialized housing delivery.
▶ 0:42:37Permitting through this would be streamlined. Lenders and insurers could rely on the certification as a basis for underwriting. Code officials would retain their authority but exercise it against a known and tested baseline. Federal programs could utilize a certification for awards and subsidies. This is what's done in Japan. Uh this is not a proposal to preempt local code officials. It is a proposal to give them a tested performance baseline against which to exercise their authority. The savings would come not from redoing the same approvals in every project.
▶ 0:43:06The quality gains would come from concentrating expert review at the systems level rather than fusing it across thousands of individual project reviews. In the US, the strongest endor endorsement for housing system certification has come from small vertically integrated companies like my friend Eric Schaefer here who's also serving on a technical committee to support our work. Um, fading west uh will will be discussed today.
▶ 0:43:31Certification benefits factory site and hybrid delivery equally because what it certifies is the integrated system not a technology itself. It also certifies the technology. Some innovative site builders have also endorsed this regulatory reform exactly the same reason including Texas-based JPI uh a major multif family uh builder.
▶ 0:43:53Um uh we are working so ModX is working with NIBS and a steering and technical committee of 21 people uh on to develop the standard uh we hope to be completed by December of uh 2026 and we're happy to say that the state of Washington is already working to pilot this at a state level. Uh Todd Bayther who's a industry expert and also the chair of the building council is developing this. Uh I wanted to make this committee aware of this important work.
▶ 0:44:21um more than half a century in the making and look forward to your questions and your thoughts about how federal action can support state, local, and government and nibs in in helping the scale. Thank you.
▶ 0:44:33Uh thank you. I now recognize Mr. Schaefer for his fiveminute opening
▶ 0:44:37Thank you, Chairman Williams, Ranking Member Velasquez, and members of the committee for the opportunity to testify today. My name is Eric Schaefer, and I am chief business development officer for Fading West in Buunav Vista, Colorado. We are a fully integrated design, construction, modular manufacturing company focused on the lean process.
▶ 0:44:59The US faces a crushing housing deficit and this burden falls on both national builders and smaller home builders like Fading West. With little or no innovation the past 50 years in how houses are built, Fading West and the modular manufacturing industry firmly believe that this committee has a vital role to play in helping small home builders innovate, scale, and actively participate in resolving our national housing shortage.
▶ 0:45:29To understand the challenges small home builders face, we must look at how far the US lags in the manufacturing adoption in our country. Modular construction represents less than 5% of all housing. For comparison, in Scandinavia, modular makes up over 45%. We are failing to address the root systemic causes holding back our construction sector.
▶ 0:45:57First, it's uh because of a fractured labor pipeline. 41% of current construction workforce will retire by the year 2031. With fewer skilled trade professionals, available labor costs will rise and slow project timelines. Second, the price of residential construction goods is up over 40% since 2020. And third, the regulatory burden.
▶ 0:46:23regulations account for 25% of the averages sale price of a new home. And fourth, there are 43,000 individual building code jurisdictions across the United States. And this makes it difficult for modular factories to Fading West has shown that building homes using lean manufacturing principles in our 110,000 square foot factory has helped us reduce waste from 30% down to 3%.
▶ 0:46:52We have over a 100 employees who can build a house in less than 10 days in the factory and then complete the on-site work in less than 30 days for a total of 40 days, far less than traditional construction. We build homes 20% cheaper and 50% faster. We recently built our 1,000th unit in our 4 and a half years since opening.
▶ 0:47:17To see this in action, I'd like to highlight a partnership that we have with rural homes, a nonprofit developer in Teluride. In high-cost mountain and rural towns in Colorado, traditional site building, the cost is prohibitive for workforce housing. Together with rural homes, we have scaled a unique public private philanthropic partnership blueprint.
▶ 0:47:41Under Governor Polus, Colorado has become a modular friendly state through initiatives like Proposition 123 um equity funding and Senate Bill 2409. The state is streamlining factory certifications and has slashed red tape. By pairing uh donated municipal land, lowcost philanthropic capital, and Fading West's factory speed delivery, we are building workforce housing at prices well below regional and market pricing.
▶ 0:48:12We are currently building projects um all around Colorado in Wyoming, in Texas, and Montana, and have signed first contracts in the Pacific Palisades for families that lost homes in the We built 85 homes in our Colorado factory and shipped them to Lahina for the FEMA disaster relief project in We are currently building 24 homes for the Department of Hawaii Homelands uh for a pilot
▶ 0:48:42project in um Honolulu for the beneficiaries and partnering with DHHL to build a factory in Hawaii which will speed building and reduce cost. To empower small business, I offer three recommendations. provide direct capital incentives for facilities through federal grants at 0% interest loans to create regional building codes for different climate zones.
▶ 0:49:07This will unlock standardization and allow factories to flourish and to prioritize and reward vertically integrated public private partnerships. Housing policy is education policy, its economic policy, its environmental policy, its transportation policy, its community policy.
▶ 0:49:27The committee can empower small businesses to be the master key that unlocks a new era of attainable housing, vibrant communities, and thriving local economies across America. Thank you, and I look forward to questions.
▶ 0:49:40Thank you. And gentleman yields back. I now recognize Miss Devito for her fiveminut opening remarks.
▶ 0:49:48Chairman Williams, ranking member Velasquez, and members of the committee. Thank you for the opportunity to testify. My name is Emily Dvito. I am the senior adviser for economic policy at Groundwork Collaborative, an economic policy think tank in Washington DC. We face a housing affordability crisis worsened by existing housing shortages and a failure to build more homes of all types. Congress is already taking on barriers to buildings such as restrictive zoning through the 21st century road to housing act.
▶ 0:50:17Such efforts are important, but zoning reform alone will be insufficient to fix the housing affordability crisis. Home builders and home buyers face economic headwinds that Congress must tackle headon. As this committee knows, small and medium-sized homebuilders play a hugely important role in the US housing system. I would like to highlight two particular cost challenges for builders that ultimately put housing out of reach for many families.
▶ 0:50:44The rising cost of construction and the high cost of capital. The Trump administration is driving up the cost of construction through its mismanagement of the economy, specifically tariffs on core building materials as well as higher transportation costs and higher interest rates due to the Iran conflict. In the latest producer price index, the price of goods used in residential construction was up 1.2% over the last month and up 6.1% from last year.
▶ 0:51:12Higher prices place a particular strain on small builders who do not have the resources or scale to mitigate tariff costs or to pass rising transportation costs through to consumers. The Center for American Progress recently estimated that higher building costs due to the tariffs will lead to 450,000 fewer homes built over the next 5 years.
▶ 0:51:34At the same time, a lethargic labor market and the Trump administration's immigration crackdown make it more difficult for firms to find and retain construction workers, adding further time delays and additional costs to the home building process. These higher construction costs get passed on to home buyers in the form of higher prices.
▶ 0:51:55Meanwhile, just months after Doge cut staffing at federal housing agencies, the Trump administration is pulling back on federal housing funding by proposing the elimination of programs like home investment partnerships and community development block grants. These programs have channeled millions of dollars to local businesses and community partners, helping meet the needs of over 2 million people and resulting in the construction or rehabilitation of more than 1.3 million units of affordable housing.
▶ 0:52:24Let's be clear, these challenges didn't come out of nowhere. The higher prices we see today are the result of specific policy choices by this administration that Congress can re in. But even before the price hikes, cost of capital had already been a major constraint to new construction. Building the capital stack, the specific debt, the specific blend of debt and equity required for a given project can be costly for firms raising capital from investors seeking returns.
▶ 0:52:51Small and emerging developers without the same resources or established track records of large firms have more challenges securing construction loans and recruiting investors in the first place. And even when small developers secure financing, investors often impose strict repayment schedules and high return expectations, which ultimately result in higher costs for consumers. Congress should target interventions that lower the cost of capital and make it easier for homebuilders to build to affordability.
▶ 0:53:22First, Congress should allow entities like Fanny May and Freddy Mack to buy and sell construction loans, especially the tranches of debt costlier for developers. Existing programs within the federal home loan bank system should also be expanded. Second, governments should leverage their borrowing power to help cities and states establish revolving loan funds that can extend financing with low interest rates at long maturities to facilitate new construction.
▶ 0:53:49Third, Congress should play a bigger role in ensuring mortgages are affordable to home buyers. This can be achieved through popular policies such as providing low rate direct federal mortgages, reducing mortgage insurance premiums, and allowing families to utilize portable mortgages. Ultimately, policies such as these will make it easier and cheaper for businesses to access the financing they need to build more homes.
▶ 0:54:14If Congress can lower the cost of construction and the cost of capital, more builders, especially small ones, will be able to meaningfully expand the housing supply at lower prices, which ultimately means more homes that working families can afford. Thank you, and I look forward to your questions.
▶ 0:54:32Gentle lady yields back. We will now move to the member questions under the fiveminut rule. I recognize myself for five minutes. Uh Mr. Ruins. Uh, as a chairman of the National Association of Homebuilders, you, uh, spent more than four decades in the residential construction industry and have seen firsthand how the regulatory landscape has evolved in the local, state, and federal levels. And small home builders pay play a critical role in meeting housing demand.
▶ 0:54:57But many say increasingly complex and costly requirements have made it harder to build homes efficiently and affordability. So, my question would be to give a small home builder a fair chance to succeed. How important is it to reduce unnecessary regulations? And over the years, have these regulations been easier to navigate or increasingly burdensome for some homebuilders?
▶ 0:55:21Thank you for the question, chairman. That uh that that definitely strikes home. I mean, we deal with this every day. the um you know what we've done with or what we've dealt with over the four decades of increased regulation just isn't from a code or um a land use point of view. It has nothing to do with any one particular item.
▶ 0:55:45But when we when we talk about a combination of uh at the land development phase, we talk about um issues with restrictive zoning uh with impact fees. And again, we understand this isn't all federal mandated. This can be state as well as local regulation as well.
▶ 0:56:03But then when we look at infrastructure constraints, um even the the uh the nimism, the local opposition can can add in, you know, an interesting kind of twist into our ability to build.
▶ 0:56:18And I think what we're trying to do right now is to just recognize that um and as we bring this to Congress, and I knew at some point I probably would be able to um uh share this with you all, is there's not one particular item as far as regulation goes. There's not one thing in particular that if we did away with today that we would be in a much better place tomorrow to provide attainable and affordable housing. It's uh I I call it death by a thousand cuts.
▶ 0:56:47But every one of these adds another layer of cost that we simply just cannot absorb and that ultimately is going to be passed on to the consumer much like everything else. When our costs go up, that is a direct impact then on on the the eventual home
▶ 0:57:03All right. Thank you. Uh Dr. Rupnik. Uh, as a professor of architecture and a leading technical expert in off-site construction and building innovation, you've spent years studying how design, manufacturing, regulation interact in the housing industry. And through your work with MO ModX and your collaboration with the National Institution of Building Sciences. You've exploring ways to modernizing housing construction and reduce regulatory barriers that slow the development.
▶ 0:57:28So, uh, off-site and modular construction are often, uh, viewed as promising solutions to improve efficiency, lower cost, and expand housing supply, but they also face significant challenges because of codes, permitting, uh, and inspections, etc. standardization. So, my question is quickly uh, could you walk through walk us through some of the innovations, technologies, and regulatory reforms you are exploring to make the process more scalable and more manageable.
▶ 0:57:59Thank you chairman for that question. Um I think the there's a lot of interesting technologies out there but the reality is if we look globally uh lightwood frame construction and American form of construction is actually seen in many countries as an innovative form of construction. So I I say that that there are a lot of innovative technologies. The innovations that we're excited about are in the code compliance space. Uh and that's what we're really advocating for because uh as as Mr. Oans pointed out there are a lot of regulations.
▶ 0:58:25We can't point to one of them but we can what we can point to is the structure of code compliance. So we have a single model we have we have now a smaller number of model codes that are then adopted by states and then modified adopted by counties and modified and then actually interpreted project by project. The multiplication of what actually a company has to deal with small or large are infinite decimal.
▶ 0:58:50uh the investment in streamlining code compliance is the is the single tool that we think would benefit both conventional builders and off-site builders. Um and that is something that we've seen AI uh other digital tools used in this space and every industrialized economy has had the difficult process of saying our code compliance system is fragmented. It doesn't work doesn't work for conventional doesn't work for new technologies and we need to reform it.
▶ 0:59:21Uh thank you. I now uh recognize the ranking member for five minutes. My time is up.
▶ 0:59:27Thank you, Mr. Chairman. Mr. Veto, uh housing costs are at the root of the affordability crisis and putting significant pressure on family budgets and limiting the ability of people to save money or even meet their basics um needs. Can you all outline some of the root causes of the housing shortage?
▶ 0:59:51Thank you for the question. For decades, the US has underinvested in housing. Construction never really recovered after the great financial crisis. And since then, we've only had persistent labor and construction shortages. Um, at the same time, as my testimony mentioned, acute price hikes are making it worse as builders and contractors contend with high prices on core construction materials from tariffs.
▶ 1:00:16Um, and one of the biggest underlying challenges we face today is the high cost of capital that makes it incredibly expensive, time consuming, and overall difficult for developers, especially small firms to build affordable housing. Um, and this is why I believe that if we want to fix our housing affordability crisis, we have to fix our housing financing system.
▶ 1:00:37Thank you. Um, Mr. drawings. The National Association of Builders testified uh before the financial services that uncertainty from tariffs was con constraining investment. What impact do section 232 tariffs on lumber, steel, and aluminum and kitchen cabinets and finished wood products as well as potential future 301 tires have on small builders?
▶ 1:01:09Thank you very much for the question. Um, our research through our econ team has shown a fairly insignificant um, burden when it comes to tariffs that somewhere around when we look at a a total building cost, everything that goes into the home. We we're estimating that about 7% of building materials that go into that home are actually imported. So we're somewhere under 10% of our net costs here.
▶ 1:01:38So you know currently with the administration working toward the American first environment that's in influencing some of our work, but it's it's it's fairly minimal at least from
▶ 1:01:49agree with the uh the member of the National Association of Homebuilders that tariffs is constraining investment.
▶ 1:01:57I don't think there's any question that they're having some impact.
▶ 1:02:00Okay. Wouldn't you agree that these tariffs have increased the cost of housing? You're saying no
▶ 1:02:06Okay. And the president has proposed significant cuts to programs at HUD. Mr. Beto, what are some of these cuts and how do they impact housing
▶ 1:02:18That's right. The president has um been trying to eliminate some of the nation's most flexible housing programs, including um the home investment partnerships program and community development block grants. In the president's proposed budget for fiscal year 2027, uh that would cut funding for the department of housing and urban development by roughly 11 billion or 13%.
▶ 1:02:42Um cutting this funding means that these communities and businesses that are counting on these programs um for the flow of capital won't get it and may not be able to build as many homes or at rates that families can afford. So, do you agree that if the president and members in Congress are serious about addressing the housing production that they will be increasing, not decreasing HUD's housing production programs?
▶ 1:03:10Yes, ma'am.
▶ 1:03:13Uh, on both sides of the aisle, Mr. the veto. Many of us recognized that Nimbis have abused land use regulation to slow the construction of new housing starts. But solving that issue is only part of the problem. Why is expanding government options for access to capital so important for new construction and particularly for small builders?
▶ 1:03:37Thank you. Um, yeah. I mean, I think everybody on the panel agrees that there is uh there's no doubt that zoning restrictions and complex uh permitting processes have worsened our housing affordability crisis. Um, unfortunately though, I feel strongly that fixing zoning alone will not dissipate the underlying costs of securing financing, which is one of the major drivers um of the affordability crisis we see today.
▶ 1:04:02Thank you, Mr. Owens. Um, to that end, your testimony mentioned exploring SBA financing to help get more access to capital for small developers. I'm working on a bill to modernize the 504 CDC program to support renovation of mixeduse developments for commercial and residential units. Would this be a provision you will support?
▶ 1:04:30I think we'd want to look into that a little bit more, but I think that we're we're we're absolutely in alignment and very hopeful that the Small Business Administration grant pro, you know, the the lending process will help us out. We represent the small builders and anything that we can do. Capital is always an issue for us, not just in mainly the carrying cost of of the business more so than just actually financing the land.
▶ 1:04:55Thank you. Um,
▶ 1:04:59oh yeah, my time expired.
▶ 1:05:01Lady's time is up. She forgets that
▶ 1:05:05Uh, I now recognize Mr. Vermuser from the great state of Pennsylvania for 5
▶ 1:05:09Thank you, chairman. Um, thank you all. Um, very interesting and important um, discussion and hearing here. We all agree construction costs, regulatory delays, outdated zoning constraints fuel decades of underbuilding. Uh perhaps as many as 3 to four million single family homes. Um we need to build and make available. Small home builders uh play a very vital role, Mr.
▶ 1:05:35Owns, as you are are clearly bringing out as you did in your testimony earlier this week. As has been mentioned, we did pass a very bipartisan amendment to the 21st Century Road to Housing Act that will address many of these shortage uh issues by reducing unnecessary barriers to new home construction, modernizing HUD programs, allowing banks to more freely deploy capital and have some restrictions on institutional purchases of single for family homes,
▶ 1:06:06not the building of single family homes, but the purchasing of them. So, Mr. very intrigued by your testimony. Had some real good ideas in there. I like this lending lots, labor, lumber laws. I mean, that's that's good. That really sums sums things up and uh helps us focus, I think.
▶ 1:06:24Um the um the banking uh as the ranking member was just just talking about uh you know, our housing act allows banks to lend more to finance home construction. Um, this should make a difference. Uh, it should double it. It could actually double it according to the intent of the of the law anyway. Uh, and I'm intrigued intrigued about the idea of expanding 7A loans for home construction. Uh, maybe double it. Right now it's at 5 million.
▶ 1:06:54We bring it up to 10 million. I mean, one builder alone perhaps that could equate to, well, you do the math, 13, maybe 14, 15 new homes. Your thoughts on that?
▶ 1:07:05Thanks, sir, for the question. um you know for us access to capital is a must and we absolutely cannot build without that that so when we talk about um this the the possibility we're as I said with the the earlier we're encouraged by the SBA 7A or 7B program as a way to finance direct costs I think there are limits though to that what we'd seen um for example phase development is would be excluded from that and actual projectbased
▶ 1:07:36working capital would would be something that I I think I understand would have been excluded.
▶ 1:07:41Um I think when we're looking at the overall landscape of uh construction of you know larger builders I think have more varied access to different p capital pathways. We represent the small volume builders. You know our average builder is building 10 or less homes a
▶ 1:08:04The ones I know. Yeah. Sure.
▶ 1:08:05Yeah. So that that's that's the one thing right now that we're looking at is what what are some means that these smaller builders would have access to capital and that's why we sort of are are we're encouraged by some of your discussions with the SBA on the
▶ 1:08:21and the SBA would be I think more effective maybe faster uh than the HUD programs uh that exist.
▶ 1:08:27It may be.
▶ 1:08:28Okay. So um Dr. Rupnik well first off um yeah Dr. Dr. Rupnik, the um uh the uh 21st century road to housing uh bill, the regulation from a regulation standpoint or any aspect of that bill. Could you give me your feedback on that, some of your thoughts?
▶ 1:08:50I I haven't studied the specifics of it, but I think the issue is that we have not yet really understood um based on the conversation today where the cost is because we're talking about the cost of regulations. we're not talking about the structural cost of our code compliance. So that I think from what I've seen in the bill and I haven't spent as much time as I'd like to because it's been changing.
▶ 1:09:12uh I would all I would caution is that from our uh research from 20 years it's really code compliance not the regulations themselves that have been a burden in the US also in Pennsylvania which has a very strong modular sector and it is the thing that the what I don't see is specific specific tools for really understanding first and then assessing those and that's where I think we really need to understand before we even allocate funding uh really understand the hidden costs of our code compliance regime.
▶ 1:09:42Okay. Thank you. Um Mr. Schaefer, your any feedback you can provide on the uh on our housing act. Um yeah, the the certainly the innovation for modular is is a a huge plus that we see and the cutting the red tape is again big for us because again if entitlements take 12 to 18 months before you can even build the house a lot of times in affordable housing projects by the time you get to the um entitled moment
▶ 1:10:09um it doesn't pencil anymore so we can't even do the project. Thank you.
▶ 1:10:12Thank you very much. I yield back. Mr.
▶ 1:10:15gentleman yields back. I now recognize Mr. McGarvey from the great state of Kentucky for five minutes.
▶ 1:10:21Thank you, Mr. Chairman. Mr. Owens, in your testimony, you opened up and said there were a shortage of 1.2 million homes in this country. I think that number could be low, but regardless, we're all agreeing that we are millions of homes short in this country. And I think this is really important because one of the things we talk about here in the Small Business Committee is the American dream. the American dream. You can work hard. You can provide for your family. You can leave the world a little better than you found it. And you can put your kids in a better spot than you were in.
▶ 1:10:49And I think owning a home is a foundational cornerstone of this American dream. We still know that owning a home is a generational wealth builder. It's an asset you can pass on. But when we're talking about building homes, I want to talk about what people are going through right now when they want to buy a home because it is far from easy. So, I wanted to run the numbers a little bit for you. I'm from Louisville, Kentucky, and I was looking at my town, Louisville, Kentucky. Uh, and I wanted to find a home that was $250,000. Why?
▶ 1:11:18I wanted to make the math easier for me. So, I got on Zillow and found immediately four homes listed for $250,000. One in Shively, one in Okalona, one in Germantown, one just east of Jaytown. All have two bathrooms. One of them has two bedrooms. The other three have three bedrooms. Three of them are between 1,200 and,400 square ft. One of them was 2100 square f feet right there in Louisville, Kentucky. $250,000. Okay.
▶ 1:11:44So, the area media income for Louisville, Kentucky is about $89,000 annually for a fourperson household. After taxes, that's about $65,500. So, that shakes out about $5,500 per month that you're bringing home after taxes. If you want to buy a $250,000 home, let's pretend. And I say pretend because 50% of Americans don't have access to $500 cash. Let's pretend that you can put $50,000 down on this home. That's 20%.
▶ 1:12:15I told you I'd keep the math easy. 20%. Now you're going to look at a $200,000 mortgage. Current interest rate fixed on a 30-year mortgage. That's going to cost you $1,400 a month. That is $16,800 per year. Now your 655 is down to Okay, let's say you're a young family of four. You got two kids. Child care. We all know what this looks like in Louisville, Kentucky.
▶ 1:12:40The average cost that's going to put you at $380 per week, $1,500 per month, $18,000 per year. Now, that is down to 30,700 that you are bringing home after you've got your mortgage, after you got your childare. Bear with me. We know what grocery prices are doing right now. Just walk through the grocery, walk through a Kroger in Louisville. So, I'm going to go conservative. I'm going to say for a family of four, you're spending $250 per week for all four of you. That's $13,000 a year. Now you're down to $17,700. But guess what? We haven't talked about taking care of these kids yet.
▶ 1:13:10Healthcare, especially with what Trump did to the Affordable Care Act, is now $1,800 per month on average in Louisville, Kentucky. That's $21,600 per year. Guess what? You are now minus That's your family of four in a $250,000 home. You are $3,900 underwater. And what have we not talked about? We haven't talked about your utilities.
▶ 1:13:33You haven't talked about your water, your cell phone bill, your car payments, your insurance, your gas, which you can just drive to $4.40 when I left Louisville on Barstown Road this week. Your $3,900. And guess what? We haven't even talked about what the actual payment on the home is. In the above scenario, we had a 30-year mortgage. By the end of it, you will have paid $250,000 in interest on that $200,000 loan. So, we got to get the affordability under control here.
▶ 1:14:02And one of the ideas that's been floated, MVito, is the idea of a 50-year mortgage. And I want to talk about what impact that has on affordability and what you think about what that would do for families.
▶ 1:14:13Thank you for the question. Yeah, the 50-year mortgage, I think, is a misguided attempt to make it seem like it's providing relief for home buyers without fixing the underlying problem. Um, on a 50-year repayment plan, families would end up spending significantly more on interest over the lifetime of their loan and build equity much slower um than other families. Uh, I don't think that Americans want their debt to last longer. They just want their housing to be more affordable.
▶ 1:14:40Yeah. So, you're going to pay significantly more over the cost of 50 years. And even if you're able to buy something a little bit cheaper upfront, we're still looking at this math. You're still looking at a $250,000 home. You're still in the red. And guess what? Even if you think you can buy it for a little bit cheaper upfront, look at what the tariff policies are doing right now. You're looking at building and material prices up three and a half% year-over-year. Mr.
▶ 1:15:02Owens, have you seen this in your business that the cost of lumber and materials right now is we have to a certain extent but it's more in the metals I think uh as of recent we've seen some stability in the lumber prices um certainly from the you know the peak there during co
▶ 1:15:21yeah and this the this rise in cost is making it harder to build homes it is making it harder to find the American dream on every level and I think we have to address the affordability crisis to start talking about this Mr. Chairman I yield back
▶ 1:15:32yields back I now recognize Mr. Neros from the great state of California for five minutes.
▶ 1:15:38Thank you. Thank Thank you, Mr. Chairman. I want to thank you uh the ranking member for bringing us together for this important hearing on housing. you know, I represent a district in Southern California in the San Gabriel Valley, and I don't even know where you can find a house for $250,000 anywhere there. Um it's just not possible, right? And the rising cost um just continues to add, right? And look, I look at it a very simple way when kind of looking at economics and it's supply and demand, right?
▶ 1:16:08We need a lot more supply in order to help bring down the cost of housing. And it's not just single family homes people could afford, but also renting uh rentals, right? And then even as my uh I think of my grandmother um years ago as she started to age, she moved into senior citizen housing that provided opportunities for more people to kind of move in there as well. And look, my uh district is not that far away from where the eating fires were last year.
▶ 1:16:34Uh which only adds to the um the the shortage of housing there as and now those people are going to need to build and it's going to cost them even more as uh insurance companies continue to make higher demands on on the way that construction happens and what they can do. And uh look, there's been a lot of great innovations there, I think, to kind of help and prevent fires or to help the homes become more stable during those times, but it comes at a cost as well, right?
▶ 1:17:03Um not only uh at a cost to the uh the owners of these homes who are going to have to rebuild, but also it's going to be rising insurance cost as well. Um so we definitely need to help uh I believe our our home builders kind of do more, as you say, free up capital so that they can build more So, um, Miss Devito, I'm going to ask you something about that kind of intrigued me in your opening statement there is, uh, Fanny May and Fanny Mack providing construction loans to, uh, to companies.
▶ 1:17:33Um, what do we need to do in order to make that happen?
▶ 1:17:38Thank you for the question. That's right. Um, I think the government sponsored entities, Fanny May and Freddy Mack should, um, be expanded to allow the the securization of construction loans. this will functionally spread risk um for investors and free up capital. Um I think that could be an important way to make sure that um already existing private capital out there makes its way to small and emerging homebuilders. Um
▶ 1:18:08okay. So would that take uh I guess it would take legislation from us in order to make that happen?
▶ 1:18:12Oh yes. I apologize.
▶ 1:18:13Okay. No. All right. I I would love to work with you on that and see how we can kind of move forward and really kind of find a way to make that happen.
▶ 1:18:21Great. Um, Mr. Owens, I you're from Ohio and you you're from that area and and I don't really know what the workforce is like over there, but I know what it is in California around homebuilders and it's an it's an immigrant workforce, right? A lot of people immigrate here to the United States and they get into this industry and they've become very valuable uh resource to our construction companies out there that are building homes.
▶ 1:18:45Uh but unfortunately the president has asserted uh that these massport deportations are going to help free up jobs actually when I think it's actually done the opposite. Uh but what are you hearing from your your homebuilders or the people in your association out west? Um, what impact has these these ICE raids and and and border patrol raids had on the workforce there out west like in California and in other areas across the country.
▶ 1:19:14Thank you for the question. Um, you know, the the labor shortage existed way before we had the immigration crackdown. We lost, I think, about a million and a half uh construction related jobs during the Great Recession. So I think it's very localized how you pointed it out.
▶ 1:19:32U we see that a little bit I build in Arizona as well and we've seen this being a little bit more localized but um it it it has disrupted some of local operations but we don't see that headwind if you will as a severe constraint right now in housing supply. Well, I I I feel like I'm hearing different from some of the home builders I talked to out west, but it it definitely is having an impact. Um, look, I I am with you.
▶ 1:20:01I again, I think we need to figure out ways how we can increase housing, whether it's modular housing, and I don't know how that would kind of really work. Like you said, there are a lot of restrictions and California does have restrictions, especially around earthquakes and things like that. But we'd love to to meet more with all of you to kind of find out um, you know, how we can make this work, right? how we can uh have more access to capital and how we can uh you know make things more available so that we can increase that uh supply number to help bring down the uh the cost.
▶ 1:20:31But with that I yield back. Thank you.
▶ 1:20:34Gentleman yields back. I now recognize Mr. Jack from the great state of Georgia for five minutes.
▶ 1:20:38Thank you very much Mr. Chairman. And if I could I will start with Mr. Owens. Thank you for your testimony today. Uh, could you walk this committee through the cumulative impact federal regulations, whether environmental permitting, labor rules, energy codes, or financial reporting requirements have had on the final cost of a home for an average American family trying to buy their first house?
▶ 1:21:02Thank you for the question. Um, as as I mentioned earlier, I think it's it's it's just it's an aggregation of a lot of different uh cost impacts that come in. We could talk from the federal point of view. I think about the wetlands permitting process. Um perhaps uh when we look at permitting reform, that might be a possibility too that would give us some some some relief.
▶ 1:21:27When we looked at individual permits versus uh nationwide permitting uh if we stayed on the the Clean Water Act and the compens pardon me, that's a mouthful. the compensatory uh mitigation reform that might be helpful for us.
▶ 1:21:44I think again when we go back in and we look at uh some of the OSHA regulations that are applied at the federal level when we look at the heat compliance standard the reporting the electronic reporting uh requirement. Again we represent the smallest core of the of the homebuilders. we don't represent the nation's largest home builders.
▶ 1:22:06Um that um uh you know our our our builders are very much rooted in this small business environment and that's where we look at some of these costs that might be able to be absorbed uh by the larger builders particularly in the land development end of things. These are things that are almost prohibitive for many of our smaller smaller builders to do any land development at all right now.
▶ 1:22:35Your testimony uh indicated that you estimate I believe is it 25% of the cost of a home is due to regulations. Do you want to comment on that a little
▶ 1:22:44Sure. Um I think if my numbers are correct I think through the land development phase it it uh is about 10% and I think we're a little bit north or or more than 13% of the costs actually during during construction that make up that that uh 25% costs of of of regulation and fees above sticks and bricks um essentially and it's even more than that around 40% in the multifamily.
▶ 1:23:13Thank you. Could you comment uh this week the House took action on housing as you saw no doubt a few days ago actually just yesterday if I'm not mistaken. Uh could you comment on how that's going to help Americans achieve that American dream buying their first home um and and helping their families grow?
▶ 1:23:29Yeah, I very much appreciate that question because that's something that the effort that Congress has made I think is going to go a long way to really supporting what we feel is you know completely underserved housing inventory right now. I think um one thing although a little bit controversial but in the end again because we don't in we don't represent institutionalized investment the removing the seven-year force requirement to sell build to rent properties was something that is very very important to us because that's about
▶ 1:23:5910% of the overall uh addition to the inventory on an annual basis at this point. I think also too that um the uh the road to housing the house version uh increased stronger land use reforms uh enhances multifamily finance tools creates um some new rena new renovation programs and I think one of the most important things that really helps the small builder contingent out there is it provides some
▶ 1:24:29regulatory relief for the community banks to get a little bit more flexibility where we typically go for our for our money to build these homes.
▶ 1:24:38We um we often talk in this committee about workforce development and I'm honored to chair the subcommittee on workforce development thanks to our chairman's appointment of myself in that capacity and would welcome in these closing 50 seconds you talking about uh what more Congress can do to help ensure we've got a pipeline of skilled um skilled employees and folks coming out of uh trade schools to help build these
▶ 1:25:01Uh I'll be brief and maybe we can circle back to it. The constructs act certainly um supports career tech schools as a primary alternative to the traditional four-year. Uh we absolutely need your help on a program that started back in the mid60s, the do job core program that's administered through the uh employment and DO's employment and training administration and probably a couple other ideas.
▶ 1:25:25Thank you. Well, Mr. Chairman, I appreciate you convening this hearing today. It was time timely given everything else that happened in the House this week. And with that, I yield back, sir. Uh Jim O'Neal's back. I now recognize Mr. Osholski uh from the great state of Maryland for five minutes.
▶ 1:25:40Thanks so much uh Chairman Williams. Thank you also to ranking member Velasquez uh to my colleagues on the Small Business Committee and to our witnesses for being here today. I believe that we all know that tackling the housing crisis in America is a top priority for members of Congress across the aisle and across this committee. To be clear, America is facing an affordability crisis. And America's affordability crisis begins with housing. If you can't afford a roof over your head, little else matters.
▶ 1:26:08Unfortunately, this is a crisis that is exacerbated by President Trump's stunning ability to so easily turn his back on a promise that he made to lower costs for Americans on day one. President Trump said it himself, quote, I don't want to drive pricing of h I don't want to drive housing prices down and quote, I don't think about Americans financial situation when referring to impacts from the still unauthorized war with Iran.
▶ 1:26:36Trump's war of choice has also increased mortgage rates to unattainable levels for many Americans who are also grappling with gas prices of $4.50 per gallon or more across the country. While inflation surges to the highest level it's reached in nearly three years. As I've pointed out in this committee before, 99% of Americans are paying more out of pocket, in some cases much more than they were under Trump um before Trump 2.0. I think my colleague, Mr.
▶ 1:27:06McGarvey, did a good job of going through some specifics. I don't know how anyone can call this a win for America. Unlike the president, lowering costs for my constituents and the American people is my number one priority. When it comes to housing, more than half of Maryland families who rent their homes are costburdened, which means they spend more than 30% or more of their income on rent and utilities.
▶ 1:27:28The share of Maryland households able to afford the median priced home is also less than Alongside these unattainable realities to simply live in a home, the overall cost to build out our housing supply across the country has reached historic highs. the cost of material and labors have increased significantly. I want to thank the National Association of Homebuilders for pointing out the impact of the tariffs which have alone uh are projected to cost raise the cost of imported construction materials by billions of dollars.
▶ 1:27:57Um and before I turn to questions, I'll just conclude by saying this. We must view housing as a workforce issue. Without enough housing to accommodate job growth, housing prices increase, which pushes out current residents and deters prospective residents only serving to slow economic We must work to address attainability as a holistic problem. I look forward to discussing what policies can help small business, small homebuilders who need support from Congress at this time. Uh Mr. Devito, I'll start with you.
▶ 1:28:24Uh for much of our history, small builders were able to obtain loans from local financial institutions for home building, but that access to capital has become more constrained in recent years. How can the US government get more financing in the hands of small builders and contractors?
▶ 1:28:38Thank you for the question. Um that's right. Getting more financing into the hands of small builders is vitally important to relieving the crisis. Um I think the federal government is well positioned to expedite that effort. Um, we discussed, I think, allowing the government sponsored entities to buy and sell construction loans. There are some existing programs within the federal home loan bank system that I think could be better utilized.
▶ 1:29:02Um, and then finally, filling the gap in financing for needed projects um that the private market is reluctant to fill or um for which the private market would charge exorbitant um exorbitant returns are, I think, all required tools.
▶ 1:29:17Great. Thank you. Um, and Mr. Owens, I know that builders can occasionally gain a higher profit by building um on a building with more square footage or adding more square footage, which can price out younger first-time home buyers looking for a starter home. Uh what do you think can be done to encourage the building of smaller, more affordable starter homes and multif family units to help have a a spread of a diversity of housing options?
▶ 1:29:42Again, being proud to represent the nation's smaller volume builders, I think that we follow the market. We one thing that we have learned and there's such little spec inventory if at all from our builder contingent. We become a lot more custom builders um infill builders.
▶ 1:30:00We you know um I I think what we can do is to just simply say we're going to follow whatever makes sense for our buyers because we're bu basically building one at a time. you know, and and and in saying that there is a sensitivity to these overall costs. The worst thing we can do is build something that people can't afford. We pay a lot of attention now to to the operating cost of a home.
▶ 1:30:25What is it once that house is built to your to I'm sorry, an an earlier point of how expensive it is to actually, you know, maintain that house and and have the the monthly utility cost factored into that. So, I think it's incumbent upon us. Again, we're we're trying to be and always have been part of the fabric of these smaller communities. We're in every community in America versus the larger of the nation's builders that that pretty much handpick and select their market.
▶ 1:30:54So, we have to be very responsive to not only what the costs are, but also to provide the proper product that people can
▶ 1:31:01Appreciate those uh responses. Thank you, Mr. Chairman, for having this hearing. That I yield back.
▶ 1:31:06Gentleman yields back. Can I now recognize Miss McCyver from the great state of New Jersey for 5 minutes.
▶ 1:31:11Thank you so much, Chairman, and thank you to our ranking member for holding this hearing today. And thank you to each one of our witnesses for being here today. America's housing crisis is getting worse by the day. 30 years ago, the average age of a first-time home buyer was 28 years old. Today, that age is 40. Home ownership is quickly becoming a faroff dream for our younger generation. Re-enters are being hit hard as well. Half of them are spending so much on rent that they have little left for anything else.
▶ 1:31:40Families across the country are being pushed out of stable, affordable homes. All while the construction of new homes is dwindling. What the nation needs now are more initiatives like those taken in my district in New Jerseyy's 10th where we where we had nearly 200 new affordable housing units built last year, helping families keep a roof over their heads. The Trump administration's economic policies have only made these problems worse.
▶ 1:32:06Inflation has spiked to the highest level in four years, driving up cost all around the country. Today, gas is high, grocery prices are high, health insurance is high, prescription prices are high, utility bills are high, the list goes on and on. These price increases leave millions of hardworking Americans with nothing left over for savings after paying bills, ensuring the dream of home ownership remains even further out of reach.
▶ 1:32:34If we are serious about closing America's housing gap, we need policies that actually lower these insane costs and expand the supply of affordable homes. Mr. Devito, thank you for your testimony today. Um, very enlightening and you talked a little bit about this today. Home buying is at its lowest level since the mid 1990s, while nearly half of the renters spend a third of their paycheck on rent.
▶ 1:33:01From your perspective, can you elaborate on what are the biggest drivers behind the worsening of the housing affordability crisis families face today?
▶ 1:33:11Thank you. Um yes, in addition to the acute pricing challenges that um this committee has covered and is well aware of, um I think the trend uh of wealthier home buyers purchasing larger and larger homes um and therefore especially large home builders um being incentivized to build them is a big problem. Um today it it is increasingly challenging for um young working-class families to find but certainly to afford a home.
▶ 1:33:40Yeah. especially when you're being beat out by cash prices. That is a big deal. Um despite how dire the housing situation is today, the Trump administration is still finding new ways to make it worse. Unfortunately, we have learned that the administration is preparing to privatize Fanny May and Freddy Mack, which are critical to keeping the mortgage rate stable, the mortgage market stable. How would this privatization affect firsttime or lowincome home buyers?
▶ 1:34:07Um so uh since the great financial crisis, Fanny and Freddy have been under government conservatorship. Um and their sort of operating model and um overarching priorities have shifted from um just serving shareholders or considering shareholder interests. Um and returning uh returning profits to public interest.
▶ 1:34:28um with the privatization that could shift um and capital could be restricted, become more expensive um and shareholders would uh would certainly benefit with some pretty sizable windfalls.
▶ 1:34:41Yeah. Another thing too that I'm hearing a lot of homeowners talk about is around insurance costs, right? That has been a big, you know, rising cost as well. Um, how are increasing insurance premiums and climate related risk affecting affordable housing projects and smaller home builders?
▶ 1:35:00Yes, thank you. I mean, climate change is is getting significantly worse by the year. Um, I am from Florida and we have suffered many hurricanes that have wiped out entire communities um preventing them from from uh moving back into their homes for months at a time.
▶ 1:35:15Um, all of these climate risks just add insurance costs onto the cost of a home as increasingly insurers um grow concerned about potential payouts um and then certainly actually have to pay out more and more um as catastrophe um hits US
▶ 1:35:32Yeah. Well, thank you so much for that. You know, I appreciate everybody's comment and you know, expertise on this. I think we definitely have to look at this issue as something that is a multi-facet and these multifaceted solutions. It's not a one- all fixall. And and lastly, I think it's crazy too when you speak to a lot of young people these days who are paying $3,500 for studios but unable to get approved for a mortgage for a home.
▶ 1:35:56It's just incredibly crazy and we need to really take a real strong look at this country and where we're headed and where we are currently at right now. With that, I yield back. Mr. Chairman, thank you. gentle lady yields back. I now recognize Dr. Morrison from the great state of Minnesota for five minutes.
▶ 1:36:13Thank you so much, Chairman Williams and Reagan Member Velasquez for holding this important hearing. And thanks to our witnesses for being here and for your testimonies. I think we all agree that the cost of housing is too high. Due to shortage of housing supply, we've seen housing prices skyrocket and families are being forced to spend more and more of their income paying for a place to live. Both renting and buying are increasingly unaffordable. And unfortunately, many of the administration's policies are only worsening this affordability crisis.
▶ 1:36:42The 21st Century Road for Housing Act is an important step toward addressing our affordable housing program, but the administration's policies continue to create serious headwinds. The Trump tariff policies and rising inflation are causing the cost of building materials to continue to increase. And of course, the terror of Trump's mass deportation policy is worsening the labor shortage in the construction industry. Um, Mr.
▶ 1:37:05Devito, during your testimony, you mentioned that over half of builders reported rising inflation and the cost of building materials are significant problems they faced in 2025. You also highlighted that small builders are disproportionately impacted by the high price of building materials. Could you elaborate on why the tariffs imposed by the Trump administration hurt small builders more than large builders and put them at a greater disadvantage? Thank you. Um yeah, that's right.
▶ 1:37:33Even um before the war in Iran and some of the tariffs went into effect, um inflation was persistently above the Fed's 2% target. Um these broad pricing pressures make home building significantly more expensive. um small builders often don't have the same kind of resources or margins to shift supply chains or stock supplies to defay these costs um and end up even either absorbing them or reducing production.
▶ 1:38:00So how does small builders navigate the uncertainty around these tariff these everchanging tariff policies? Uh I think we're seeing that it's very challenging to um uh there is a lot of uncertainty in obviously the economic uh policy environment and um especially the fiscal policy space and so uncertainty about uh about interest rates is driving mortgage rates up and the cost of capital becomes more and more expensive.
▶ 1:38:26Um there have been many vacasillations of tariff policies for particular goods which just creates more um more disruption and more concern about uh about being able to consistently plan for the future.
▶ 1:38:39Thank you. You know, I have the honor of representing Minnesota's third district, and I've been hearing from small business owners from across my district and the greater uh Twin Cities metro area about the devastating impacts of Operation Metro Surge on their businesses with businesses across the Twin Cities losing over 610 million dollars in revenue because of it. Uh foot foot traffic was down, SCA staff were afraid to go to work, and some businesses were forced to close.
▶ 1:39:09We have an ongoing lab labor shortage that we've discussed some this morning in the construction industry with contractors reporting that the shortage of skilled labor is one of their top issues and a leading cause of delays. Mr. Deto, I'm returning to you on this one. How have ICE raids worsened our existing construction labor shortage and what are the implications for housing
▶ 1:39:30That's right. The ICE raids and mass deportation efforts um that the president has made a priority for his administration create a huge shock to the construction labor market that had already been suffering from shortages. Immigrant workers uh comprise a large percentage of of that workforce um especially of the construction trades um and ICE raids and threats of deportation um are reducing their ability to show up. It is um it is having a chilling effect. many folks are are scared to go to work.
▶ 1:40:00Um and then of course some are being specifically targeted for deport deportation. Um so so builders, especially small builders, have reported many incidents of um disrupted work which just adds time delays um and a and a general inability to find and retain construction workers.
▶ 1:40:17Thank you. And then lastly, you know, the housing insurance industry is facing substantial pressures. you're from Florida um from the escalating frequency and severity of extreme weather events largely driven by climate change uh leading insurers to either increase premiums or exit high-risk regions altogether. How does th this impact housing costs for Americans and the development of new housing?
▶ 1:40:41Yeah, exactly. So, um you know, insurers have have uh every right to be concerned about the future of increasing costs, especially as climate change gets worse. um in particular in in specific states like Florida. Um so all of that just adds on to ultimate consumer costs as insurers obviously try to hedge um against the the potential for increased claims um and consumers have a harder and harder time I think actually getting the help they need um when a mass event like a fire in
▶ 1:41:11Hawaii or a hurricane in Florida um damages their community.
▶ 1:41:16Thank you for that context and I see that uh my time is elapsed so I yield back. Thank you, Mr. Chair.
▶ 1:41:20Gentle lady yields back. I now recognize Miss Goodlander from the great state of New Hampshire for five minutes.
▶ 1:41:26Thank you, Mr. Chairman, and thank you to our witnesses for being here today for this really important hearing. Um, I'm going to jump right into it because Mr. Owens, I'm very grateful for the 5L framework. I think this is very, very useful. Um, my grandfather raised us with a with a sixp framework. Prior planning prevents piss poor performance.
▶ 1:41:47But I I I'm I'm a big fan of the five L's and I want to jump right in um and on what you've designated your fifth L, the cost of laws and regulation. And I really look forward to reading the study from 2021 was eyeopening for me. Um when you think about it right now, 65% of American households are priced out of a medianric home in this country.
▶ 1:42:13And as you point out in your testimony, a a $1,000 increase in home prices would price out another households. So this is this is a genuine crisis. Um we've got to lower costs by increasing supply and by lowering the cost of building. And what you've pointed to, you know, as of 2021, more than $93,000 attributable to the cost of development and construction.
▶ 1:42:42Um, I I want to ask you about something that I'm not sure has come up in this hearing yet, but the the Build America Buy by America provisions that were included in the Infrastructure Investment and Jobs Act, I'm very supportive of the underlying goals.
▶ 1:42:56In practice, what I've seen on the ground in New Hampshire is that the way that they've been implemented, particularly as it relates to the construction of new residential housing has created some really, I think, unintended effects and costs and made it additional barriers um to building quickly. So, I wanted to start with you, Mr. Oms. Can you talk about some of the challenges that your members have faced with respect to the Build America by America or BABA compliance?
▶ 1:43:26I I wish I could. Um yeah, I haven't seen any direct effects in in in my own business. We've seen uh delays being one of the bigger uh you know mainly on when we look at some of what happened with the lumber market, the domestic lumber market over the years where mills closed, we had less mills out there doing the OSB and then when the when the reinvestment or the ask was, you know, the build America by America uh came back into play.
▶ 1:43:56It was one of those things. I live that every day in Flagstaff, Arizona, where we've had our trees to be harvested uh marked for the f the whole 10 years I've been out there and we just can't get enough workforce in quickly enough, let alone to get those logs to a mill versus even getting the mill back up to speed and producing OSB at maybe a more affordable rate than we're paying now. So, that's really the only thing that I could um comment on at this point.
▶ 1:44:24Good. Well, I'll submit questions for the record. I'd be interested to hear from from um all of our witnesses on that front. Just to go to the co the material costs, lumber um as you've put it, the the costs of con the costs of material costs. Um you point out in your testimony that in April 2026, we've seen costs on the rise in 2026.
▶ 1:44:50Um, Miss Dvito, you you pointed to some pretty eyepopping numbers when when we think about just the costs of tariffs on small home builders. Can you speak to that? Uh, because this of course is directly in in the lane of the United States Congress to end these unconstitutional and costly and chaotic
▶ 1:45:12Yes, thank you. Um, right. I think the president's policies are are putting additional pressures on certainly on families struggling with rising prices but also on businesses especially small businesses um with tariffs on core construction materials. Uh recently 62% of small builders reported that building material prices uh are a significant problem that they face and um that's compared to just 25% of large of some of the largest builders.
▶ 1:45:40Uh so small businesses are are particularly prone I think to some of the some of the suffering around um tariffs on construction materials.
▶ 1:45:48Mr. Schaefer, can you speak to this in your own experience?
▶ 1:45:51Yes, for us tariffs um the impact has been about 3 to 5% is what we've experienced. Again, we're not we're building two to 300 homes a year. So we're in the middle. We can buy in bulk. We're not a big builder, but we're not building one or two homes. So the impact um has not been dramatic, but about 3 to 5%. Well, on thin margins and in in the midst of a crisis, every every cost increase has a massive impact. I want to thank you all. Um, this is such an important hearing. I with that, I yield
▶ 1:46:23Uh, gentle lady yields back. I now recognize Miss Sculton from the great state of Michigan for 5 minutes.
▶ 1:46:30Thank you so much, Mr. Chairman. Uh, came up here uh, a little bit sooner than I thought, so I'm just pulling my remarks up here. Uh I am uh I'm grateful for the opportunity uh to connect uh with our witnesses today. Uh and Mr. Veto, thank you so much uh for for your work and your help uh in my office. Um I apologize. Let me just uh pull these up one one quick second.
▶ 1:47:06It's okay. They're not in here. Okay, perfect. Okay, there we go. Sorry about that. Uh there is clearly a need across the country for diversified uh supply of affordable housing and our small businesses should have a larger role in addressing that challenge. Uh do we do we want to pause? Okay. All right. uh in addressing that challenge.
▶ 1:47:37We know that the industry consolidation is an increasing trend across the economy uh which puts small businesses at a disadvantage. My bill, the Main Street Competes Act, just passed out of this committee yesterday. Uh thank you for the committee's support on that and would prompt the federal government to examine our antitrust laws to find ways for our small businesses to compete in every market. Mr. Devito, my first question is for you. How does increasing builder consolidation create an unfair playing field for small businesses?
▶ 1:48:06Thank you. And that's right. I mean, of course, there are still many, many small builders in the US. Um, but we have seen more industry consolidation over the last several years. Um, housing markets are highly localized and these impacts can look different from area to area, but small builders already at a disadvantage against larger players. um and the underlying economic uncertainty and pricing pressures are putting a lot of them on the brink.
▶ 1:48:32Consolidation is bad for home builders trying to compete, but it's also bad for home buyers and communities. Um so I I commend you for attempting to stop this uh trend.
▶ 1:48:42Absolutely. Um in West Michigan, I consistently hear from constituents not only about the cost of housing, but also the quality of existing housing supply. According to an analysis by Housing Next, there's approximately 1,454 renter households and 1,095 owner households in Ottawa County in my district that live in substandard housing conditions.
▶ 1:49:08Uh, this means that they are living in spaces with issues like overcrowding or lacking basic features like plumbing or kitchens. Mr. Mr. Devito, sticking with you here, your testimony highlights how some of the largest construction companies are facing legal troubles for building lowquality housing. Are there accountability measures that Congress should consider to discourage these companies from cutting corners?
▶ 1:49:30Thank you. Yes. Um, and just this week there was reporting that some of the largest homebuilders um are are increasing their uh legal costs due to litigation against subquality building. Um, ensuring strong federal enforcement. I think is is crucial, but Congress can also just help promote competition in the home building industry to prevent uh some of the bad practices that we tend to see uh when larger builders have a larger share of the market without uh any competition.
▶ 1:50:02And and what do you what do you think in terms of enforcement and followup? Where are some of the gaps that you see in in making sure that those are uh consistently enforced?
▶ 1:50:11Um that's a good question. I am not as familiar with what actually happens when the home comes online, but I think making sure that there is clear and um consistent federal oversight, state and local requirements. Um we've talked a lot about streamlining some of those codes, which does not need to mean compromising on safe on health and safety standards.
▶ 1:50:36Yeah. invite you uh and any of our other panelists into the conversation too just about where where we could be helpful there. Uh and you feel free to follow up and submit them for the record after uh as well. Um one last one in in the last few seconds remaining. We know that the president's tariff policies have created real instability. We've been this is a theme of the morning. We've talked about it a lot uh for many small businesses particularly those in the construction industry uh who rely on uh critically imported housing materials.
▶ 1:51:05Uh Mr. DeVito again you mentioned how small firms often do not have the resources to navigate these erratic tariff policies can confirm uh how can the small business administration do more to insulate small businesses from the worst of these impacts.
▶ 1:51:20Thank you. Uh we can certainly provide I think more small business resources um by returning investment to the agency after it lost significant workforce last year. Um but ultimately I believe we need to address the root cause of these acute pricing pressures which is the
▶ 1:51:37Thank you. I yield back.
▶ 1:51:40Gentle lady yields back and I now move as chairman to for one more final question uh from my side and uh recognize myself for five minutes. Uh Mr. Schaefer, uh, as a leader at the, uh, Fading West development, uh, you've been at the forefront of using modular construction to deliver housing in communities facing urgent need, including supporting recovery efforts for disaster impacted residents in La Haya, Naya, Hawaii, as well as providing workforce
▶ 1:52:10housing in mountain towns uh, like Breenidge. So my question is from your experience uh deploying modular housing in these very different uh contexts could you explain the key advantages of modular construction compared to a traditional construction? More broadly how do you see modular housing helping in address to address challenges today relating to housing affordability, speed of delivery and overall supply constraints in high uh need communities.
▶ 1:52:38Yes, thank you for the question. Um so again it's speed to market. It takes us 10 days to build a house in the factory. Um, specifically in Lahino, we built 85 houses in two months. They were shipped. Two months later, people were moving in after, um, experiencing complete loss of their homes and and community. So, um, all the subcontractors are in a factory. We are, um, built as a manufacturing group.
▶ 1:53:07So, we see ourselves as 18 stations. Um it's more set up like a car factory. So uh very high standard u building, high quality, architecturally interesting. And what this allows us to do then is u build cheaper and faster.
▶ 1:53:24Um and um again the rep re repetitive motion of doing a three-bedroom, two bath house over and over again, you can speed it up and that's really what the affordable housing market is is lacking right now. So, um, what manufacturing does then is it it makes them cheaper and faster, which allows us, um, um, to move folks in in a in a very quick way.
▶ 1:53:49Good. In my time remaining, Dr. Rupnik, in your testimony, you wrote about the need to standardize terminology for industrialized housing and how it impacts small builders. So, the question would be, could you elaborate on the benefits of standardized terminology and why it is important to tackle it first?
▶ 1:54:06Um but yeah, we have found through analyzing all of the great work that all the agencies, the federal agencies do in supporting housing, not just at HUD but at the Department of Transportation, US Department of Agriculture that um even when we talk about industrialized, factorybuilt, modular, manufactured um the agencies themselves do not use consist consistent terminology which makes it very difficult for those very well-intended uh funding to reach small businesses.
▶ 1:54:34Uh and that signals to finance and insurance that they don't know what the heck we're talking about. Uh it's very difficult to understand many of the the barriers that we're talking about with finance and some of the opportunities where this is a less risky process for insurance. We are still not consistent in what they are.
▶ 1:54:51Um, and so the United Kingdom, for example, has spent very cost-effective public funds in just saying, "We're going to pick a term and we're going to stick with it both for their equivalent of subsidies and awards, but also their way of signaling to u finance and insurance that we are talking about a particular process." Okay. Mr. Schaefer, in the time I have less in your testimony, you mentioned that 41% of the construction workforce will retire with the next 5 years.
▶ 1:55:18In February, the committee heard the testimony from witnesses who spoke about the role career and technical education strengthen uh strengthen the pipeline for high demand jobs. So, quickly, would you agree that opportunities through CTE like that of the Boulder Valley School District uh could support the next generation of the construction
▶ 1:55:36Um, absolutely. Thank you for the question. Yes. um working with trade schools, working with high schools, working in in all university settings um is going to be a big part of this um because um there will not be enough workers. They're already we're already in that that uh position. The good thing about modular is it's a controlled environment. Um you can cross trainin, you can be a part of um our workforce um with very little training.
▶ 1:56:03so we can train you on um on while you are working and um it hopefully will allow for many more jobs for our workforce.
▶ 1:56:14Okay, thank you very much. Uh my time is up. I now recognize ranking member Velasquez from the great state of New York for five minutes.
▶ 1:56:21Thank you, Mr. Chairman. You know, I am really struck um to the fact that here we are discussing um what can we do in Congress to facilitate um increasing uh the uh the the housing supply and I really truly believe that immigration is part of the equation and I don't think that we will offend the
▶ 1:56:51administration. by saying that a lot of the workers that are legally here do not show up to work because of the fear of being um arrested and sent to a detention center and to any foreign country where they do not belong.
▶ 1:57:14So I I just would like to and and then there is a study that the New York Times wrote an article about in terms of who the worker who represents the workforce in the construction a lot of Latinos immigrants, a lot of them, and they are not showing up. Uh Mr.
▶ 1:57:38Schaefer, can you talk to us about the main barriers to financing for modular companies and how can the federal government fill the gaps?
▶ 1:57:50The challenge, thank you for your question. The the challenge with modular um with on the financing side is that you have to pay for the house before it is built. It only takes 10 days to build in the factory, but it's the opposite of how typically um payments are done in construction. So you're paying a large portion before the home is built. So that is a challenge for many banks and and and frankly developers to understand it.
▶ 1:58:17And I think personally that has been one of the problems why modular has not caught on more in our um country. So, it's going to be education of um banks, the federal government, the state government to um allow for financing to happen, whether it's a bridge loan, whatever the case may be, to get the financing done
▶ 1:58:39so that we can build them. So, that has been our biggest challenge.
▶ 1:58:42And Mr. Robnney, u in your testimony, you mentioned a dormant authority um passed by Congress decades ago. what is preventing this authority from being used right now?
▶ 1:58:56Uh the knowledge that it existed and so we very much thank HUD and the PDNR department for funding us to look at you know what is out there and what we can use and we discovered that National Institute of Building Science is really designed to help both local and state governments as well as industry to really streamline their regulations. Uh and again streamline compliance I want to be specific about that. It's not the regulations themselves. It's how we meet those regulations. Those are very different things.
▶ 1:59:23And so we are yeah we're working with mostly states u many of the states here um and we're working with industry right now but what we u what we going back to the the work that and the standardization of award criteria that's brought up is that for the federal government what we would love to see is helping states and industry by adopting a single certification process for housing products not for factories.
▶ 1:59:50And then what other countries have done is pointing as many federal programs simplifying compliance by saying if you're certified as a housing product, you qualify for X, Y, and Z, whatever that is. That will bring standardization. It will increase competency. It'll make your lives easier because we're not constantly looking for new ways to create compliance for new societal issues because we'll have new societal issues.
▶ 2:00:13Um but what right now we create new compliance for new issues which is where the real cost comes from not from the societal goals that we should have aging in place you know natural resilience we want those things but every time we add one of those so that's where the federal state and it is a federal state and local and industry piece and national institute of building science has been set up for that and we're trying to resuscitate that and it was really research it's fedally funded research that discovered that needle in a hay stack that has allowed it to think through that. Thank you. I'll yield
▶ 2:00:44Lady yields back. I now recognize Miss Goodlander from the great state of New Hampshire for five minutes.
▶ 2:00:49Thank you. I appreciate it. I wanted to just come back to financing constraints and the cost of capital and just ask you know as I before I came to Congress I worked in the antitrust division at the justice department and one of the things we see and many of you pointed out in your testimony the consolidation in the banking industry the assault on community banks has been a huge uh barrier and cost driver uh for for increasing the apply.
▶ 2:01:20The 21st Century Road to Housing Act had some good provisions to strengthen the hand and provide relief to our community banks. Uh, but I wanted to ask our witnesses if you have other ideas, anything that we left on the table that we could do to support our community banks. Did we get it all right? That would be a remarkable feat in the history of this Congress. Well, I'll I would if if Mr. on unless you have some
▶ 2:01:48if if I may. Um, a little bit out of my wheelhouse here, but we'll staff will be happy to get back to you on that. I think we've consulted with you uh as well as a Senate as much as probably any other entity to get this right. We truly appreciate all your efforts to carry this forward, but I think that's something that's more of a heavy lift for for our staff to get back to you.
▶ 2:02:12Great, Miss Devito.
▶ 2:02:14Thank you. Um, yes, I think there's a really good opportunity to work on follow-up legislation to maximize the effect of road to housing. Um, specifically, I think a a bipartisan package that focuses on those financing constraints and leveraging all of the government's potential to resolve some of them.
▶ 2:02:34Thank you. Um, I wanted to just come back for a moment to um to the home buyer and you know in New Hampshire we have pioneered and seen real success in resident owned communities which are overwhelmingly communities with manufactured homes.
▶ 2:02:54Um, you know, this is truly the one of the last remaining affordable paths to to home ownership and u really look forward to working with you all um in making building on the progress that we made in the bill passed yesterday. Uh but what what I'm seeing on the ground in New Hampshire, resident owned communities work really well because it gives people a stake in the decision-m and the stability of their communities.
▶ 2:03:24Um but what we are also seeing is a trend of big corporate investors who are buying up manufactured home communities. um what they're doing is they're raising the rents, they are adding junk fees, and they're often leaving residents with nowhere else to go because moving a manufactured home, as you know, well, is is practically impossible.
▶ 2:03:48Um, so I wanted to ask about, you know, these I think unfortunately a disturbing trend in in rising abusive practices by corporate owners of these communities and um and the ways in which they're jacking up costs. So I'm I wanted to begin with you, Mr. Devito. Do you do you think that there are measures Congress could take, including prohibiting corporate ownership of these types of communities?
▶ 2:04:15Uh, thank you. Yes, I think um Congress should very much build on I think some of the negotiations in the road to housing package to make sure that institutional investors in particular um and some of the biggest large large builders um are not able to just extract from communities by hiking up rates and rents um and tacking on uh unnecessary
▶ 2:04:37Mr. Mr. Shaver, could you just speak to what you've seen in your own experience and what you think Congress might be able to do to support resident owned communities that are stable and and
▶ 2:04:47Yeah, thank you. Um, so again, the the things that I highlighted were the public private philanthropic partnerships. We've seen those be the most successful. Again, when we talk about the word affordable and housing, it really shouldn't even be used in the same sentence because there's no such thing as affordable housing. If you're already paying 100,000 before you even start building it, um it's almost impossible.
▶ 2:05:10So, most of the projects were involved in include either um state funding somehow to bridge that gap or federal funding or um local communities are in such dire needs that they're waving tap fees. They're making the entitlement process quicker so that the um the cost of the overall house is cheaper to hit that kind of 80 to 120 AMI, which is the area we work in. Thank
▶ 2:05:36Thank you. Well, thank you all. And with that, I yield back.
▶ 2:05:40Gentle lady yields back. And I'd like to thank our witnesses today for their testimony, for being here, and for appearing. Without objection, members have five legislative days to submit additional materials and written questions uh from the witness to the chair which will be forwarded to the witnesses. I'd ask the witnesses to please prompt uh or please respond promptly. And if there's no further business without objection, the committee is adjourned.