Housing affordability bill sailing toward US Senate passage

By Richard Cowan

WASHINGTON, March 12 (Reuters) - The U.S. Senate on Thursday was poised to pass legislation aimed at boosting affordable housing construction nationwide, giving lawmakers the ability to campaign for re-election this year by highlighting efforts to ease the burden of high living costs.

The legislation, spearheaded by Senate Banking Committee Chairman Tim Scott of South Carolina, a conservative Republican, and Senator Elizabeth Warren of Massachusetts, the progressive senior Democrat on that panel, would have to be reviewed and voted on by the House of Representatives if it passes the Senate, as is expected.

Late on Wednesday, senators voted overwhelmingly to advance the bill toward passage. It was a moment of rare bipartisanship in a chamber that spent most of the day in bitter disagreements over immigration policy and the war President Donald Trump is waging on Iran without approval by Congress.

Democratic Representative Andy Kim of New Jersey, in a Senate speech on Wednesday, said the measure "will take meaningful steps to lower the first-time home buyer age significantly by allowing for the construction of substantially more homes at more affordable prices."

The bill would provide a range of government incentives for the housing and financial industries to narrow an estimated 4 million home shortfall that is the result of several factors.

Those include high mortgage interest rates, a 60% increase in home prices since 2019 according to some estimates, construction material shortages following the COVID pandemic, and the lasting effects of the 2008 financial crisis.

Under the bill, environmental reviews for construction projects would be waived or sped up and more financing would be freed through federal block grants to states.

Also, loan limits would be raised for federally-backed mortgages for multifamily homes.

In a controversial move, the bill would cap institutional investors' ability to buy single-family homes at 350 and require them to sell newly built rental housing after seven years of ownership. The goal is to tamp down investors outbidding individual buyers.

Some industry groups this week expressed opposition to the provisions, arguing they could diminish the availability of housing units on the market.