Matthew Yglesias: A ray of housing hope is emerging in Washington

Housing affordability is a key issue for the American consumer on which the Trump administration has done nothing useful. From tariffs on construction material to higher budget deficits driving up interest rates to deporting building trades workers, virtually every policy lever is being thrown in an anti-supply direction.

At the same time, good news may be coming from Congress where last week the powerful Senate Banking Committee passed an important package of bipartisan housing reforms with unanimous support. The only fly in the ointment is that the package is so ambitious, and the emergence of consensus between Republican Chairman Tim Scott and ranking member Elizabeth Warren so unexpected, that little groundwork has been laid for advancing these ideas in the House. But if champions for these ideas can be found in the lower house, Congress would have the opportunity to get something critical done on the long-neglected issue of federal housing policy.

One particular aspect of the package that I’ve been following for years is the somewhat obscure topic of chassis requirements for manufactured homes.

Most aspects of housing policy are state and local in nature, but since the 1970s the federal government, through the Department of Housing and Urban Development, or HUD, has been the primary regulatory of houses that are built in factories and transported to their ultimate destination. The process of transporting these “trailers” generally requires them to have an attached chassis that allows them to be transferred from the factory to their destination. But HUD, for no particularly good reason, requires the chassis to be permanently attached to the structure.

This requirement was adopted amidst a boom in the market share of manufactured homes as part of a deliberate regulatory crackdown pushed by traditional homebuilders and affiliated labor interests. The chassis requirement is not single-handedly responsible for the shrinkage of the manufactured housing sector, but it is a big factor as the chassis makes it hard to site trailers on top of basements, hard to engage in architectural innovation, and easy for exclusion-minded local governments to discriminate in favor of stick-built homes.

Both Scott and the Biden administration were agreed on the desirability of repealing the chassis rule and promoting a new boom in manufactured housing. But in the previous Congress, Scott paired chassis reform with an effort to roll back some Consumer Financial Protection Bureau regulations that he felt were unduly squelching the market for entry-level mortgages. Former Senate Banking Chairman Sherrod Brown, a Democrat, strongly objected to Scott’s mortgage changes and the whole thing was deadlocked. Brown lost last his Senate seat in November, but that meant he was replaced as top Democrat on the committee by Warren — the CFPB’s biggest champion — in a way that made progress seem, if anything, less likely.

But rather than continue the deadlock, Warren worked out a deal that includes Scott’s proposals on both manufactured housing and mortgages and expands them by some other ideas.

One of these is the Build More Housing Near Transit Act long championed by Democratic Rep.Scott Peters of California which would have the Department of Transportation prioritize funding mass transit projects in places that are relaxing zoning requirements to allow dense construction near the stations. Another is the Housing Supply Frameworks Act that would direct HUD to promulgate a set of best practices for supply-friendly local land use planning. The Better Use of Intergovernmental and Local Development for Housing Act (the name makes no sense, but it lets them call it BUILD Housing) and the Unlocking Housing Supply Through Streamlined and Modernized Reviews Act both streamline National Environmental Policy Act reviews for infill housing, along with a few modifications or the creation of new pro-supply grant programs.

A very intriguing development is a small $200 million competitive grant program for local governments that take regulatory action to increase housing supply.

This is a notion that has been kicked around in Washington in concept form at least since President Barack Obama’s second term but was stymied by, among other things, questions about how to measure compliance. A new Census product based on the agency’s Master Address File allows for housing production to be measured at the Census block level for the first time. This administrative improvement makes it possible to take the idea of “race to the top, but for housing” from concept to legislation. The $200 million isn’t enough to radically alter American housing policy, but it will do some good on its own while more importantly allowing advocates to field test the new measurement system and lay the groundwork for more aggressive ideas.

If the grant program is a small carrot, Warren of Massachusetts and Republican Senator John Kennedy of Louisiana worked together on a provision that would wield Community Development Block Grants (CDBG) as a stick by depriving high-priced communities that stymie new housing of their federal grant money. For years now, even the most YIMBY-minded Republicans have tended to shy away from the federalism implications of conditioning federal grants on zoning changes. CDBG is perhaps an easier program for them to get to yes on since it primarily goes to urban areas where Democrats live.

For Warren, there is a significant practical risk since Massachusetts much more than Louisiana is home to many towns and cities that are palpably guilty of blocking new construction despite high demand. By creating a federal stick that will be wielded against local governments in her own backyard, Warren is demonstrating an impressive level of commitment to genuinely tackling the problem of state and local barriers to housing supply. Perhaps even better, because of her track record nobody would attack her from the left for promoting deregulation or compromising on CFPB authority.

Logically, a bill that can command support this widespread in a Senate committee should have no problem becoming law. And Majority Leader John Thune has indicated he wants to hold a vote. The question is whether there’s a path forward in the House. Several of the individual bills folded into the larger package have House co-sponsors. But both the grant program and the CDBG proposal are products of negotiations between Scott, Kennedy, and Warren.

These are good, smart ideas that appeal to an ideologically diverse group of legislators, but they do involve skewering some longstanding sacred cows around local control. Without specific buy-ins from key committee members in the House and with Republican Speaker Mike Johnson more focused on shoring up his imperiled majority with gerrymandering than passing bills, the whole thing could easily die on the vine. Which would be a shame, not only because the package is good policy but it’s very existence suggests a more optimistic vision of functional politics than we normally see.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Yglesias is a columnist for Bloomberg Opinion. A co-founder of and former columnist for Vox, he writes the Slow Boring blog and newsletter. He is author of “One Billion Americans.”