HUD Secretary Marcia Fudge on soaring cost of buying and renting homes

Geoff Bennett:

Home prices have risen astronomically, nearly 20% higher year over year, making homeownership unaffordable for millions of Americans. Rents are spiking too. The biggest culprit is an historic housing shortage, strong demand and low supply mean higher prices. And experts say it's unlikely that prices nationwide will drop in any significant way anytime soon.

This week, I spoke with the Secretary of the U.S. Department of Housing and Urban Development, Marcia Fudge about the rising cost of housing and what can be done about it.

Thanks so much for being with us.

Marcia Fudge, Secretary of Housing & Urban Development: Thank you for having me. I appreciate it.

Geoff Bennett:

Since the pandemic started, housing prices, rents across the country have really soared even in places where housing affordability had been taken for granted understanding that the reasons for that are complex, some of the reasons extend beyond the federal government's reach. What do you see as the overall solution?

Marcia Fudge:

I don't know that there's any one solution, Geoff. Quite frankly, this has been an ongoing problem. It just didn't start with the pandemic, it just became more clear in a brighter light was shined on it. We have not kept up with housing in this country for decades. The biggest problem is that there's a supply problem. There is much more demand than there is supply. And so, we know that today, we need at least one and a half million new units of housing just for the population we have right now.

We also know that because of the rising cost of housing, not only just to rent it, or to buy it, but also to build it that we have seen fewer housing starts for single family houses than we have in years, we have seen fewer multifamily units built than we have seen in years. And purchases are going down as well, because of the economy and other things. So, there's no one solution. But what I do believe that we need to do is find ways to incentivize or encourage developers to build more multifamily housing.

Geoff Bennett:

Well, on that point, is there a role for the federal government to play whether it's providing grants to ease local zoning rules or to give developers incentives to build denser housing?

Marcia Fudge:

In May, the President put forth what he called the Housing Supply Plan, $30 billion dedicated to housing. So, we are putting more money into the housing trust fund. So, we can do some gap finance and we are putting more money into housing finance agencies, we're doing more by technical assistance. We are talking to mayors. You know, Geoff, just — we're doing everything from the federal government that we can, but we need help from Congress. But we also need help from communities that are suffering with these problems.

Geoff, there is more money out there right now than they will ever have. The Rescue Plan, the COVID Plan, those bills created an environment where many states and cities are flush with resources. So, between treasury and us, we are saying to them, look, you have these resources, use them to try to alleviate this housing crisis that you have in your community. So together, all of us working together, I do believe that we can make a dent in it.

Geoff Bennett:

Homeownership is the most frequent path to wealth building in this country. It's the best path to wealth building in this country. And yet black home ownership is at the lowest level since the 1968 Fair Housing Act was signed. What do you see as the reasons for that and what's the best way to address it?

Marcia Fudge:

I would say just very honestly to you that there is still a system in place that is really a discriminatory system. We're still redlined communities in this country, Geoff, right now, because people won't lend in communities where homes are valued at less than $100,000, $125,000, those communities begin to die. We won't loan money for people to buy those houses, we won't give them money to rehabilitate those houses. And so, what happens is investors come in, they buy them up for cash, most of the time, they start to rent — they put a few — they do put a little money in them, and then they raise the rents for everybody in the neighborhood.

I think that we also have to understand that appraisal bias is a major issue in this as well. You will find that the black or brown or the community is the lower the valuation of the homes. And so that also creates a problem for lenders.

Thirdly, when you look at black and brown people, one of the biggest impediments to purchasing a home is student loan debt. It has been weighted higher than any other kind of debt in this country. And so, it makes them on credit worthy.

Well, one of the things we have already done is neutralized student loan debt up to a certain amount, so that we can make those people credit worthy. And then today, of course, interest rates are going up. So that has created another impediment on top of what already exists. But a lot of it is just the system itself. Geoff, the system is not designed to help low-income people or poor people or poor people of color. But to banks credit today, as we have been talking with them, they are starting to realize there are things that they can do to encourage homeownership in black and brown populations, and they are doing it.

Geoff Bennett:

For those who might be unfamiliar before you were HUD secretary, you were a member of Congress. Before that, you were a mayor in Ohio. How does all of that inform the work that you do now? I mean, there are people who say that housing policy in many ways is local, you have that perspective, as a former mayor, as a member of Congress?

Marcia Fudge:

Without the experiences of head, Geoff, there's no way that I could really do the job the way that I believe that I should be doing it. Having worked with Congress, understanding the process by which they pass federal laws, but also the appropriations. And what I know as a mayor is that cities can't do it alone. Yes, cities do control zoning. And yes, the cities need to look at zoning. But there is no way with the gravity of the problem that any community can do it by themselves. It just doesn't happen that way. They cannot deal with the homelessness crisis. They cannot deal with all of the issues that go along with trying to get people into their first homes.

But we are saying, as a federal government, we can assist you with down payment assistance, we can assist you by staying in your homes, like giving you longer mortgages, we can make sure that we treat you fairly throughout that lending process. Those are things that the federal government can and should do. Those things come under us whether it be being insured by FHA, or whether it be loans that are secured by Ginnie Mae. We have the wherewithal federally to make an impact on all the lenders in the country.

Normal communities can't do that, we can. We also have resources that we have put out, again, Rescue Plan, tons of money. We send out community development block grant money, which many of them use. We send home money to communities to help them build housing, as well as we look at a broader picture and understand the significance of the problems.

We today over the next couple of days are going to be announcing new housing vouchers that we have gotten from communities that haven't used them, and we're distributing those to communities who need them. So, housing choice vouchers is a big thing. We need to do everything we can all hands-on deck to be sure that everybody has an opportunity to live in a safe, decent house in a decent neighborhood. It's just not something that we have focused on yet and we have to focus on it. And I think my background lends itself to doing it, because I've always worked very, very close to the people. Mayors are the first line of defense, Congress people, we talk to people every day. And so, a lot of people who make decisions to don't talk to people every day. I'm just blessed and fortunate to have been able to been in those particular roles.

Geoff Bennett:

Secretary Marcia Fudge, thanks so much for your time. I appreciate it.

Marcia Fudge:

Thank you. I appreciate being with you.