Sen. Manchin Narrows Scope of Possible Reconciliation Bill While Waiting for More Inflation Data
Sen. Joe Manchin (D-WV), a key centrist in Democrats’ ongoing efforts to pass a party-line budget reconciliation bill, said this week he would not move forward on an economic package that contains climate provisions or tax increases, upending weeks of negotiations with Senate Majority Leader Chuck Schumer (D-NY). Manchin, above, added he would support a limited measure this month aimed at reducing pharmaceutical prices and extending federal subsidies for buying health care coverage. (The Washington Post, July 14, Bloomberg, July 15 and Roundtable Weekly, June 17)
Inflation & Timelines
- Manchin explained his position during a West Virginia MetroNews interview this morning: “I said, Chuck [Schumer], until we see the July inflation figures, until we see the July Federal Reserve rates, interest rates, then let’s wait until that comes out so we know that we were going down the path that won’t be inflammatory to add more to inflation. Inflation is absolutely killing many, many people.” (Full interview and The Hill, July 15)
- The July Consumer Price Index is scheduled for release Aug. 10, after surging to an annual inflation rate of 9.1% in June. (U.S. Bureau of Labor Statistics, July 13)
- Democrats are pushing to pass a bill before the Congressional recess begins on Aug. 8. If any agreement is reached, a bill would have to be drafted, scored, and debated, which could take several weeks as the midterm elections loom. The underlying budget reconciliation instructions authorizing a filibuster-proof bill do not expire until September 30. (The Washington Post, July 15)
- The Roundtable on July 13 commented on the evolving reconciliation talks on its Twitter feed, “As policy negotiations continue, we are working to ensure that any scaled-back bill doesn't include anti-growth, anti-real estate tax hikes such as repeal of like-kind exchanges; increased capital gain tax rates; or revisions to taxation of pass-through entities.”
The only option for Democrats to pass a reconciliation bill this month may be reduced to a limited version focused on prescription drug pricing and a two-year extension of Affordable Care Act funding to prevent major insurance premium hikes. The prescription drug legislation should raise more than sufficient revenue ($288 billion) to pay for a temporary extension of the health care insurance subsidies. (CNBC, July 15)
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House Ways and Means Committee Focuses on Affordable Housing
Policymakers discussed the nation’s scarcity of affordable housing, legislation that could boost the housing supply, and institutional ownership in the single—family home market during a July 12 House Ways and Means Committee hearing, which followed a similar House Financial Services Subcommittee hearing last month. (Roundtable Weekly, July 1)
Housing Market Challenges
- Ways and Means Democrats focused on the role of the pandemic in exacerbating the shortage of affordable housing, expressed concerns regarding growing institutional ownership of homes and the practices of corporate landlords, and reiterated support for policies such the low-income housing tax credit (LIHTC).
- Committee Republicans emphasized how high inflation has shut many buyers out of the market. (Hearing video and testimony, July 13)
- Committee Chairman Richard Neal (D-MA) stated, “Our families and communities can’t thrive without quality, affordable housing. But too many Americans face skyrocketing housing costs, long waiting lists, new pressure from institutional investors, and unprecedented bidding wars that keep them out of the housing market.” (Neal opening statement)
- Neal added that an expansion of the Low-Income Housing Tax Credit (H.R. 2573) and passage of the Neighborhood Homes Investment Act (H.R. 2143) would create nearly 1 million additional affordable homes. (Joint Committee on Taxation, Present Law and Background Relating to Tax Incentives for Residential Real Estate, July 13)
- Committee Ranking Member Kevin Brady (R-TX) blamed Democratic policies for driving the annual inflation rate to 9.1 percent and increasing the average home price by $100,000. (CNBC, July 13)
Housing Affordability and Institutional Investment
- Christopher Herbert of the Joint Center for Housing Studies at Harvard University, which recently published The State of the Nation’s Housing 2022, noted that although institutional investors have contributed to the demand for single-family homes, supply shortages predating the pandemic are the primary culprit behind rising prices. (Herbert testimony, July 13)
- Edward Pinto of the American Enterprise Institute testified, “Vilifying institutional landlords distracts from the underlying issues facing the housing market.” He continued, “On the single-family side, they account for too small a share of purchases and of the housing stock nationally. Even in the few metros where their share is higher, it is not enough to move the price needle, especially at the low end of the market.” (Pinto testimony, July 13)
- Several witnesses addressed legislative proposals that would boost the supply of housing—including H.R. 2143, introduced by Rep. Brian Higgins (D-NY), that would establish a new tax credit for developers rehabilitating vacant properties into affordable homes—and H.R. 2573, introduced by Rep. Suzan DelBene (D-WA), that increase the low-income housing tax credit. (CQ, July 13 | Higgins news release, July 1, 2020 and DelBene news release, April 15, 2021)
- The New York Times reported this week on how the lack of affordable housing, once a problem largely limited to the coastal markets, now has spread across the country. Freddie Mac estimates the nation needs 3.8 million housing units to keep up with household formation. (Image above, New York Times)
- Roundtable President and CEO Jeffrey DeBoer recently addressed the issue of housing costs, “Expanding the supply and availability of affordable housing deserves a coordinated local, state, and national policy action plan. Local zoning restrictions, permitting issues, and the oversized influence of NIMBYs—coupled with high and now significantly rising labor and material costs—are the true factors limiting housing supply, and in turn, increasing housing costs.” (Roundtable Weekly, July 1)
- The Roundtable Policy Agenda, above, states, “More can be done to incentivize builders, developers, and owners to create low- and middle-income affordable housing. Low-income housing tax credits and incentives for land-use permitting and zoning reform should be enhanced.”
- Additionally, The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) has formed an Affordable Housing Working Group, which is working with the Research Committee to develop proposals on expanding the nation’s housing infrastructure.
Next week, a Senate Finance Committee hearing will focus on "The Role of Tax Incentives in Affordable Housing." The July 20 hearing will include testimony from Dana Wade, Chief Production Officer, Real Estate Finance at Walker & Dunlop.
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Roundtable Elects New Board Members, Releases FY 2022 Annual Report
New Board Members
- The Roundtable membership approved, effective July 1, the addition of the following three industry leaders to the Board:
- Roundtable President and CEO Jeffrey DeBoer commented, “The Roundtable is excited to welcome these business leaders who bring important perspectives from CRE’s hospitality, financial services and development sectors to our Board and Policy Agenda.”
- “We are also grateful for the three years of successful service that Amy Rose (President and Chief Executive Officer, Rose Associates) devoted to our Board of Directors, and look forward to her continued participation as a Roundtable member. Amy is stepping down after lending her expertise during an especially challenging time that spanned a pandemic-driven economic shock.” DeBoer added.
- The Roundtable’ Board is elected from the membership—and includes four to six elected leaders of national real estate trade organizations from The Roundtable’s 19 partner associations.
- The Roundtable’s 2022 Annual Report addresses the strength and resilience of CRE as the nation seeks greater economic stability, growth, and fairness during an evolving pandemic.
- Roundtable Chair John F. Fish (Chairman & CEO, Suffolk) and DeBoer, above, state in the introduction: “As the world faces challenges such as inflation and rising interest rates, supply chain and labor shortages, other local public policy challenges, and increased uncertainty caused by the conflict in Ukraine, the importance of a strong and resilient real estate industry has been underscored yet again. While the way these challenges manifest may be new, the threat of such challenges is something the industry has risen to time and time again.”
- Links to the Annual Report and its policy issue areas include:
The Roundtable’s membership represents over 3 million people working in real estate; some 12 billion square feet of office, retail, and industrial space; over 4 million apartments; and more than 5 million hotel rooms. It also includes senior, student, and manufactured housing as well as medical offices, life science campuses, data centers, cell towers, and self-storage properties. The collective value of assets held by Roundtable members exceeds $4 trillion.
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