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[gavels] >> the senate committee on banking, housing, and urban affairs will come to order. before we begin, i will probably embarrass her, but want to call her out. irene gray is working her last week as a stenographer in the united states senate. she has been here for 20 years -- 27 years and we thank her for quiet, effective, crucial work to preserve the hearings. even when senator toomey and i

don't say much of note, she still has to take it down. just appreciate your good work for this country and your unsung hero as a unsung hero contracted or not as a civil servant. thank you, thank you. this hearing is in a hybrid format. four of our witnesses are joining us remotely before senator toomey and me. one or more members may attend from their offices. yesterday was the first of the month.

for millions of americans, the rent was due yesterday and for many the rent keeps going up and up and up. two weeks ago we heard from witnesses about the soaring costs of housing and how it hurts families priced out of purchasing their first home and imperils the renters who are just one illness or job loss car repair away from eviction. as one of our witnesses documented in his book. this problem is squeezing people across the country, even working jobs that were supposed to be a ticket to the middle-class. it's not a new problem. for decades so many americans struggle to scrape together the rent each month with mold, rodents, broken appliances. 90 years ago we began investing in affordable housing so that everyone would have a safe and affordable place to live. the funding that we have put into the effort never kept up with the needs of renters or even the basic maintenance of aging federally assisted housing . and for the past decade half of renters have been paying more than one third of their incomes just to keep a roof over their heads and we know the challenges of renters are only getting worse. 3.8 million homes short of what we need. not a single state in the country has enough housing. for the lowest income renters, there are just 36 units of affordable and available for

every hundred renters who need them. meaning that renters cannot put -- vote with their feet in the housing market because there is nowhere for them to go. this means that renters have to make do with what they have got, even if the house has dangerous lead paint in the walls or the landlord won't fix the heat or their bathtub has been clogged for weeks.

housing so difficult to find, renters are forced to ask themselves if it is worth it to push for a repair from the same person who can put an eviction on the record and decide if they have a place to sleep at night. the shortage of housing means that rent is going up for pretty much everyone, up 15% compared to a year ago nationally. cities like austin, texas or senator menendez on the committee, newark, rent is up 25% and when rent rises, it makes everything in the life of a person more precarious. more and more families are one emergency away from losing their home. renters see the pain, the missed trips, the car repairs they put off, the second job they have to take just to make ends meet. wall street investors just see opportunity. they don't see the pain or they just don't care. investors are purchasing single-family homes and renting them out at sky high rate. 28% sold this year went to investors. think about that, investors too often from out of town who want to make a quick buck who are buying more than a quarter of homes. not bought by families who want to put down roots who dream of seeing their kids grow up in that neighborhood and go to the local school. that number is up from 16% just a couple of years ago. the biggest investors with the deepest pockets are the ones who own more than 100 properties,

nearly double the share of the purchases. as we have seen in cincinnati a , single company based in texas bought up 29 properties on one street in price hill. 29 properties in a single street . in that neighborhood now half of all homes are rentals and the city is left to chase down out-of-state landlords who let these homes fall apart. families need landlords in the community. cities need landlords that want to actually take care of their buildings and help families stay in their homes. but big wall street firms promising investors double-digit yield and running up double-digit eviction rates, pricing out those who make a are pricing out those who make a community home. good landlords, renters, first-time homebuyers alike. they are just buying up single-family homes, targeting mobile home communities and apartment buildings. we see that across the country, anywhere that adds to their own bottom lines. last week the subcommittee on the coronavirus crisis published a report showing that at the

height of the pandemic, four of these massive landlords, four, filed nearly 15,000 evictions. four landlords, 15,000 evictions. when a renter who has fallen behind on rent can't get the landlord to fix the heat, we often hear that it's your individual problem. we hear that it is just between the renter had his landlord, and the local government is to blame for this bad policy. it's true, every eviction, every rent hike, every unlivable home is a personal crisis for an individual family but all of these crises have added up to a big national problem that costs us all more in education costs when kids have to change schools every six months or so. costs all of us in lost productivity when the workers who support our businesses and schools and first responders cannot find an affordable place to live. it costs us more in health care when people cannot store their medicine because they do not have a place to live. it isn't someone else's problem, it affects all of us. and we need to work together to

solve it. we have to expand the supply of safe and affordable rental rentals for -- we have to maintain the affordable housing we currently have so that we do not fall further behind on housing supply and help renters find and remain in homes that they can afford with financial assistance including emergency assistance. and support bipartisan prevention efforts like mediation through the bipartisan eviction crisis act. i look forward to hearing from our witnesses today about how we can tackle these challenges facing renters and grow the good -- the number of good landlords. that will benefit all of us. senator toomey? sen. toomey: thank you, mr. chairman. let me join the chairman in recognizing and thanking miss irene gray for her years of service to the committee, the senate, and to the country. we really do appreciate your good, solid, consistent hard work. thank you.

the fact is, across america every month americans are , falling further and further behind because of the president's out-of-control inflation. paychecks are not keeping up with rising prices. after adjusting for inflation, wages have declined 5% since president biden took office and the fact is working americans are getting poorer every day. and our democratic colleagues' wasteful spending and growth killing regulation with excessively accommodative monetary policy are what caused forty-year year high inflation and an economic contraction. what is the response that we hear from colleagues question are jamming through a reckless tax and spending bill that will make the situation worse. hiking corporate taxes will slow economic growth and harm americans in the manufacturing sector and sending billions more will fuel inflation. this new wasteful spending going towards corporate welfare for

green energy subsidies for the , wealthy to purchase tesla's and a handout before the elections for americans who purchase higher obamacare plans. including spending on housing, that's the topic of today's hearing. under the biden administration costs of housing has skyrocketed. housing prices increased 18% in the last 12 months. rents have jumped 14%.

affordable housing is growing further and further out of reach for many. you wouldn't know that from reading the bill. the housing provision creates a slush fund for green subsidized housing. i guess the theory is that at a time of surging housing costs, the solution is to put solar panels on section eight housing. government, especially this administration are often the problem, not the solution when it comes to housing. there are countless ways that needless government regulation drives up housing costs. time permitting permitting processes that drive up the costs of new rental housing, overly burdensome reviews, tariffs on steel, lumber, and other building materials have the same effect. rent control laws reduce the supply and quality of housing. subsidies capitalizing entire house prices and rents. loose underwriting standards drive the housing prices and rents still higher and then the gse responds by subsidizing investors in single-family rental housing. but that just further drives up prices and crowds out aspiring homeowners. more recently the democrats of , this administration have taken the government year to the next level. they have dropped hundreds of billions of helicopter money to stimulate an already strong economy. $80 billion and that went to rental assistance, vouchers, and other subsidies inflaming demand. the president extended the illegal eviction moratorium that has deterred investment in new rental housing. [coughing] excuse me and led to

some renters not paying when they could afford to. predictably, landlords responded by increasing rents and requiring larger security deposits. today the democrats propose more of the same protections. we will likely hear them a case for so-called tenant protections and argue for making the covid rental assistance program permanent. but doubling down on failed rental housing policies. instead it will make housing more expensive. today we will also hear from landlords about how government intervention makes it harder and more expensive to be a landlord and that leads to higher costs for renters. to improve housing affordability for all americans, renters or owners, we should pursue reforms that leverage the power of free enterprise to increase housing supply and make markets more competitive. a healthy market needs not just -- competes not just on price but also service and product

quality. to that end we should scale back the role of government and increase the role of private capital. we should avoid the temptation to adopt so-called tenant protections that will have unintended consequences including increasing housing costs. we should phase out demand-side subsidies that drive housing costs higher. we should end the failed gse model that fosters excessive risk-taking and contributes to a boom/bust housing cycle. localities should revisit their obstacles to housing construction. we should prohibit the gse and other federal programs from subsidizing rental units in jurisdictions that impose rent controls. and we should get them out of the business of subsidizing single-family home investors. and we should keep the gses focused on their affordability mission by keeping them out of social policy. meanwhile, i hope the administration will finally engage on housing reform. the treasury has still not met

obligations to deliver a housing reform plan to congress that is now 10 months overdue. instead of pushing a reckless tax and spending bill the administration should look to opportunities for bipartisan legislation that relies on free enterprise and not government to make housing more affordable for more americans, whether they own or rent. thank you. sen. brown: i will now introduce the five witnesses. professor matthew desmond, a professor of sociology at princeton and the author of the book evicted. he is also director of the division lab at princeton. welcome. laura brunner is the president and chief executive officer of the port of greater cincinnati development authority. prior to joining the port she spent 15 years in accounting. miss morey is a small property owner living in seaford, new york. she is joining us i believe from either her home or office in new york. mr. darian dunn is the managing

partner at atlantica properties. a real estate investment and asset management companies. in the state of two of our members of this community. he is also a civil engineer, i understand. and miss diane is the president of the national low income housing coalition. she served as director of public housing and management at hud in washington. and she is almost a regular in this committee. welcome. professor desmond, if you would begin? thank you. prof. desmond: chairman brown, ranking member toomey, thank you for the opportunity to testify before you this morning. my name is matthew desmond and i'm a professor at princeton university where i direct the eviction lab, research group dedicated to understanding the causes and consequences of housing instability. i come before you today greatly

concerned about billions of american families brutalized by our country's painful and utterly predicable rental housing crisis. since 1985, rental income has exceeded -- rental prices have exceeded income gains by 125%. most families today spend half of their housing costs on shelter costs alone. last year rents increased faster than they ever have on record. nationwide, median asking rent increased by 17% in a single year. but some cities saw rent increases double that. since last march, rents have risen already present in orlando, 29% in cincinnati, 22% in dallas. this is the inflation crisis on steroids. when the price of gas goes up, we can adjust, carpooling to work. when the price of food goes out, we adjust. eating out less.

but when the costs of housing shoots up, what can families do? they are often already living in the cheapest apartments available. they cannot double up with relatives because of local occupancy laws. they cannot move if they want to keep their jobs, family ties, and schools. all they can do is cut back on other necessities like health care, educational enrichment and food. as a direct result, the united states has a much higher eviction rate than other industrialized democracies. the number of eviction filings has increased by 21% since 2000, rising to 3.6 million cases filed in an average year. eviction is incredibly harmful to families and communities, it leads to job loss, homelessness. depression, suicide. babies born to mothers who and eviction while pregnant are significantly more likely to have adverse birth outcomes which has been shown to have lifelong even multigenerational effects. the evidence is in and clear, eviction is not just a conviction of poverty, it's a

cause of poverty. one possibility is that property owners' expenses have gone up and to maintain steady income they have to pass on housing costs to tenants. this is not with the data shows butthis is not with the data shows to be happening. rather owners of multifamily properties in recent years have seen revenue increase at a faster rate than expenses. this has been especially true for properties located in low income neighborhoods. the owners of these properties solve their rental prices increase by 47% between 2012 and 2018. their expenses during that time only increased by 14%. both the private housing market and the federal government had ve failed to provide american families with enough affordable housing. as a result property owners have , seized the opportunity to increase rents knowing that they

have a captive tenant base. we need to increase the supply of affordable housing so families can have release now. not 10 years from now when the doors open, but today. congress could provide much-needed relief by deepening investments in housing vouchers. i urge this committee to pass the eviction crisis act in and the family stability opportunity voucher act, bipartisan sponsored bills to two stem the bleeding. you can extend the emergency rental assistance which does so much to prevent an eviction spike during the pandemic. when we boost incomes for working families through government programs or economic growth but do not address rent, income gains are often recouped by the housing market. studies show that when states raise minimum wages, landlords respond by raising the rent. the implication is that investing in affordable housing is not only necessary to stabilize communities. it is also essential because of

it is necessary because of all of the other economic factors pending on it. now is not the time for inaction, indecisiveness, or the same old tired debates about spending. we could pay for these investments in dozens of ways. simply collecting unpaid federal income tax on the top 1% of households would bring in $175 billion a year. what we can no longer do is look renting families in the face, families now living in cars, and garages, attics, storage sheds in the richest country on the planet. and tell those families you know, we would love to help you, but we just can't afford it, because that is a lie. sen. brown: thank you, professor. miss brunner? ms. brunner: chairman brown, members of the committee, thank you for the opportunity to testify today on how renters and communities are impacted by the housing market and how institutional investors are changing the landscape of single-family housing in hamilton county. my name is laura, president and

ceo of the port of cincinnati development authority. it is a quasi-governmental government agency focused on mending real estate to promote job creation, hone ownership, -- home homeownership and equitable development, guided by the belief that real estate should work for everyone. we focused on the acquisition and rehabilitation of blighted commercial and residential properties to provide housing options across multiple price points resulting in the revitalization of neighborhoods. we operate in the hamilton county land bank whose mission is to return vacant properties back to productive use. since 2012 we have successfully sold more than 1000 properties. since 2015 the residential program has created more than 100 new and market rate homes investing $24 million to catalyze private investment. housing development is not simply a byproduct of economic development but rather an engine of economic stability and

growth. simply, homes create long-term wealth. real estate is one of the fastest ways to shrink the wealth gap and help restore the middle class. in cincinnati black homeownership is only 30%. -- 33%. nationally about 42% of black households own their homes compared to 72% of white households. housing and homeownership are the foundation of everything else in our lives. and for too long, redlining and segregation has stifled black residents from this opportunity. this has become increasingly hard today as institutional investors continue to crowd out the housing markets across the country. last summer, we asked the city of cincinnati for the names of the five worst landlords. it took months of rigorous research to uncover that over 4000 single-family homes in hamilton county had been purchased by these five landlords. tracking the acquisitions was an

arduous task due to the high volume of llcs used. there is a team out there. out of time investors hiding behind a cloak of anonymity. as evidenced by the city of cincinnati's lawsuit against pinebrook last year this investor model results in poorly maintained properties and negligent landlord practices. investor landlords are more likely to evict their tenants. institutional investors may only own 1% of single-family homes, but this may mean 50% of homes on a single street. when the geographical impact is so concentrated it has a , negative game changing effect on what it means to live in a neighborhood. it has an impact on neighboring homes where the surrounding property values see downward pressure. institutional investors found a very profitable new sector, they have been purchasing large volumes of single-family home in

regions with the most distant sinvested neighborhoods and turning them into rental properties with all cash offers , that blocks out first time low income buyers. the low home values and high rental rates make our city attractive. a cash cow for investors but a money pit for renters. in the second quarter of 2021 one in six home sales were purchased by large investors and we know that it is significantly higher than price points below $250,000. last month cincinnati had the largest jump in rental prices in the country. so we feel we had to do something to insulate renters. in december of 2021, the port placed a bid on 194 single-family homes formally owned by a california-based firm that fell into receivership. the receiver reached out when the auction was imminent. we couldn't help see this opportunity as a partial antidote to the threat. in january of 2022 the port closed on the acquisition and

launched the care homes initiative. no other institution to our knowledge has taken on a project similar in scope and challenge. because of our risk columns we could create an innovative financing model that included zero public subsidies. the port leveraged its nontax revenue to issue bonds to pay $14.5 million, outbidding a dozen investors. with an intent to create viable pathways to homeownership or current tenants of these homes. working in neighborhoods, a nonprofit with a successful track record provides assessment, financial literacy training, and homebuyer education interested tenants can take. of course, bold ideas rarely come without risk. it is clear that some of these homes have not been upgraded since they were built in the 1950's. balancing the financial performance needs of the homes with human needs of tenants is

challenging. this reality reinforces the significance of the port 's efforts to interrupt the cycle of the investor ownership of these properties. it is our duty to make it work for our most vulnerable residents. more than ever bold policies are needed to make sure the housing markets meet the needs of our community. thank you for the opportunity to testify. sen. brown: thank you. miss moore, you are recognized from new york. >> thank you for the invitation and the opportunity to share my story. my name is rose anna, i live on long island in new york. i am a small landlord with a single occupancy home as a rental unit. i'm a single mom with an incurable cancer that began before the pandemic. i'm on a month to month lease to

help us build and ease the burden on my life. as my health declined, i saw no other option but to speak to the tenant and provide notice for her to vacate so that my sister could stay with me and help me with my teenage son who has learning disabilities. the tenant refused and began holdover filings and proceedings. the pandemic hit and the eviction moratorium was put in place which, by the way, was originally intended only for nonpayment and covid-related hardship cases. what i found out they were lumped together and it did not take long for the tenant to stop paying rent. and you can thank your governor for that. that was the response she gave the police officer when he asked why she continue to stay. working one of three jobs while undergoing treatment to make ends meet, she spitefully and

incessantly smoked, knowing that i was sick and that it made me violently ill. she violated the lease, which clearly had a no smoking clause because my son was asthmatic. she didn't care and there was nothing i could do. on top of all of this the stress contributed to my [indiscernible] i could go on with countless stories of deplorable behavior thanks to the governor and the federal eviction moratorium extensions. the tenant was basically given the right to abuse the situation. she was allowed to live rent free for two years, even though gainfully employed. she ignored all the rules outlined in the binding lease agreement that she signed and agreed to. and the situation allowed her to destroy my property knowing that there would be no recourse.

as one of the very lucky people who received money from the landlord rental assistance program out of new york's emergency rental assistance program for landlords that were willing to apply for federal emergency rental assistance. however it was only one years worth and i had to pay income taxes on it read the tenant was now paying taxes on forgiven debt. the money does not cover the entire back rent. nor the $10,000 in legal fees. nor the $25,000 it costs me to rebuild and clean the area that she destroyed. even leaving feces everywhere and rotting food in the kitchen. the overall aftermath of new regulations that landlords would subjected to will continue to drive them away from renting out properties. the eviction moratorium led to

abuse in my case and in many others. because landlords are still housing nonpaying tenants while waiting for their due process. a tenant that expects the government to pay will frankly not pay their own rent. it perpetuates a hair's attitude and -- who cares attitude and impacts landlord livelihoods. creating an emergency rental assistance program, making it easier for government officials to reimpose eviction moratoriums for lockdown borders. we all can agree, it is back. the eviction moratorium that occurred during covid led to [indiscernible]

the government discouraged landlord participation, passing more expenses for all. too many restrictions [indiscernible] considering renting going forward. more stringent requirements with intense screening criteria in place to cover themselves just , in case. we are already starting to see the impact of all of this with social media videos circulating, teaching prospected -- prospective tenants how to create statements because so many chose not to pay rent that they now cannot provide the documentation required to obtain an apartment and this cannot continue. landlords are not in the business of evicting, but we should be able to insert in circumstances. allowing policymakers to consider landlords, particularly

small mom and pop landlords and single-parent landlords trying to make ends meet. and sick landlords, like myself, just trying to get by. because after all, we have families to support, too. thank you. and i look forward to answering your questions. sen. brown: thank you. next witness is mr. dunn, welcome. mr. dunn: chairman, ranking member, members of the committee, good morning. thank you for the invitation to testify today and share my story. my name is darian dunn, i am the managing partner of atlantica partners, a company with my younger brother and with a mission to empower individuals by establishing thriving and holistic communities. i was born and raised in georgia my parents taught me that home is more than its place, it's an

idea. -- ideal. i graduated from georgia tech where i studied civil engineering and economics. after acquiring my first rental property 20 years ago i have since participated in the ownership, management, and development of nearly 1000 housing units. i know that expanding affordable housing in our nation is possible and critical to solving our housing availability challenges. but the government at all levels must empower, not restrict housing providers from doing what they do best, providing places to call home at affordable levels. we can offer affordable rents in part because we have a thoughtful, long-term approach to property ownership. we have owned many of our properties for over a decade while nearby properties have traded hands upwards of five times over the same amount of time. i'm fortunate to have built a successful company that operates on an institutional level but i have never forgot my humble beginnings as a landlord with very limited resources. i saved money from my day jobs for the down payment for

single-family rental homes and apartment properties. it is not surprising that the majority of rental homes in small multifamily properties in this country are owned by individuals and small businesses like mine. in fact, over 70% of tenants in the united states live in properties that have 20 units or less, including single family homes. small landlords represent a majority. but policy driven policymakers tend to overlook the struggles of this group of business owners. my responsibility to residents keeping my business viable so that i can continue to serve those most vulnerable to the ever worsening affordability crisis. the government should seek to help me do that. our tenants are our partners and the business cannot exist without them. the symbiotic relationship was put on full display during the height of the covid pandemic. the financial pain felt by tenants was ultimately built by -- felt by landlords and vice versa.

fortunately my company did not , have a large percentage of delinquent tenants like many others in my industry. however we did have some that were unable or unwilling to pay rent for an extended amount of time, the worst case being a current tenant that hasn't paid rent since october of 2020. while we have fortunately been able to withstand these challenges, the majority of small landlords cannot sustain these setbacks. although many housing providers experienced significant delays in receiving their funds due to challenges with local execution of programs. despite federal resources to help during the pandemic, the inventory of affordable housing is eroding as small landlords p opt to or are forced to sell their properties. we cannot afford to lose these market players and we need more mission driven housing providers. i support business practices and public policies that strengthen the tenant landlord bond as opposed to those measures that pit one side against the other.

examples of good measures include lease insurance to cover property damage and lost revenue, reform of the section eight program, incentives to encourage conversion of unused commercial properties to housing with access to favorable debt and equity for nonlife tech deals. evictions are a last resort must -- but we must ensure that moratoriums do not discourage a vulnerable population from paying their rent and building their credit. for example, our company doubled down on tenant financial literacy training during the pandemic. we educated tenants on the importance of avoiding eviction filings and creditor collections. we also implemented a program to report positive payments to the credit bureaus leading to 75% of of our tenants improving their credit scores. i will close by reiterating that we must increase housing supply and provide incentives.

and i promise to continue my efforts to make the idea of home a reality for generations to come. thank you for the opportunity. i look forward to answering any questions. sen. brown: thank you. >> thank you, chairman brown ranking member, members of the , committee, thank you for the opportunity to testify today. pre-pandemic millions of , extremely low income households, disproportionately people of color, struggled to remain housed. and more than half a million people experienced homelessness. 10 million of the lowest income households paid half of their limited income on rent, leaving them without resources to put food on the table, purchase needed medications or otherwise make ends meet. any financial shock would cause them to fall behind on rent, face evictions and become homeless in the worst cases. these same households lost wages, had increased costs and were at risk of losing their homes during the pandemic.

the federal government responded to the clear and growing need by providing unprecedented resources and protections. congress provided $46 million in -- $46 billion in emergency rental assistance. president trump implemented a national eviction moratorium, extended by a bipartisan congress and further extended by president biden. these resources and protections kept millions of renters who otherwise would have lost their homes during a global pandemic stably housed. now as resources are completed -- depleted and protections expire, low income renters are faced with rising inflation. skyrocketing rents, eviction filing rates reaching for -- for -- or surpassing pre-pandemic averages and in many communities homelessness. every $100 increase in median monthly rent is associated with a 9% increase in homelessness. last year monthly rent increased on average nationally by nearly

$200. rising rents are driven by increased demand. limited supply and a mostly unregulated market that allows landlords to raise rents without regard to the impact on tenants. institutional investors are purchasing homes at an increasing rate, and they are raising rents, charging higher fees as a profit-making strategy and filing for eviction at alarming rates. a lack of national renter protections places tenants at risk of unjust treatment, housing instability and evictions. underlying all of these challenges is a long-standing, pervasive and severe shortage of 7 million homes affordable and available to the lowest income people. which the private market on its own cannot adequately address. the shortage is a structural feature of the country's housing

system, impacting every state and nearly every community. yet congress only funds housing assistance for one in four eligible households and has failed to preserve our country's limited supply of public and other affordable housing. to address a decades long housing crisis that has only worsened during covid-19, congress must enact long-term solutions, such as expanding rental assistance for all people -- for all all eligible households in need, preserving and expanding the supply of affordable homes. providing short-term assistance to prevent evictions and homelessness. strengthening and enforcing renter protections and incentivizing or requiring local governments to eliminate restrictive local zoning. these solutions must be paired with reforms to break down barriers that prevent access to critical resources and deepen racial disparities.

although the best opportunity to advance long-term solutions is the reconciliation bill moving through the senate now, it looks unlikely that it will address the housing crisis in a meaningful way, leaving renters and the people experiencing homelessness to suffer from continued in action. and to protect tenants from exorbitant rent hikes and prevent more homelessness. the bottom line is this, the country's lowest income seniors, people with disabilities, and working families are struggling to stay housed in this housing market. without decisive and quick action by the biden administration and congress, too many more renters will fall into homelessness. with all of its associated costs. to children, families,

communities, and the country. we can prevent this outcome, but only if we act and act soon. thank you again for the opportunity. sen. brown: thank you. ms. brunner, your story of the care homes initiative is quite a story. thank you for sharing that. and you suggested just the arduousness of making that happen, thank you for your commitment to do that. talk for a moment if you would about what other areas in ohio are seeing similar, i don't expect you to know the same details outside of cincinnati but are seeing big investors come in and more importantly what would help your organization and others like it be able to fix up more homes and keep them affordable for renters and return them to affordable homeownership, if you would. ms. brunner: thank you for the question. we became aware of the issue about a year ago when this article in "the wall street

journal," featured cleveland, ohio. the rapid increase of ownership by these institutional investors. making us start to study what was happening in cincinnati and i think ohio in general typical of a target area because of our home values relative to the rental market. i don't have specific information but i know that this is something happening throughout ohio. yes, the llcs, when we got the names of the five different investors that had the most significant code violations from the went to figure out how many city of cincinnati and then went to figure out how many homes they owned in the city avenue cincinnati you cannot look up , the entity named because it is common in real estate for llcs to be used in real estate ownership but we found that one had 91 llcs just in our county, meaning that there is this lack of transparency that makes accountability harder. that's one of the changes we would recommend, some kind of

registration process that would make it easier for the local jurisdictions to then track and hold accountable these property owners for the condition of the properties. and we also discovered that many of them are still receiving homeownership credits on their property tax bills. so that is something else that should be changed. we certainly don't want to have less costs for them than other businesses because what they are doing, these are businesses, so they should pay higher taxes. and i also think that we are looking into two other ideas. we don't know the extent to which opportunity zone funding has been used for the investment in these properties. we know that a significant amount of investment is in low income track areas. it would be a concern certainly if opportunity zone funding is used for this, which is i think not the intent. i think that there needs to be

some analysis of leed taxation and the implication it has for this asset class. sen. brown: professor desmond, two questions if you would answer them together. first, addressing what ms. brunner said about llcs and how has it affected your ability to track who is filing evictions around the country? i know that's a big part of the doing at the eviction laboratory work you are doing at the eviction laboratory and if you would speak for a moment about the crisis act and how it would prevent evictions. prof. desmond: thank you. the growth of llcs in the housing market has expanded precipitously over the years. studies have linked llc ownership to property neglect. this isn't because landlords register under llc's to own stock, it seems to be that llcs invite moral hazard, preventing liability and accountability,

inviting negligent behavior. studies have linked llc ownership to property disinvestment, tax abandonment, even completely walking away from properties. one of the landlords i spent time with the milwaukee i asked, what happened to this house i spent a lot of time in. she said i just gave it back to the city. what she meant his she meant is she stopped paying taxes and let it go to tax foreclosure. that should not be a part of a business strategy but for some landlords who use llcs, it is. it also seems to be the case that a small number of landlords due on outside -- outsize number of evicting. we can't know who they are because we don't know them. if we did we could design policies that would target the root of the eviction crisis. the eviction crisis act would do a lot to get us to a better place when it comes to stepping -- stemming evictions. allow us to track the data, the first it would only way to understand if these evictions are violating the fair housing act. the federal government does not

collect eviction data. the only group that does is my group at princeton on a national level. and i promise you i will do this -- i will not do this forever. the second is legal reform in to see if we could make a more humane and rational way to adjudicate the process. third, it looks at rental assistance. and if we could figure out a way to make small dollars go a longer way. for example in cincinnati last year, i believe that one in seven evictions were for less than $500. for some cases the line between , homelessness and staying in your home does not cost that much money. sen. brown: thank you. ms. yentel, your comments on that? what the eviction crisis act would do in your view? ms. yentel: i would point primarily to the last piece that matt mentioned, making emergency rental assistance a permanent program.

and permanently funding it at $3 billion annually. the legislation was additionally introduced as bipartisan legislation in the senate in 2019. even before the pandemic there was bipartisan understanding and agreement that short-term rental assistance could help some families who can otherwise make ends meet absorb an unexpected financial shock and avoid eviction and the spiraling into poverty that results. it was initially envisioned as a pilot program and then of course 2020 came, the pandemic, 46 billion dollars in emergency rental assistance. we have had the pilot program. emergency rental assistance has been successful. $40 billion of the $46 billion has been spent or obligated. 6 million families have been helped. over 6 million payments have been made. now it is time to take the lessons that we learned during the pandemic, from the 500 programs that were stood up across the country and put that

into authorization and funding for a permanent emergency rental assistance. and again i'm really pleased to , see that the legislation has bipartisan sub work. -- support. sen. toomey: thank you, mr. chairman. ms. morey, thank you for being with us remotely today. i appreciate your testimony. i feel badly for the circumstances you are in and i hope your prognosis is good and that you are feeling well. i read your testimony. so i know the story. but we did not have a good audio connection for much of your opening comments. so i just want to clarify a few things for people who might not have been able to understand what you were saying. first of all, my unders ending -- understanding is you own your own home and attached or as a part of that home there is an apartment and that you rented that apartment out on a month to month lease to a tenant, right? ms. morey: correct. sen. toomey: and then at some point because of a deterioration in your health you decided that

you really needed to have your sister move into the apartment who could help you. so you provided the notice to your tenant that you at some point would not continue to renew the lease. and your tenant nevertheless refused to leave the apartment. is that right? ms. morey: correct. >> did i understand you to say, she stayed in the apartment without paying the full rent, i don't know if you paid any rent, for two years? ms. morey: close to it. sen. toomey: close to two years, stayed in the apartment. you could not do anything about that, why? >> because the housing court was closed. even when i try to open a case because of her smoking, and emergency types of hearing, find the, that was zoned to start the

-- that was going to start the clock over again. meaning that my last filing would go away and the new filing would then take its place. >> and with an eviction moratorium in place, would you be able to evict this person? ms. morey: yes, if there was no moratorium in place. sen. toomey: right, if there was no eviction moratorium than you could. if there is, then you wouldn't. did this person seem to know that you were not in a position to evict her? ms. morey: yes. sen. toomey: and so took advantage of that. and so let me ask you. now having gone through this experience, knowing what you know about the government's willingness certainly at times to impose a ban on evictions, do you regret having rented your place out? ms. morey: i don't regret it. but a guarantee of no

moratorium, there would have to be more than that. i would have to feel supported and protected by my government. there would have to be protection that don't just favor one side in order for me to ever consider renting again. sen. toomey: right. we have been hearing a lot about the supply of housing. it's true we have a shortage and this is to be a very compelling story of the unintended consequence of what is meant to be helpful to becomes harmful when some people tenants but actually becomes harmful when some people inevitably abuse this. mr. dunn, in your testimony, you said and i quote that government actions that raise his costs does your costs impact residents and my ability to provide affordable housing. end of quote. i assume that like any other business, if there are higher costs posed on you from the outside, at some point you have

to pass it onto to your customers, the renters. whether it is in higher rent, higher security deposits, or some combination thereof. if the higher costs are impose d on you, are you going to have to impose those costs on renters? mr. dunn: generally that is the case. there's a misconception that landlords are mostly big business and as we have heard today, over 70% of landlords are small business. >> and i do want to get to a point about that. mr. dunn: and also those costs have to be passed on because they are such relatively small margins, like any business. some businesses have less than 10% of a cash flow margin. and up to maybe 20% to 30%. if costs are raised by even 10% to 20%, that could absolutely wipe out profit. >> so it has to be passed on. a costs such as higher tax or higher maintenance costs on your building is an obvious one. but there is another kind of

cost which is if the government imposes an eviction moratorium that has the effect that some percentage of rent is not going to be collected because people know that you have no recourse if they don't pay the rent it most people will still continue to pay rent. -- but most people will continue to pay the rent because they know was the right thing to do mr. dunn: the moratoriums can create, it can threaten the relationship between tenants and landlords. most tenants as you said they pay their rent and are responsible but when you have a system that does text the other side of the partnership and he -- you will hear me use that word, partnership. it's not about the landlord, it's about the tenant landlord

partnership and when one side is not protected it hurts the system. when there is a moratorium in place that doesn't allow one side of the partnership to thrive, the system breaks down. sen. toomey: and the costs is borne by those paying less. it has come up repeatedly from witnesses and my colleagues have made the point about the increasing percentage of single-family homes owned by private investors. a lot of people are very concerned about that. i would just underscore that the people who are most able to afford the burden, the costs of evermore regulations are large corporations that can spread it out as opposed to the moment tenant right away, we tolerate the gse subsidizing private investors in these single-family homes. if people would prefer to have local landlords and people owning their own homes, one thing we could do is forbid the gse from engaging in these subsidies and i would urge my democratic colleagues to consider that.

sen. brown: thank you. the senator from new jersey is recognized. senator: ms. yentel, the out of reach housing coalition report shows in stark detail how hard it is for low income renters to afford even modest housing. in my home state of new jersey a medium income renters barely able to pay for a one-bedroom home. a renter earning minimum wage would need to work 80 hours per week or two full-time jobs the able to afford a one-bedroom house. however, the data is actually worse than that because affordable housing availability impacts other parts of a family budget. for example affordable housing is easily located in areas far away from job centers, forcing workers to pay higher transportation costs. given this, how important is it that we build more affordable

housing near transit so that we can connect people to good paying jobs, careers, and opportunities? ms. yentel: thank you for the question. it is important that congress not only invest in more deeply in affordable homes for the lowest income people but also to ensure that the extremely low income people and people of color can live near transportations and the opportunities that that presents for them. we also have to be careful when we work on transit oriented development to ensure that it doesn't create displacement or gentrification. the affordable housing component is the best way to do that, to ensure that we are preserving existing affordable housing and -- in neighborhoods connected to transportation and building more so that the lowest income people are not displaced if new development comes near those transit stations. senator: thank you. that is where i led the charge

in my livable communities act, which creates a federal grant program to incentivize the development of affordable housing near existing mass transit. and you know, we hope to see some of that happen. by the way, my preface to the question is you don't dispute what i said in terms of the realities of what it is for rental income in terms of peoples challenged to meet that? absolutely republicans are far out of reach for minimum wage workers -- rents are far out of reach for minimum wage worker. rent is far out of reach for minimum-wage workers and other low-wage workers, for seniors, people disabilities on limited

fixed incomes. we also find rent is out of reach even for the average renter, who often earns about five dollars to six dollars less per hour then what rent costs in their communities. a big part of the housing crisis that we are facing today is stagnant or declining wages for the lowest income people and skyrocketing rent. sen. menendez: when people cannot find a place to call home and are displaced, society bears the burden. ms. yentel: inaction is expensive. we pay for allowing poverty to exist through increased health care costs, for families and parents. we pay for it through lessened educational attainment for kids, families that are on affordably housed or precariously housed earned less over their lifetimes. they pay less in taxes. so the flip of that is also true. when we invest in affordable housing there are savings to be found in other areas of our life and through the federal government. sen. menendez: the coronavirus brought unprecedented challenges

to all of us, including renters across america. many were already struggling prior to the pandemic. with the consolidated appropriations act and american rescue plan, we were able to keep millions from being evicted. what has the eviction lapse data shown about how these programs help renters stay in their homes? >> both programs were historic and successful between the end of the cdc eviction moratorium in july and roughly 216,000 evictions that would be expected under normal conditions did not happen. the biggest reductions in evictions were seen in low income african-american and hispanic communities in areas mostly affected by the eviction crisis. ask the same time, during the days the moratorium existed, foreclosures were down historically in the country too because the federal government also ruled out forbearance for

homeowners. this was a policy that was one of the most important federal policies in the lives of low income renters since low income -- since the invention of public housing. sen. menendez: what can we learn from the pandemic in regard to targeted assistance to assure funding is deployed as rapidly as possible? dr. desmond: one of the consequences of the emergency rental assistance program is the development of channels in every state to get money in the hands of tenants that needed in a way -- need it and a way to make property owners whole. it would be a waste to let those channels go by the wayside since we have built them through the pandemic. sen. menendez: i understand senator cramer is next. >> you to all our witnesses for being here. -- thank you to all our witnesses for being here.

mr. dunn, i think we all -- it seems we all can agree to some degree on the problem. i will tell you and listening to senator toomey's questioning, my mind started going down the usual path. what is the ultimate end to the constant government distortion of markets, the sticks and carrots that seem to create higher price and very little in regards to providing more supply? the biggest problem with inflation, the cause of inflation is when demand outpaces supply. we keep incentivizing demand and not supply. i'm not sure where it all ends. one part of that scenario that we do not talk about is the cost of regulation. there has been a study i am sure you are familiar with recently that predicts about 40% of the cost of multifamily and single-family rent is regulation.

can you speak to government regulation? i am sincere when i say i do -- i struggle to find the balance. every time we try to solve the problem, we incentivize one side or the other and escalate cost. can you speak to the imbalance and the right balance? mr. dunn: the national homebuilders association did do a study looking at all levels of government and regulation adds about 40% to the cost of building homes and the cost of building real estate and developing real estate. that is directly passed on to the people we are trying to help. we have to make sure we are dealing with the root cause of the issue, which is a lack of supply. everyone, every witness here today, we agree that is the problem. we need to focus our efforts on every level of the government on making sure we are creating more housing.

when we create solutions that in many cases i even understand why they are being created in the short term to help one side, it does not help the problem and does not solve the problem. we need more housing. we have to make sure plans create more units and not initiatives that pit one side against the other. we have to make sure the tenant-landlord bond, which is sacred, has a place to live in this country. sen. cramer: i do not think any of us advocate no regulations. obviously, there need to be protections in place. i agree. the problem is easier to identify than the solution, i admit. when the incentives create a distortion to the point where the cost of rent is going up faster than the rest of the economy, that is not the right solution. but i am with you. i would like to see us focus more on the supply side.

i am not sure that complete lead -- completely does it either. sometimes you can end up with an overabundance as well. thank you all. i still have a minute and a half if anyone else was to comment on -- wants to comment on the same question. i would be happy to listen. >> i would be happy to share that related to regulations or state and local laws that one of the biggest challenges to increasing formal housing supply -- affordable housing supply is often restrictive local zoning that inhibits the supply of any kind of apartments and especially affordable apartments. this drives up cost for everybody and exacerbates segregation and other racial disparities. states and localities will need to do more to limit or entirely remove those restrictive zoning laws if we are to be able to build the number of homes the

country needs. the federal government can use the levers it has primarily in creating incentives or requirements that are tied to federal funding, especially big funding through the transportation, the bipartisan transportation infrastructure bill. that can create a compelling incentive for local communities if they are able to receive those funds, only if they do more at the local level to reduce restrictive zoning. >> the only thing that concerns me about that is that sound -- that sounds swell, until the local community decides it is not worth the funding, in which case you have solved no problem. >> that is why we should think bigger than the housing funds, where typically we look for incentive for restricted zoning and we look toward the pots of money all communities want related to transportation funds,

highways, etc.. >> senator reid is recognized. sen. reed: what we have noticed is a lot of institutional investors, private equity firms, etc. are getting into buying residential homes at significant numbers and that could disrupt the entire market. i know real estate is typically a local issue in terms of realtors, and terms of individual sales and all these factors. do you have an assessment as to why they are getting in? what they might do, and the downsides? dr. desmond: we have seen the rise of institutional investors in the single-family rental

market after the foreclosure crisis because there was a market opportunity. the average cost of a home dropped by 27% after the foreclosure but rent did not decrease during the last recession. that gave institutional investors a chance to buy up single-family homes and rent them. that is why you see increasing investment in cities like atlanta, charlotte, phoenix for example, where institutional investors have a bigger chunks of the market. about 2.3% of the single-family rental market is now owned by institutional investors, but even that small footprint is bigger in places like atlanta where some neighborhoods, a third of the single-family market is owned by institutional investors. why should this concern us? because research link is to show investment to hire housing costs. institutional investors raise

rent more aggressively. there is also research linking institutional investors to property neglect, putting more on tenants for upkeep and they evict at higher rates for lower amounts of money. sen. reed: the other issue is are we seeing these institutional investors take the ownership and then creating derivatives or other financial products based on ownership? is that happening? dr. desmond: i cannot answer that question at this time. sen. reed: what kind of federal investment would be the most effective to ease family housing costs and to help renters? any thoughts?

dr. desmond: the housing choice voucher program has been an incredibly effective program. families who receive a housing voucher move to better neighborhoods. their kids do better in schools. their kids eat more and become healthier and less anemic. so a cost-effective, successful way to expand on housing security, economic mobility for families across the country is to take a program we have that already works well and expand it to families that need it. ms. yentel: when it comes to housing supply, our country's newest and most deeply targeted housing supply program is the national housing trust fund thanks to your leadership in creating and getting it enacted. the program at its current funding level, 100% of those dollars are to build or preserve apartments and many of those apartments are up and running

now, helping some of the most vulnerable people in our country, including people who are previously chronically homeless, kids aging out of foster care, survivors of domestic violence, and so on. the only problem with the program is it is underfunded. this year was its largest funding level yet and it is still at under $1 billion for the entire country, so the program needs to be expanded so we can build a number of homes that are needed and ensure they are affordable to the people with the clearest needs. sen. reed: i agree with you and our challenges to come up with funding sources to keep the fund active moving forward. with that, i will thank you and the panel.

sen. brown: senator chester is recognized. >> i come from montana and many have had trouble finding available housing. the price points have gotten too high. it has gotten worse during the pandemic. so many people think the entire state is like the show yellowstone and i guess that is ok but that is not true. across our community in montana, some places are seeing median sales prices of homes rise 40% in the last year alone. this is pushing more and more people from potential homeownership to looking for homes to rent. what impact do these challenges have on the ground in communities like yours? ms. brunner: there is a profound impact on local families when

homeownership opportunities are taken away from them and an amazing impact on neighborhoods that are replaced by institutional investors. if i can build on the question asked earlier about the motivations for these investors, one of the things that has fueled it is what professor desmond talked about with home prices crashing and going back to the time of the 2008 housing crisis. then there has been met since that time, in amazing amount of institutional money that has been available. many of these investors have been able to buy properties without guarantees and the portfolio we purchased was in receivership not because the portfolio failed but because the owner walked away and a judge put the properties into receivership for the protection of the investors and lenders. so there has been too much

capital out there chasing places for investment and this product has been made, has been created out of whole cloth instead of investing in apartment buildings and office buildings and industrial buildings. all of a sudden, single-family houses became the desirable sector and there has been so much money chasing it. the debt has been too easy to get. as you go back into individual neighborhoods, when you have 4000 houses in a community the size of hamilton county and every neighborhood, it makes a difference. we are getting calls from jurisdictions through the county on a regular basis asking what we can do to help them fight back. sen. tester: a growing number of homes for rent in my state are been converted to vacation rentals, which puts additional stress on low housing supply. are there strategies that have

worked to prevent -- or to ease the impact due to tourism? i know it is a double edged sword, but when these homes are taken off the market because families cannot afford to buy them because they are used for vacation rentals, that adds to the problem. are there any strategies out there? >> sure. any time affordable rental units are taken off the market and used for some other purpose than housing low income people, that exacerbates the existing shortage of homes affordable to them in that community, so it points back to the need to, and -- in places where there are not enough homes for the people who live there or want to live there, we need to build more. and to build more market rate apartments, we need local communities to remove restrictive zoning laws and allow the market to build those units and have them affordable to middle income renters.

for low income rentals, the -- low income renters, the private market on its own cannot build and operate apartments that are affordable to them because they cannot pay enough and rent to cover the cost to build and operate the apartments. for them, federal subsidies are needed either in the form of, if there are an adequate number of homes, and the form of rental assistance to be a bridge between what they can afford and what rent costs, or in the form of building apartments and ensuring they are deeply affordable to extremely low income people through programs like the national housing trust fund. sen. tester: we do not have any immigration policy in this country, frankly and we need one because it would help with the workforce. it would have positive impact on reducing inflation, but we are locked up on that issue.

do you have thoughts on where we could get workforce to build these houses? the point is if we are going to increase the supply we have to have workforce. we have no workforce. we have no immigration policy and we do not have enough folks to build houses. do you have thoughts on that? >> that is an important and good question. i do not have immediate solutions to share but i would love to follow up with your office afterward. >> super. thank you. sen. brown: senator warner from virginia is recognized from his office. sen. warner: if you have those solutions, let my office know as well. we are long overdue on an immigration solution. as we think about a project i have been involved in unsuccessfully for over a decade

in terms of reform, the idea of having something approximating a 15 to 20 basis point fee on all of the work that fannie and freddie does on mortgages create a dedicated source of funding for not only first-time homeownership but also housing to deal with the rental issue as well. one of the things i have worked on a lot has been homeownership. my question to you is on rental housing. i have been an advocate along with others on this committee. i am proud of the fact that a number of members on this committee started a caucus in the senate to try to make sure we get more capital into these entities to help fund housing.

we have seen the disproportionate impact on communities of color. i think we need to do that and i think there is this virtuous circle you talked about as well that is providing more affordable housing either in the rental market or in terms of even homeownership and helping communities across the income spectrum. you -- your group did a recent study on the shortage of affordable rental housing. in virginia, we have about 150,000 shortage of affordable rental housing units. we have certain tax programs. we just do not have enough private capital going into building affordable rental housing. what can we do beyond our

traditional programs to get private capital going into this underserved -- underserved market? ms. yentel: i would bring it back to the public investment needed especially as we talk about where the data shows the clearest and greatest needs. the data are clear that the most severe shortage of homes affordable is for the lowest income people. extremely low income renters are the only segment of the population for which there is an absolute shortage of homes affordable to them. this has ripple effects and addressing this shortage can provide relief, especially when we are talking about federal resources. it is important we ensure the limited resources are targeted where the greatest needs are. for the work you have done on

first-generation homebuyers and assisting first-generation people to become homebuyers, i think that is a very important. and for renters too because all housing is on a continuum. when we have a situation like we do today where potential first-time or first-generation homebuyers are locked out of the market because single-family home prices are so high, that keeps them in the rental market. they tend to have higher incomes than other renters. that can drive up costs. our housing system is like a game of musical chairs. when the music stops playing, it is always the lowest income people who are left standing without any homes at all. sen. warner: unless we are going to do 100% federal financing, how do we take those federal

incentives to incentivize private capital beyond taxpayer programs to actually get more supply of low income rental housing? i'm just wondering if there's anything beyond funding the existing programs or if there are other examples of creative initiatives you have seen in your work that we ought to bring in to the toolkit. >> it is effective for communities to be able to use those funds. tax incentives are also helpful in attracting private capital. the low income credit is an important program. it should be expanded. and reformed to ensure communities can do more to build apartments for those lowest income people.

sen. warner: i think most of us on the committee support the national housing trust fund, but the erratic level of funding to that, one of the ideas, we may not agree on all housing financial reform but the idea of at least some dedicated fee would provide a more stable source of funding for the national housing trust fund. i hope we can revisit. thank you. sen. brown: senator warren for massachusetts is recognized. sen. warren: the fed interest rate hikes are making it more expensive to build more housing and more expensive to take out a mortgage to buy a home. this could lock more families into the rental market and push rent even higher. big wall street firms are watching this with dollar signs in their eyes, private equity,

real estate investment trust, and big corporations have gobbled up more and more of the rental market and now serve as landlords to thousands of americans. in 2018, non-individual investors owned 26% of the rental stock, up from 18% in 2001. on a recent earnings call, executives at a private equity firm bragged that slowing housing construction, that is less supply, and higher mortgage costs, provide a lot of support for their bottom line, since people will still have to live somewhere. so professor desmond, you are a leading expert on predatory housing schemes. so let me ask you. as corporate landlords like blackstone buy up rental properties, will be the impact

on families in those homes? dr. desmond: first, those families will pay more and sometimes a lot more. those families might experience a reduction in housing quality. they saddled tenants with extra fines and fees, including those who cannot make rent at the end -- beginning of the month because they do not get paid on a monthly basis. plus many of those tenants do not have access to a lawyer. over 90% of landlords do. that leaves families in vulnerable situations. sen. warren: an investigation by the house select subcommittee on coronavirus crisis tells us during the height of the pandemic corporate landlords illegally evicted families by the thousands, violating federal and state moratoriums that had been put in place to protect tenants.

today, with family struggling with rapidly rising rents that you talked about and with the economy at risk of being pushed into recession by the fed's overzealous interest rate hike, it is urgent that we take steps to protect renters from predatory schemes and ensure that corporate landlords at least follow the rules in place. that is one reason i propose creating a new tenant protection bureau, which would allow tenants to easily file complaints against unscrupulous landlords and provide officials with data they need to enforce tenant protection laws. how could a tenant protection bureau protect families' rights and force these wall street landlords to actually follow the rules? >> it could be tremendously helpful. as you said, that report only verifies what we knew was happening during the pandemic, which was some of these

corporate landlords were flouting the law and we pushed through the pandemic for the federal government to hold them accountable, to apply penalties to them for not following the cdc eviction moratorium. there was no single agency that was charged with or empowered to do that, so it did not happen. if we had a tenant protection bureau in place during the pandemic, it could have prevented untold harm and evictions of some of the most marginalized people. it could help further enforce tenant protection, prevent egregious rent hikes, and let tenants hold their landlords accountable. sen. warren: that is a powerful answer and i appreciate it. to ensure every family has access to safe and affordable places to live, we have to build more houses. that is the ultimate answer. we need more supply. there is no way around it.

these investments are overdue. it is also urgent that right now we stand up to corporate landlords and protect tenants from these predatory schemes that could push them out on the streets. and a tenant protection bureau would be a good start, so thank you for your work. thank you for being here. thank you, mr. chairman. >> thank all of you for your testimony here today. i think there is consensus that we need to address the housing supply issue and there may be some federal tools we can use to incentivize local jurisdictions to reduce barriers to housing supply, but i think all of us know we are not going to snap our fingers today and in the next six months, a couple years, create all the supply we need. so i think we should also focus

on using proven public policy tools to provide more families with affordable housing and allow families that have been trapped in poverty to move to areas of opportunity. professor desmond, you mentioned in your written testimony a bipartisan bill i introduced with senator todd young called the family stability and opportunity vouchers act, which would provide families with young kids the opportunity to move to an affordable home but also services to make transitions to other neighborhoods with higher opportunity. could you talk about the fact that people have looked at this, the empirical evidence that shows this is effective? and second, what is the impact on that program which we are trying to expand because it has been successful? what is the impact of the

institutional investors buying up properties in areas families want to move to? dr. desmond: thank you for the question. the bipartisan bill you helped introduce and sponsor will be incredibly impactful for families in all sorts of ways. housing is about opportunity, where you are living, where your kids are going to school. the promise of a housing voucher is to expand choice and opportunity for americans denied it. the empirical research on this is clear. when families have the opportunity to move to neighborhoods with lower rates of poverty and crime, higher rates of public safety, their lives are improved in so many ways. let me give you one data point. children who go to schools with higher levels of integration do better than their peers who go to segregated schools even when the segregated schools are flooded with resources. these programs work, not to mention giving families a breath

so they can pay what they should be paying for housing costs instead of driving them into poverty. the institutional investment in our markets is the opposite of this. it is the view that housing is a commodity, something that should only be for profit and an opportunity denied her -- denier and a poverty spreader. sen. van hollen: we have discrimination based on source of income, where in certain places the majority of places around the country landlords can discriminate against people with vouchers because of the source of income. can you talk about that challenge and whether it is made more difficult if you have institutional investors with no connection to the neighborhood? dr. desmond: source of income discrimination in most counties, there is no law against just saying no to a family just because they have a voucher.

evidence suggests when source of income laws are put in place , they help families get housed quicker and into better neighborhoods. with respect to institutional investors on this question, when you take the landlord and tenant relationship talked about today and put distance between folks that are working together and make the relationship purely financial, landlords do not have a lot of skin in the game to give tenants a break when their kid gets sick or they have to go to the dentist. it suggests those lawnmowers are -- landlords are going to react in an impersonal way and might build in discrimination that is beneficial to their profit motive. >> there is a lot of additional territory to cover. i have a little bit of remaining

time. could you comment briefly on the family stability and opportunity vouchers act and why it would be important to move that forward? ms. yentel: it will be important for the reasons professor desmond said. the only thing i would add is that the legislation, 500,000 new vouchers targeted toward families with young children could effectively end family homelessness and the funds included for mobility counseling are especially important because that allows counselors to help these families with finding communities that are best for them and helping them obtain and retain housing in those communities. it is an important bill. >> thank you. sen. brown: senator cortez masto is recognized from her office. >> i want to start by thanking our stenographer, who has served the senate for over 27 years.

thank you for your service and i wish you well. i want to thank the ranking member and chairman for this important hearing. similar to what i have heard from my colleagues, i am concerned about institutional investors and the impact it is having in nevada where we see all these properties being purchased. in my state and 2021, 20 9% -- 29% of the homes purchased were bought by investors and i cannot tell how many are institutional. it has everything to do with what i heard earlier about not enough transparency in being able to track this. can i ask you, because we have heard the negative impact by some of these institutional investors, some of them we have heard in our community, can you share examples of communities

countering the pressures on home prices brought on by purchases from institutional investors? >> the challenges low income tenants face are primarily based on the fact we have few tenant protections through the country. there is a power imbalance that tilts in favor of landlords, especially institutional investors at the expense of low income renters. we need to rebalance that power so it is more equal and tenants have protection against rent hikes, against fees for profit, and against the increased eviction. there is a set of protections that should be implemented at the federal, state, and local

level. sen. cortez masto: we were talking about vouchers and the positive impact it has for stability for tenants. can you talk about what vouchers also do for property managers and the benefits? ms. yentel: it is reliable income for property owners, for landlords. if they have a tenant with a section eight voucher, they will get regular rent paid each month and they have the benefit of knowing that rent will be stable and continuous. it is a benefit for landlords as well. sen. cortez masto: it gives them the ability to upkeep their property as well. is that right? ms. yentel: rent is pegged at the fair market rate, which should be enough for landlords to operate and maintain their properties.

sen. cortez masto: professor desmond, you included manufactured communities in your book evicted, and thank you so much for the work that you provided. very enlightening. the other area i am concerned about is homes being purchased by private equity as well and the impact we are seeing on the security and stability of the tenants. can you talk about what you are seeing there with respect to our manufactured communities? so many in my state are now losing their stability and homes and private equity companies are coming in and purchasing these communities. dr. desmond: your concern is warranted. we have seen institutional investors buying up an enormous

source of housing and often evicting entire mobile home parks and displacing entire communities. let me give you one example of how institutional investing is different than normal land lording. only about 5% of americans are paid on a monthly basis now, but rent is due at the beginning of the month. for that 95% of americans, often they cannot make rent during the first of the month. if you have an institutional investor as your landlord, you often get an eviction notice by computer. by algorithm. that increases your housing costs by 20%, which means the rental housing crisis is even worse if you are under those conditions. sen. cortez masto: my time is up. thank you. sen. brown: senator smith of minnesota is recognized.

sen. smith: two weeks ago we held a hearing in homelessness and how we can work together to address this issue. senator brown and many subcommittee members were participating in that. it is connected to this hearing today because we know without a safe, affordable place to live nothing in your life works. in our subcommittee, witnesses agreed the primary cause of homelessness is this under supply of affordable housing. we are seeing in this hearing today that this housing supply problem affects all segments of the housing continuum and we are seeing how the shortages are affecting the homeownership market and it is a big deal in rural and suburban and urban communities. i want to come first to dr. desmond.

thinking about this backdrop a couple weeks ago on homelessness, what you see as the relationship between homelessness and the broader problem of housing affordability? could you talk more about the homelessness issue? dr. desmond: when the rent goes up, so does homelessness. there is a direct connection between rental costs rising and shelter capacity expanding, people moving from a home they paid 50% of their income to one they pay 70% to maybe their car to a shelter to the street. there is a link. reporting out of california on this has been telling. 60% of people who live on the street in oakland are from oakland, lived in oakland, often were homeowners in oakland and for one reason or another ended up on the streets as citizens

and natives of that state. sen. smith: there is a misconception that people become un-house and homeless because they have an underlying health problems like a substance use disorder or mental health issue, yet is it not true that those are the kinds of health issues that develop because you are experiencing homelessness? dr. desmond: both can be true, but the intervention is clear. provide families homes first, no matter their mental health state or struggles with addiction or other social problems they might be facing. when we intervene in the housing situation, they get healthier. they can take medication. we can provide a stable and consistent mental health intervention. it is not rocket science. the solution is housing. sen. smith: it is not that we do not know what to do. it is whether we have the will to do it. some would argue -- we

acknowledged a severe supply challenge with affordable housing. some would argue that strategies like rental assistance served to fuel demand for housing, thereby driving up housing costs. it isn't a supply side tool. is that accurate? does rental assistance make the economics of affordable rental work better for developers and rental property owners? ms. yentel: yes. when it comes to low income households, the amount they can pay in rent without subsidy does not cover the cost to build and operate housing, so federal intervention in the form of subsidy is necessary and housing choice vouchers are effective in communities where there is sufficient supply of homes but people living in them cannot afford them. it acts as a bridge between what people can afford and what rent costs and allows them to stay

affordably housed. sen. smith: it seems that is a demand-side solution and not getting the economics of having more affordable housing seems to be the right way of looking at that. ms. yentel: as long as we have seniors or people with disabilities with fixed incomes as long as we have families working low-wage jobs that are essential to our communities, we have to acknowledge that federal subsidies are necessary to make homes affordable for them and fund those solutions at scale. sen. smith: earlier there was discussion about how local zoning restrictions contribute to making affordable housing more expensive to build. my hometown has done a model job of creating more inclusionary zoning.

could you address what we could be doing at the federal level to support that kind of local zoning? >> your state is leading the way for the country to look at ways to remove restrictive zoning. local zoning is a local issue, but there are federal incentives or requirements that can be put on local communities if we look at the large pots of money that states and localities need to run their communities. we should put incentives or requirements on funds for local communities to do more to remove restrictive zoning. until we address restrictive zoning inhibiting the supply of any kind of apartment and especially affordable apartments, even if we are successful at getting the level of funding we need we will not be able to build. the federal government should use the levers it has to

incentivize or require communities to do more. >> thank you. sen. brown: senator warnock is recognized. sen. warnock: according to data from the 2020 american community survey, around 45% of georgians spend more than 30% of their income on rent and one in five spend more than half of their income on rent. we may assume these numbers are from high rent cities, but that is not true. it is not just high rent cities. in two rural counties in the southeast part of my state, one out of every three households spends more than half their income on rent. georgians are being crushed all over the state. there is no question that we need more housing stock, and i

support many initiatives that would do that. georgians do not have the luxury to wait. they are trying to pay rent now. they cannot wait several years for rent to fall. even as we put forward policy that would increase housing stock, we have to address the housing and security people and in georgia are dealing with now. how long would you estimate that it will take for the housing supply to catch up to demand? >> at will take -- it will take years, if not more than a decade. it is a matter of restrictive local zoning that needs to be addressed and removed and the supply chain issues, and many more issues, workforce issues to build housing. it will take many years for us as a country to dig ourselves out of the supply whole we have created.

sen. warnock: so it will not go away next year or the year after that. presumably, rent will continue to rise in the meantime. >> they will continue to rise. maybe they will start to come down. even if they do, when we look back to pre-pandemic times, many numbers in georgia were likely the same. even if rents comes back to where it was before the pandemic, there are 10 million households through the country paying at least half of their limited income on rent, so they will continue to struggle. sen. warnock: so we had this problem prior to the pandemic that was exacerbated by the pandemic. do you think offering tax cuts to rent burden families would help bridge the gap until we can address the housing supply issue? ms. yentel: absolutely. cash in people's pockets helps them pay their bills. whether it is in the form of

extended child tax credits or in the form of renter tax credits that can also support low income renters to afford the rent. they can have a meaningful impact on housing affordability. sen. warnock: i am a proponent of tax cuts for hard-working, ordinary families who could really use it. it seems to me we need to provide solutions. now, given the housing supply issue for georgians who feel squeezed by the rent, that is why i am working on legislation now to do just that, offer tax cuts to families with runaway rent costs. i want to pivot to another question. the low income housing credit program is the most important

system for supporting the development of affordable housing. since congress created it, the program has financed over 3.6 million affordable rental units. however, the affordability is only maintained during the tax credit time period, which is at least 15 years but could be longer. one way the affordable period can be reduced as if the property owner requests regulatory relief through a qualified contract. ms. yentel, can you say more about what it means for a property owner to request a qualified contract? what is that? ms. yentel: it means they can get out of the affordability requirement, something of a loophole. sen. warnock: so another entity

could raise the rent. ms. yentel: that is correct. sen. warnock: do owners informed the tenants of their buildings that their property might be sold and lose affordability requirements? ms. yentel: they don't. sen. warnock: whether property owners have waived the rates, would that be helpful information? ms. yentel: absolutely, more transparency is a good thing. at the national low income housing coalition, we have a database where we show where properties are at risk not under qualified contracts but where there affordability is expiring in coming years to give that data and transparency for communities to come up with solutions. the department of treasury and hud should do more. sen. warnock: lihtc has been

important around the affordable housing question and i'm working on legislation. sen. brown: senator warnock's comments about tax cuts, i might add, senator warnock joined me and senator bennett on working on the child tax credit. we have talked but how that relieved pressure for so many of your tenants, mr. dunn. for that year it was in effect at the end of the month when they got the tax credit, it relieves anxiety they felt to pay the rent and they did not have to deny their family or children or themselves in those last days of the month, so thank you. one of my favorite abraham lincoln stories is lincoln one

time said to staff who wanted to keep them in the white house to preserve the union, i have to go out and get my public opinion back. lincoln would do that when presidents could do that perhaps more openly than they can today. i urge my colleagues to get out. most of us do not interact a lot with people who are about to be evicted. they may call our office but we do not have that personal touch enough. i urge my colleagues, if we are not doing that as much as we should, to talk to people who work at the front desk, who drove to work today, who ask what it is like to rent in d.c. or tennessee or georgia or pennsylvania, ask them how many times they have to call their landlord to get a repair made whether it is a leak that goes and repaired, whether it is with the rent increase was they had to cross their fingers and hope

the rising rent would not force them to move. those are everyday stories of people we may come into contact with. i would hope more of us would do that. thank you to the witnesses. all five of you remote and the four of you here. for senators who wish to cement -- submit questions, they are due by close of business one week from today. ur witnesses according to our committee rules, we ask you to respond to any questions within 45 days from the day you receive them. the committee is adjourned. [captions copyright national cable satellite corp. 2022] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

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