MESA, AZ — The Trump administration is addressing housing affordability by cutting red tape, the U.S. Housing and Urban Development secretary said Thursday.
HUD Secretary Scott Turner said the president is removing regulatory barriers to housing construction and the mortgage industry.
“We want to make it easier for builders to build and buyers to buy,” he said outside a home in Mesa.
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This week, Turner removed an energy-efficiency building code standard for new single-family homes that the Biden administration had required for federal loans. He said the 2021 update to the International Energy Conservation Code adds up to $31,000 to the price of a home.
“When builders have to pay this fee on top of other regulatory costs, up to $100,000, it makes it very expensive to build,” Turner said.
Homes now must meet a lower energy-efficiency standard in order to qualify for a Federal Housing Administration or U.S. Department of Agriculture mortgage.
Removing red tape like the IECC standard, he said, will increase the supply of homes.
“We need about 7 million homes in America,” he said. “That includes single-family, multifamily, duplex, manufactured housing. And so as you bring these regulatory barriers down, it helps builders to be able to build.”
Turner said the federal government is not the solution to getting more affordable housing built, saying it's a local issue.
"I've been encouraging people around the country as I travel, 'Take inventory of your regulatory environment.' Because the hardest and the deepest and the heaviest regulations are local, and so when the local leadership here brings down the regulatory environment, then it makes it better and easier and cheaper, if you will, to build."
But regulations aren’t the only thing making homebuilding expensive. The price of lumber and other materials has skyrocketed in the last few years.
Turner reiterated his pledge to cut regulations and also said he would tell local builders that the administration is aware of high prices for materials.
"We're not oblivious to this,” he said. “We understand it, and we're working on it every single day because we want our builders to build.”
The FHA and HUD last week announced that they are expanding the types of credit scores they use to evaluate mortgage applications. The agencies will allow the use of two models that include rent and utility payment history.
It’s an idea that has some bipartisan support. Earlier this month at a Phoenix town hall on housing, U.S. Sen. Ruben Gallego, one of Arizona's two Democratic senators, said the change is needed.
“You’re going to have a generation of young Americans that are going to have very bad credit or no credit at all because they’re going to be renting forever,” he said. “And then they go buy their first house, and it’s going to be like, ‘Who are you?’ ... and they’re going to end up paying higher rates.”
Gallego said former President Joe Biden's administration had proposed a rule to use one of the models the Trump administration is adding for mortgage applications.
But experts say the change is likely to have a limited effect because the high cost of homes, not credit scores, is what is keeping many Americans from buying a home.
According to Zillow, the average home value in Phoenix is $410,000, down 2.7% from a year ago.
