What Is the Housing for the 21st Century Act?

The two dozen provisions in the congressional bill passed on Monday night hold many implications for the housing market.

The Housing for the 21st Century Act was passed by a vote of 390-9 on the House floor, a rare bipartisan effort aimed at reducing regulations on housing and aiming to correct a yawning shortage of homes available for sale nationwide.

Reps. French Hill (R-AR) and Maxine Waters (D-CA), the two lead sponsors of the bill, said it contains several provisions introduced by each side of the aisle and came after several months of honing.

The Senate's version, the ROAD (Renewing Opportunity in the American Dream) to Housing Act, contains more provisions and sets the stage for more discussion about what reforms will become law.

Over 70 housing-affiliated groups and homebuilders cheered the bipartisanship, which could set the stage for new federal housing laws and contains reforms at every level of government.

"With the nation facing a shortage of roughly 5 million homes and first-time buyers now entering the market at a median age of 40, bold action to expand supply and remove barriers to homeownership has never been more urgent,” Shannon McGahn, National Association of Realtors® executive vice president and chief advocacy officer, said.

What it does for regulations

The bill proposes more coordination among government agencies, especially the U.S. Department of Agriculture and the U.S. Department of Housing and Urban Development, related to environmental reviews. It proposes an Advisory Working Group to expedite the review process.

The bill also includes some efforts to streamline environmental reviews for some housing projects. Particularly, it wants to create more exemptions to the National Environmental Policy Act review for things like small-sized developments and infill projects.

HUD would also be directed to create best-practices frameworks for state and local zoning and land laws. Much of land use is managed at the state and local levels, but several states have proffered their own ideas around altering what can be built "by right" and without review.

It also requires more oversight of HUD and public housing agencies. HUD's secretary will begin to testify annually on the agency's performance before Congress, while housing agencies have increased reporting requirements on contracts.

What it does for financing

The bill sets new loan limits for Federal Housing Administration multifamily mortgages and also creates a new formula that allows more frequent adjustments to them.

It also directs the Government Accountability Office to study what hurdles middle-income people face when trying to secure housing, intended to consider ways to expand supportive programs for them.

Community Development Block Grant recipients can now use their funding for affordable housing. The bill will also begin to report on local land-use policies that limit the supply of homes built in an area, and also create a database of undeveloped publicly owned land.

Furthermore, the bill creates a competitive program to be administered by HUD that would encourage regulations around housing development and infrastructure programs.

There is a set of other provisions with specific implications that could help veterans obtain housing, and still others that encourage financial literacy while bolstering eviction protections.

What it does for construction

The bill creates a grant program to help entities develop a local manual of pre-reviewed housing designs, a concept that could mean fast-tracking larger-scale neighborhoods that contain some common house plans.

One provision removes a decades-old requirement that manufactured housing be built on a permanent chassis, even though many never move from their first destination. Removing this reduces the cost of construction.

Another provision aims to encourage "point-access block buildings" of up to five stories that contain a single staircase and thus would contain more living space. Still another provision encourages HUD to consider a program to offer FHA-backed mortgages under $100,000.