Sen. Warren Targets Affordable Housing Issues

Sen. Elizabeth Warren recently delivered remarks at the New England Council, where she highlighted her priorities to lower housing costs, including increasing supply and bolstering renter protections.

In her presentation, Sen. Warren also highlighted the dangers posed by institutional investors for families seeking to buy or rent single-family homes, and discussed actions that the Biden Administration has taken to protect renters and homeowners, including the Renters Bill of Rights.

“America is in the middle of a full-blown housing crisis. There are a lot of ways to measure the crisis, but I’ll start with the most basic: We don’t have enough housing,” said Sen. Warren. “Nationally, the United States is over seven million units short of how many homes we need to house our people. Seven million. Massachusetts is struggling. Experts estimate that we need about 175,000 new housing units right now for everyone to have a place to call home. The consequences of that shortage can be felt in a million ways.”

Founded in 1925, the New England Council is a non-partisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region.

Sen. Warren continued by citing specific examples of affordability issues, specifically for those in the Commonwealth of Massachusetts.

“Forty years ago, a Boston Public School teacher made $17,600—and a single-family home in Greater Boston sold for $79,400,” explained Sen. Warren. “In other words, the cost of a house was about four-and-a-half times a teachers’ salary. Today, that same public school teacher makes $82,300—while that same single-family house in the region sells for $900,000—nearly 11 times a teacher’s salary. Housing feels unaffordable because it is.”

She continued by citing issues as well for the rental market in their search for fair and equitable housing.

“And it isn’t just homeowners. From 2020 to 2021, rent in Massachusetts jumped a whopping 21%. The average home sale price in the same two years increased by nearly 30%,” said Sen. Warren. “With 30-year mortgage interest rates [over 7%], the dream of owning a home is farther out of reach than ever for first-time homebuyers. Those high interest rates also hit renters both because developers can’t afford to build new apartments and landlords pay more on their mortgages too. The cost of housing is the largest contributor to inflation, accounting for over half of the monthly all items increase in the most recent Consumer Price Index.”

According to the Bureau of Labor Statistics (BLS), the latest Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in November on a seasonally adjusted basis, after being unchanged in October. Over the last 12 months, the all-items index increased 3.1% before seasonal adjustment.

The BLS reports that the index for shelter continued to rise in November 2023 nationwide, offsetting a decline in the gasoline index. The energy index fell 2.3% over the month as a 6% decline in the gasoline index more than offset increases in other energy component indexes. The food index increased 0.2% in November, after rising 0.3% in October. The index for food at home increased 0.1% over the month and the index for food away from home rose 0.4%.

All these indices mentioned impact the wallet of American homeowners as these slight hikes all attribute to a deeper cut into the wallets and savings of Americans nationwide.

“The problem is bad, and the problem is getting worse,” said Sen. Warren. “Do you think housing is in short supply in Massachusetts now? Do you think rents are already rising like a hot air balloon and housing prices are already out of sight? Well buckle up for a rough ride. Experts tell us that to address the current housing shortage, we’ll need to build as many as 200,000 new housing units in just the next six years.”

A recent bright spot for those struggling with affordability has been a steady decline in the 30-year, fixed-rate mortgage (FRM). Freddie Mac has reported that after 17 consecutive weeks eclipsing the 7% mark, that the FRM has dipped to 6.67%, thus providing slight relief for those struggling t lock in the American dream.

Sen. Warren added, “Shortages are everywhere. What kind of housing do we need? Every kind. Housing for first-time homebuyers. Housing for renters. Housing for seniors. Housing for people with disabilities. Housing for students. Housing for people who have no homes. Housing for veterans. Manufactured housing communities. Rural housing. Urban housing. Housing for workers. Affordable housing. Housing for pretty much everyone who isn’t already rich and already a homeowner. The shortages are real, so what can we do?”

In listing possible solutions, Sen. Warren called for governmental intervention to assist in curbing the crisis.

“Increase supply … it’s plain old Econ 101, and we need to face it head on: Nothing gets better if we don’t increase housing supply,” said Sen. Warren. “Here in Massachusetts, we are lucky to have a governor who has made it her priority to address the housing crisis head-on. Earlier this fall, Gov. Healey introduced the Affordable Homes Act, a set of bold policy proposals to boost the supply of housing and drive down housing costs.”

The bill referenced by Warren includes a $1.6B investment in the maintenance, accessibility, and resilience for one-quarter of the state’s public housing portfolio. The Affordable Homes Act would also support the creation of more than 40,000 homes that otherwise would not have been built. The bill will also preserve, rehab, improve, or support more than 27,000 existing units in Massachusetts, including improvements to over 7,000 public housing units and the decarbonization of 3,000 public housing units.

“Our Governor knows that a one-size-fits-all approach won’t solve this crisis, but flexible options will help our communities make big, bold choices that work for them,” said Warren. “Three cheers for Massachusetts for tackling the housing crisis head on, but it isn’t enough. Remember, we need 200,000 new homes, condos, and apartments in just the next six years. Last year, Massachusetts approved 17,692 housing units—that’s not even one-tenth of the new housing we need. At this rate, we can’t even hold steady on our housing crisis—it will just get worse.”

And while highlighting the Commonwealth of Massachusetts and the measures taken locally, Sen. Warren feels that the federal government can play a vital role in alleviating the issues faced in the housing industry.

“It’s time for the federal government to step up, not to tell local governments what to do, but to be a good partner for communities that are ready to act,” noted Sen. Warren. “Here’s my quick pitch on why the federal government should partner up and take a bigger role in increasing housing supply: The federal government is in the best position to help because it has the power to raise revenue nationally. Look at giant corporations like Amazon that park themselves in states that give them tax exemptions while their customer base is nationwide. Massachusetts can’t fix that problem alone, but using money from my 15% minimum corporate tax on billionaire corporations, for example, would enable the federal government to stimulate a bigger housing supply—and lower housing prices—and the big corporations that profit from doing business here in the United States can help make that happen.”

She continued, “Second, the federal government should invest because housing connects to many other issues that the federal government directly pays for. We know, for example, that access to adequate housing reduces healthcare expenses for the Medicaid population. Increasing the supply of affordable housing will reduce money spent in emergency rooms. And third, it’s a matter of our values. For less than 5% of the annual defense budget, for example, we could create a fund that year after year could be used to increase and upgrade the supply of housing nationwide.”

Click here to read more about Sen. Warren’s address on affordable housing before the New England Council.