There’s a bill in committee on Capitol Hill right now that could help a lot of people get into affordable housing. What attracts me to this bill is that it’s not a government-based program that syphons tax dollars from most of Americans in the name of affordable housing and hands it out to failing projects that are doomed from the beginning.

Instead, HR 3995, the Housing Affordability for America Act of 2002, would reduce bureaucratic red tape and restructure financing limits for developers to finance the construction of apartment dwellings throughout the country. So how does this help Harry Homeowner or Randy Renter?

The basic problem for the working poor – those folks who make about 60 percent of a community’s median income – is that they make too much for public housing assistance, but not enough to afford appropriate housing for their families.

According to the Joint Center for Housing Studies of Harvard University’s “The State of the Nation’s Housing: 2001" annual report, more than 14 million Americans have critical housing needs. This means these families spend more than half their income on housing or live in substandard units.

The bottom line – we need more houses. Real estate is not unlike any other industry. Why does housing costs skyrocket? There’s a large demand from the workers and not enough homes to house them. With that imbalance, the housing pool shrinks, making the price of homes and the cost of monthly rent creep up – actually skyrocket in some areas.

This latest housing bill comes with plenty of opportunities that will help workers across the country find affordable housing. (Generally, a renter should be able to find housing for 40 percent of his or her income or less per month. A $40,000 worker should be able to get into a house for $1,333 per month.)

For those who have a house or apartment, the question may come up – so what? Why is this important to me? Well, more housing could shorten your commute to work, reduce your driving angst and improve your quality of life. Those folks who are working hard, but can’t find a house near work that will serve their families have to live long distances from their jobs. That means they’re on the road more, clogging up the highway and causing gridlock.

This bill, which has the full backing of the National Association of Home Builders, answers the basic call for the first step in providing affordable housing opportunities. The first step in building construction is financing. If the developer has to pay a lot for the money, that cost will eventually trickle down to the renter. If his costs are lower and there are more buildings in the area constructed the monthly expense for many working families drops or at least is maintained at a reasonable level.

Another way of helping out with these initial costs is to improve the FHA multifamily mortgage insurance programs by indexing the loan limits to inflation and raising the base loan limits in high-cost areas.

Michael Strauss of NAHB says such a move “will allow the HUD Secretary to raise FHA loan limits in high cost areas. Currently, there are several markets, including New York, Boston, San Francisco and Chicago, who can’t take advantage of FHA’s multifamily programs. That means the structures they build today will have higher costs to renters once they are constructed.

Delaware builder David Curtis, a member of NAHB, told the Senate Subcommittee on Housing and Transportation, which was considering the bill last month, “the elimination of unnecessary barriers to the production of affordable housing should be a critical element of our national housing policy.” He urged the Senate panel to require federal agencies to submit a housing impact analysis with any proposed regulations if the regulations would have a significant negative impact on the availability of affordable housing.

“Unnecessary and excessive regulation imposed by all levels of government – federal, state and local –– can add thousands of dollars to the cost of a new home, making it difficult or even impossible for families to achieve homeownership or find affordable rental housing,” said Mr. Curtis. ““NAHB believes that housing impact analyses for any new proposed and final rule will greatly help in reducing the number of regulatory barriers to the production of affordable housing.”

Amen, to that.

Published: June 7, 2002

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Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple. Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.