New law aims to boost construction and ease home prices

WASHINGTON — A sweeping new bipartisan housing law recently passed by Congress looks to address the nation’s housing shortage and soaring home prices, but local housing experts note it will take years for the impacts to be felt across Long Island.

The law — the 21st Century Road to Housing Act — was crafted by lawmakers from both parties and passed both chambers with overwhelming bipartisan support last month, including the entire Long Island congressional delegation.

President Donald Trump withheld his signature from the landmark legislation, writing in a social media post that he was protesting Congress not yet passing his push for a new voter ID law. But he did not outright veto the measure, which meant that under the Constitution it became law 10 working days after it reached his desk.

The new law has been years in the making, combining various pieces of housing legislation that lawmakers from both sides of the aisle have been proposing to increase the nation’s affordable housing stock.

The sweeping package includes incentives to municipalities that ease their zoning laws to allow for more construction, relaxes certain reporting requirements for landlords looking to rent their properties to low-income residents and lifts some regulations on smaller community banks and credit unions with the goal of positioning them to offer more mortgages and homebuilder loans.

"In order for us to be successful in the future, we desperately need more housing," said Stacey Sikes, the acting president and CEO of the Long Island Association in a phone interview. "It empowers the communities to determine what works best for them, and it also provides some regulatory framework relief within it, which is especially beneficial on Long Island."

While the bill was created to incentivize home construction and clear some of the red tape surrounding the development of affordable housing, housing policy groups note that the new law does not address other underlying issues, including rising cost of materials and a workforce shortage.

"For now, this legislation represents an on-ramp to addressing the nation’s housing affordability crisis," the Urban Institute, a nonpartisan Washington based think-tank wrote in a statement. "While it could have significant effects on housing supply and affordability, its impact will depend heavily on the federal government’s capacity, the market’s reaction, state and local governments’ response and Congress’ political will for further investment in the housing market."

Here’s a look at some of the key components of the 381-page law:

Building incentives

The new law establishes a series of pilot programs and grants that would reward municipalities that modify their zoning laws to boost affordable housing construction.

Sikes said the bill overall "provides flexibility to municipalities through incentives to build more housing rather than mandates. So it doesn't tell them what to build. It just gives them more options and support to consider housing to meet the needs of their community."

While some towns and villages have been reluctant to change their zoning laws to allow for more residential construction, Sikes cited development projects at the Ronkonkoma Hub, in Patchogue and West Hempstead as examples of communities that could potentially benefit from a boost in federal dollars.

"If towns see that there is funding on the table that they can access on the federal level, it could motivate them to take a look at what projects and areas in their communities could be revitalized," Sikes said.

The measure also establishes a pilot program that would provide incentives to developers who convert vacant and abandoned buildings into housing — a program that could benefit Long Island with its "significant inventory of vacant or quasi-vacant retail centers and outdated office parks," said Kyle Strober, executive director of the Association for a Better Long Island, a non-partisan group that advocates for "sensible growth" in both counties.

"It is telling that even Washington recognizes the housing crisis afflicting regions like Long Island," Strober said in an interview with Newsday. "If the issue isn’t addressed through the cooperation of local municipalities, the serious economic and demographic implications for Long Island will soon become obvious. This legislation at least offers an opportunity to find and fund a reasonable compromise on much needed housing in our region.

Mortgage availability 

The new law eases previous restrictions on community banks and local credit unions — such as monthly meeting requirements and reporting rules — that lawmakers argued made it more challenging for smaller institutions to offer mortgages and home construction loans.

Rep. Andrew Garbarino (R-Bayport), who sits on the House Committee on Financial Services which played a key role in crafting parts of the bill, said the deregulation of community banks and credit unions is aimed at providing homebuyers and builders more borrowing options than just the major banks.

"These regulatory reforms should allow the community banks and credit unions to do more to get people access to capital," Garbarino said in a phone interview. "Mortgages and competitive rates from your local community bank is something that should really help consumers on Long Island build or purchase homes."

The new law also creates a pilot program under the Federal Housing Administration to increase the availability of mortgages of $100,000 or less — which lawmakers contend will help those looking to purchase less expensive homes in cheaper markets.

Investor purchases

Private investment firms and corporations that purchase single-family homes to rent for profit will not be allowed to purchase more homes if they already own more than 350 homes, under the new law.

The issue stems from the mid-2000s housing crisis, when private equity firms and corporations seized on the large availability of foreclosures and surplus new single-family homes to purchase large numbers of houses at record-low prices, making it challenging for individuals and families to compete with the all-cash offers made by the private firms.

The issue has not been as prevalent on Long Island, because Nassau and Suffolk "don't have massive, sprawling new-build subdivisions that Wall Street hedge funds can buy up in bulk," said Strober with ABLI, but it has been a point of concern in some upstate communities including Rochester.

Nationwide, private investment firms own about 500,000 single-family homes, according to a recent study by the Brookings Institute, a center-left policy think-tank based in Washington.

By Laura Figueroa Hernandez

laura.figueroa@newsday.com@Laura_Figueroa

Laura Figueroa Hernandez is the White House correspondent and previously covered New York City politics and government. She joined Newsday in 2012 after covering state and local politics for The Miami Herald.