Towards a Broader, Bolder HUD
An interview with Jenny Schuetz about her proposals for strengthening HUD's role in housing markets
A few weeks ago, I read a piece by Brookings Senior Fellow Jenny Schuetz calling for “a broader, bolder HUD.” It hadn’t dawned upon me until then how strange it is that we’re experiencing a widespread housing affordability crisis and yet HUD, the country’s main housing agency, has seemed largely absent from that conversation. HUD has a limited set of responsibilities in the housing market that don’t include zoning, setting mortgage rates, or many of the other factors that relate to the main real estate market. But given those constraints what broader role should the country’s main housing agency play?
Jenny Schuetz has some thoughts and they include enhancing HUD’s role as a coordinator – whether coordinating research or coordinating regional housing authorities to collaborate. And while that may not sound as bold and broad as one might wish, they are 100 percent doable, which makes them all the more relevant. Take a look at Schuetz’s original piece and my interview below.
Your piece calls for a broader, bolder vision for HUD. How would you describe HUD's current scope of work?
HUD has really been boxed into this very small sliver of housing markets and assigned the role of providing subsidies to low income renters who, in practice, live in big cities.
Despite being the official housing agency, it has never really been assigned responsibility for the overall housing market. Other federal agencies have oversight over different aspects, such as the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. But I think the upshot is that HUD has really not been given by Congress or the White House explicit authority to think about housing markets. It just thinks about poor renters.
Do you feel like HUD was intentionally given a narrow scope? Or that its scope reflected the need at the time that HUD was created?
HUD came out of concern over the kind of quality of not just housing, but quality of neighborhoods in big cities during the tumultuous period of the 1960s. And so a lot of HUD programs originated with this idea that cities are suffering from blight and population loss to the suburbs. And that we need to take care of poor urban neighborhoods in a holistic sense. That's still important in a lot of places.
But that really misses the boat in cities suffering from rising prices and rising rents and too much demand. HUD is just not especially well structured to deal with the suburbanization of the population.
You note that only 4 percent of the country's households live in federally subsidized housing and most of these households are in cities, so HUD’s stakeholders are primarily in cities and this makes HUD potentially less politically relevant to much of Congress. How can HUD solve this problem of being less relevant to suburban and rural politicians and voters?
I should say that I'm an economist and not a politician or a political scientist. But I think part of the challenge is the way HUD chooses to portray itself to voters, to the public, to elected officials. Does HUD present itself as an agency that is thinking about housing markets writ large, even in areas where it maybe doesn't have budget or legal authority? That it's thinking about housing market challenges, and it's aware of where the pain points are, and is, trying to think creatively about how they can partner with states and localities, or work in coordination with other federal agencies? In other words, is HUD the quarterback calling the plays? Or is HUD sitting on top of its programs, administering them, receiving problems that come to it, but not trying to get out in front of them?
At the moment, I think HUD has been in a little bit of a defensive crouch over the budget because they've had their budget cut for multiple administrations. And so there's a little bit of a sense that “we need to defend what we have” rather than try to expand their scope. But then they get boxed into this little sliver [focused on poor renters in cities] and it's harder and harder to then say, “HUD should have a bigger role.”
HUD administers aid to local housing agencies. You think HUD could do a better job of connecting these agencies together. What would that look like?
For example, the Community Development Block Grant (CDBG) program is pretty open ended. CDBG money can be used for a lot of different purposes. And the whole point is to give localities a chunk of funds that's pretty flexible and allow the localities to decide how to spend it.
But you could also imagine HUD saying, “We're giving you money, but we're going to give you some nudges or suggestions or guidelines on the kinds of problems that should be front of line or the kinds of things that you could do.” There are a lot of pretty small agencies and housing authorities that run fairly small voucher programs. HUD could encourage more regional thinking and planning and cooperation in how these entities spend funds to reach better outcomes.
The other thing that HUD could do better is provide more guidance and technical assistance to local governments who currently get very little direct support from HUD. CDBG goes to big cities, big counties. But a chunk of it goes to state governments that then administer it to smaller localities. The smaller localities have a really hard time accessing help from HUD. If you don't have a grant writer who can write a federal grant, you can't get competitive grants from HUD. And even participating in some of the guidance and the trainings is not that accessible for smaller places.
To figure out what those regions should be doing though would likely depend on having some research and insight into what's going on in those regions or with the housing market more broadly.
And you think that HUD should do more research. I was curious why you think it's important HUD do the research rather than get the research from Brookings or other think tanks who seem to be doing a lot of the housing research.
HUD should be coordinating research, but not necessarily doing it all in house. I think one of the really important areas where we need better data, better research, is understanding how some of the state and local zoning reforms are working.
HUD isn't set up to research that internally, and neither is any other single institution. This is an example where we would benefit a lot from having a consortium of researchers based around the country. The Terner Center at UC Berkeley is doing great work on California. The Furman Center is doing a lot of work on New York. HUD could find organizations that are based locally and understand the local policies and context, but then coordinate across those groups to make sure that they're using similar kinds of research design and methods. Maybe there's a need to buy some proprietary data that all of the researchers could use collectively and have access to the same data to do the analysis. Coming up with a playbook for what the research should look like to answer the questions we need and then making sure that there are people who are working on all of this — that's the kind of role that HUD could definitely play and has played before.
You also think that HUD should assemble and disseminate real time housing market data. Aside from being very convenient, how would this potentially help housing policy and practice innovation or help solve the housing crisis.
Rental markets are still a little bit of a black box to us. We just have better information on things like the sales volume of owner-occupied homes and the prices of homes. But given that HUD cares a lot about people who live in rental housing, it would be useful for them to tap into some of the private data sources that are available on that.
There’s information that the industry has that would be really useful for local governments. For example, what’s the percentage of leases that are being renewed versus turning over? How much of a change in rent do you have when they turn over? What are vacancy rates and how long does it take for new units to be absorbed when they're built? Where do you have vacant units that you could be tapping into? Or are there markets that are tightening that you need to get out ahead of? Providing some version of the data that can be shared with local governments or with nonprofits that administer voucher programs, and providing descriptive statistics that come out that are easy to share could be really useful.
All of these suggestions seem very reasonable. And as somebody who often comes up with very unreasonable ideas, I wonder if you've also thought of more radical changes to HUD? Why do you feel like these are the right approaches to take at this point?
The origins of this piece actually came from the fact that I've now done three congressional testimonies in the last eight months. And when Congress asks for recommendations, they're looking for things that are in the federal government's scope to do right now. So while part of me might wish that HUD could radically overhaul the way we do land use planning in this country, I also know that’s several supreme court decisions down the road, if it ever happens. I'm also not super optimistic that Congress is going to pass a giant increase in HUD's budget and give it a bunch of money to play with. So I wanted to come up with things that are relatively cheap and easy to do. Essentially, there are things that HUD could do within its current legal authority, that don't cost a lot of money, and probably don't require explicit approval from Congress to expand the realm of its authority.
I think we need to have a better understanding of how zoning reforms in particular are working before we get to the point of HUD putting out definitive guidance and doing trainings on how to rewrite your zoning, because we still don't know what they should look like. So we actually do need to [expand HUD’s research] as a first step.
Some of this is about HUD expanding its internal capacity to think more broadly about markets and to think creatively about ways they can approach problems that are outside their immediate scope. You need people inside the [HUD] building who have contacts at the right agencies, including those who work with state governments and those who understand the private market side of things. And so HUD needs to build up more of a capacity with staff in those areas of expertise and build up some of those relationships with other organizations before it can step in and do something that's kind of bolder and more ambitious.
I think HUD is doing some really valuable and important work. And I want them to have a bigger footprint and a bigger role.
I somehow hadn't thought about this question -- why HUD isn't out in front more in the midst of housing crisis. I appreciated reading Jenny's article and your interview with her here. You can really begin to imagine a HUD that that takes on a larger leadership role in facilitation, communication and strategy even if it doesn't have the expenditure budget or regulatory authority to implement all of the recommendations that may bubble up.