The 21st Century ROAD to Housing Act will become law without President Trump’s signature.
“I will not sign the Housing Bill, which has been fully approved by Congress and sent to the White House, in PROTEST over the fact that the United States Senate is not capable of passing THE SAVE AMERICA ACT,” the president wrote on Truth Social.
However, without a presidential veto, the bill becomes law 10 days after crossing the president’s desk. Now, it’s not a question of if the bill will become law; it’s what the landmark housing act will do.
What’s in the 21st Century Road to Housing Act?
The housing bill has taken a long path through the legislative process, undergoing hundreds of revisions.
The final version of the bill includes the following provisions:
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Adds reforms to housing counseling agencies conducting educational programs
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Expands access to lower-value (called “small dollar”) FHA mortgages under $100,000.
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Creates a program for whole-home repair grants and forgivable loans
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Simplifies and expands government planning processes associated with affordable housing
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Creates a $200 million grant program that aims to increase housing supply
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Allows for simplified approval for pre-reviewed housing designs to stimulate construction
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Updates FHA maximum loan limits for multifamily mortgages
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Eliminates the permanent chassis requirement for manufactured homes and seeks to reduce financing friction for modular housing
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Increases the FHA loan limits for manufactured housing loans
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Loosens restrictions on small bank mortgage lending
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Supports the opening of new community banks and credit unions
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Restricts institutional investors that own at least 350 single-family homes from buying additional properties, with some exemptions
This is not a comprehensive accounting of all the measures in the bill, as the 21st Century ROAD to Housing Act includes other initiatives.
How will the housing affordability bill affect buyers and sellers?
Realtor.com chief economist Danielle Hale summarizes the overall impact as aiming to “incentivize homebuilding by establishing policy guidelines and best practices, streamlining environmental review, and improving existing programs, including tying community development block grants to housing outcomes.”
More affordable mortgage credit
Mortgage Bankers Association president (MBA) and CEO Bob Broeksmit says the legislative package is “consequential.”
“The legislation preserves many of the hard-fought policy priorities that MBA has advocated for throughout this debate and will increase HUD’s multifamily loan limits for the first time since 2003, reduce barriers to development and increase housing supply, modernize federal housing programs, and expand access to affordable mortgage credit,” Broeksmit said in a release.
Learn more: What are the lowest mortgage rates in July?
Restrictions on institutional investors
The ban on corporate investors accumulating additional residential housing may be the most controversial portion of the act. Reaction from housing experts has been mixed.
“Banning large corporations from owning single-family homes may have negative unintended consequences, or it may have no real effect at all,” Daryl Fairweather, chief economist of Redfin, wrote in January. “These bans would likely shift home purchases from large corporations to medium and small corporations, without a noticeable impact on the existing dynamics of the housing market.”
Increased housing supply
Other industry observers believe measures removing bureaucratic barriers to new housing construction could have a significant impact.
Simplifying zoning regulations, sparking local government initiatives, and expanding community lending may increase housing supply over time.
‘Closing the affordability gap’ with modular and manufactured housing
Initiatives aimed at modular and manufactured housing could have the most immediate impact, specifically increases to FHA loan limits.
“Critics of the ROAD Act say the bill is mostly symbolic and in effect will do little to move the needle when it comes to affordability,” Shawn King, executive vice president and co-founder of Arrive Home, said in a statement. “While that may apply to some of the outlined policies, that’s not the case for manufactured housing. The ROAD Act could position this market as one of the clearest paths we have to closing the affordability gap for first-time buyers, rural families, and retirees who’ve been priced out of the traditional market.”
Read more: A complete guide for first-time home buyers
When will the housing market feel the effects of the housing affordability bill?
The massive legislation will take time to filter through the housing industry.
“It could take years for a meaningful uptick in production to materialize and longer for it to have any impact on overall affordability,” Joel Berner, senior economist at Realtor.com, said in a release.
Learn more: How to buy a house you can afford