Center for American Progress offers blueprint to reduce housing costs

The Center for American Progress (CAP) recently put out a plan aimed at lowering housing costs nationwide by increasing construction and making homebuilding more affordable through federal efforts.

The “Build, Baby, Build” proposal, published by CAP on Nov. 17, targets the nation’s estimated housing shortage of 2 million units, which the group says has contributed to rising rents and home prices.

About one‑third of U.S. households are “housing cost burdened,” meaning that they spend more than 30% of their income on housing.

“There is a real marketplace amongst policymakers for ideas that can help bring down the cost of living. And so we saw an opportunity to put something together to influence that,” Michael Negron, a senior fellow for economic opportunity at CAP and one of the authors of the report, said in an interview with HousingWire.

Lower hurdles for builders

The plan has three main components: removing barriers to construction, boosting affordable home production and reducing other housing-related costs. As a remedy, CAP is suggesting reformation to local zoning laws, incentives to local jurisdictions to approve more housing, and expansion of modular and manufactured housing.

“The federal government can’t make you change your zoning requirements, so we designed a program to create strong incentives and disincentives to get more and more communities to undertake the actions to make it faster to build,” Negron said.

“Generally, that can allow for smaller lot sizes, allowing for accessory dwelling units or allowing for more types of construction to be done … rather than requiring a zoning change.”

The proposal also calls for creating a federal innovation agency, dubbed ARPA‑Home, to support efficient construction methods.

“The main concern is that post-2008, home construction really fell off a cliff, and we really haven’t recovered yet,” Negron said.

Key recommendations include lowering costs for builders by exempting certain building materials from tariffs, along with reforms to mortgage financing through the government-sponsored enterprises Fannie Mae and Freddie Mac to enhance liquidity and securitize construction-to-permanent loans.

“In a climate where you also have higher interest rates, where your labor force is being squeezed by very aggressive immigration enforcement, all of these costs add up, and this is one that is entirely self-inflicted,” Negron said.

“The administration seemed to have come to this realization when it comes to food, so they recently walked back some of those tariffs on food imports. … So there’s an opportunity to apply that to building materials.”

Regarding GSE involvement, Negron and his co-authors say it’s important to keep an eye on the status of whether Fannie and Freddie will undergo an initial public offering.

“It’s very important for [Capitol] Hill and stakeholders to be holding the administration’s feet to the fire on what to do with the existing structure for Fannie and Freddie,” he said. “And then if there’s a desire to bring in private investment and focus it on serving the investor interest, that could really hurt homeowners. … There’s a range of possibilities, but if they give away too much to private investors, you could see mortgage rates go up.”

If fully implemented, CAP estimates renters could save about $1,000 annually in high-cost areas, and first-time homebuyers could save roughly $24,000 on a typical purchase.

The group estimates the plan would cost about $95 billion over five years and could close the housing supply gap within that period.