2019 Federal Budget Housing Outlook
Reluctantly, on March 23, 2018, President Donald Trump signed a $1.3 trillion federal budget that will fund the government until September 30, 2018.
Bill Restores Cuts from Trump’s Proposed 2019 Budget
The budget includes $42.7 billion for the Department of Housing and Urban Development (HUD), an increase of $3.9 billion from 2017 and $12 billion more than Trump’s proposed 2019 budget for the agency.
The HUD appropriations spare many of the cuts that were part of the 2019 budget, which were “focused on moving more people toward self-sufficiency through reforming rental assistance programs and moving aging public housing to more sustainable platforms,” according to HUD Secretary Ben Carson.
The original budget would have cut the rental assistance program 11.2 percent. It also would have eliminated the community development block grant program and the public housing capital fund for rehabilitating and creating new public housing units.
Good News for Housing Sector, say S&P and Moody’s
S&P and Moody’s were upbeat about the increased funding in the signed budget.
“With demand for affordable rental units at a record high, increases in tenant-based and project-based rental assistance, increases in low-income housing tax credit allocation, and the income-averaging option will benefit the affordable multifamily housing sector,” said Marian Zucker, S&P Global Ratings credit analyst.
“This includes multifamily properties’ abilities to cover debt service obligations, meet potential loan loss stresses, and improve their overall physical condition, which are all factors we consider in our ratings analysis,” Zucker said. “Therefore, the omnibus spending plan’s good news for the housing sector supports our stable outlook for 2018.”
A report by Moody’s stressed the budget’s financial benefits to the construction industry.
“With about $18 billion in multifamily bond programs sponsored by 22 Moody’s-rated HFAs funding more than 5,000 loans, the increase in tax credit authority bodes well for continued multifamily production,” its report said.
Bill Doesn’t Go Far Enough, Say Home Builders
The National Association of Home Builders was disappointed that the budget appropriations did not include further improvements to the Low Income Housing Tax Credit (LIHTC).
“Bipartisan leaders in the Senate and House fell woefully short by agreeing to a budget compromise that significantly waters down any improvements to the LIHTC,” said Randy Noel, NAHB chairman.
“The nation is facing a significant affordable housing crisis and the LIHTC is the premier program to help builders produce affordable rental housing units.”
“Unfortunately, the spending bill does not do nearly enough to meet the affordable housing needs of this country, particularly in Texas, Florida and Puerto Rico, which are still struggling to recover from the devastating hurricanes of last year,” he said. “NAHB will continue to push Congress to finish the job and quickly pass the Affordable Housing Improvements Act, which enjoys broad, bipartisan support on both sides of the Capitol. It would make a real difference by strengthening the LIHTC program and promoting the construction of hundreds of thousands of sorely needed affordable rental units over the next decade.”
Realtors Positive about the Bill
The National Association of Realtors praised the provisions in the 2,232-page bill that remove language weakening of the Low-Income Housing Tax Credit and extend the National Flood Insurance Program through at least mid-summer.
“In addition to extending the NFIP through July, with the goal of passing a long-term reauthorization and reform of the program soon, this spending bill contains significant improvements for providing affordable housing options for low-income households,” NAR President Elizabeth Mendenhall said. “Realtors were a key part of a larger coalition that fought for these necessary changes, and we’re pleased to see the steps taken to strengthen the Low-Income Housing Tax Credit to address our country’s housing needs.”
No Long-Term Expectations
The 2019 budget may have passed for now. But it expires in September. Keep in mind what Trump tweeted after he signed it. “I will not sign another bill like this.”
2019 Federal Budget Housing Outlook
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