How Can Regulatory Reform Increase Affordable Housing?

Lack of Affordable Housing has Reached the Crisis Stage.

We read stories of how a shortage of affordable housing is contributing to a wide array of harms.  People from Silicon Valley to Boise are finding it increasingly difficult to find housing near their jobs.  This contributes to increased air pollution from longer commutes. It also makes it harder for people to show up on time and sufficiently rested to be productive when they are there.

Government regulations can be part of the problem when they have the effect of increasing the cost of housing.

Regulatory reform, on the other hand, can help solve the problem. The 8/16/19 announcement by the U.S. Dept of Housing & Urban Development is a recent example.

FHA’s new Condo Approval Rule Can Increase the Supply of Affordable Housing.

Here are excerpts from the 8/16/19 press release:

“WASHINGTON – To promote affordable and sustainable home-ownership, especially among credit-worthy first-time buyers, the Federal Housing Administration (FHA) today published a long-awaited final regulation, and policy implementation guidance, which establish a new condominium approval process.”

“Designed to be flexible and responsive to market conditions, FHA’s new condo rule and the new Condominium Project Approval section of the Single-Family Housing Policy Handbook, provide a comprehensive revision to FHA condominium project approval policy.  In particular, the new policy will allow certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved. The polices become effective October 15, 2019.”

FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable home-ownership opportunities. (emphasis added) FHA’s new rule:

  • Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
  • Extends the re-certification requirement for approved condominium projects from two to three years;
  • Allows more mixed-use projects to be eligible for FHA insurance.”

“’Condominiums have increasingly become a source of affordable, sustainable home-ownership for many families and it’s critical that FHA be there to help them,’ said U.S. Housing and Urban Development Secretary Ben Carson. ‘Today, we take an important step to open more doors to home-ownership for younger, first-time American buyers as well as seniors hoping to age-in-place.’”

“The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.  As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually. (emphasis added)”


Somebody once said that: “When the reason for a rule ceases to exist, so should the rule cease to exist.”  I guess updating an old rule in light of a new reality would be the next best thing.

Let’s all commit to updating or eliminating rules we encounter that seem counter-productive.

Michael Oswald

Please note: the above post contains educational information. It is not intended as legal advice. Engage an attorney who is licensed in your state to get advice on dealing with any specific legal issue.

© 2019 Michael S. Oswald

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