The real estate market is undergoing the most rapid period of change in a generation — and the shift is decidedly urban. A succession of recent studies have found there is an under-supply of urban-style housing — attached and small-lot, single-family homes — on the scale of about 13 million units. On the other hand, there is an estimated oversupply of detached housing in the car-based suburbs of about 28 million units.
Public policy hasn’t quite caught up with the market, say the experts at the Congress for the New Urbanism. The Federal Housing Administration and its subsidiaries, Fannie Mae and Freddie Mac, are discouraging urban-style housing developments.
HUD lending standards dictate that mixed-use development projects can’t be more than 15 to 20 percent retail. Fannie caps retail share at 20; Freddie at 25 percent. And these standards set the tone for the private market — a tone that is consequently skewed toward single-family housing, and away from the pent-up demand for urban development with walkable amenities.
“It’s really disrupting the market,” said John Norquist, president of Congress for the New Urbanism. “It’s making it hard to developers to finance good projects.”
CNU is seeking reform. The organization has built a broad coalition including the National Association of Homebuilders, the National Association of Realtors, the National Town Builders Association, and the Center for Neighborhood Technology. Together, this reform group is planning to initiate discussions with Shaun Donovan, secretary of the Department of Housing and Urban Development; Rep. Barney Frank (D-MA), chair of the House Committee on Financial Services; and the U.S. Treasury.
“Our sweetest dream is that the Obama administration — the Treasury Department and HUD — would say, ‘Let’s change this before the end of the year,’” Norquist said. “The secretary of HUD, Shaun Donovan, has said very favorable things about this. He recognizes it.”