Federal financing of and spending on real estate impacts millions of Americans on every street, in every neighborhood, town and rural community in the country. From loan guarantees to commercial tax credits, these programs help those most in need pay their rent, help families purchase their first home, and provide financing for commercial development. The federal government impacts where and how homes and even whole neighborhoods are built in the United States.
Federal Involvement in Real Estate: A call for examination, a new report by Smart Growth America released today, surveys the federal government’s $450 billion in annual real estate spending. Through a combination of direct expenditures and commitments, this funding supports loans and loan guarantees, grants, and tax credits.
This involvement has an enormous impact on the U.S. real estate market. Though usually viewed as a “free” market, the U.S. real estate sector is heavily influenced by direct and indirect government intervention. Taken as a whole, these expenditures and investments impact where real estate is developed and what kind of product is built.
Even a cursory analysis reveals this impact is uneven. For example, small multifamily buildings are less likely to receive financing, despite the fact that most renters in the United States live in these smaller buildings. Viewed as whole, federal funds are not targeted to those most in need, are not targeted to strengthen existing communities and are not targeted to places where people have economic opportunities.
The report urges policymakers to review federal real estate programs to better achieve four national goals: (1) Support balanced housing choices; (2) Reinvest in existing neighborhoods; (3) Provide a safety net for American families; and (4) Help more Americans reach the middle class.
With the Presidential Inauguration just two weeks away and a new Congress beginning its work, now is the time for policymakers to re-examine federal commitments to the real estate market.