Fact Sheet: The Neighborhood Homes Investment Act
A Bipartisan Solution to Expand Homeownership Supply and Revitalize Neighborhoods and Small Towns Throughout the Country
Introduction
We are experiencing a housing supply crisis. An estimated shortage of over 7 million single family homes in the United States is driving up housing costs for families and making it difficult for first-time homebuyers to enter the market.
It is particularly difficult to develop and rehabilitate homes in distressed urban and rural communities, where construction costs often exceed the value of the home. As a result, too many towns have streets lined with vacant lots or dilapidated housing—making it harder to attract employers and hurting the tax base.
We need to build more affordable, single-family homes for working families ready for homeownership. At the same time, we must help current homeowners in older homes make critical repairs so that they can build and pass on generational wealth.
The Neighborhood Homes Investment Act
The Neighborhood Homes Investment Act is the bipartisan affordable homeownership supply solution we need to repopulate and revitalize communities while giving families the opportunity to own homes in the communities where they live and work.
Neighborhood Homes provides federal tax creditsused to cover the gap between the cost of building or rehabilitating homes and the value of those homes.
The tax credit covers up to 40% of the costs of building a new home for sale, and up to 50% of thecosts for rehabilitating owner-occupied homes.
The federal tax credits are provided by formula tostate housing finance agencies, which in turn allocate the credits through a competitive application process to “project sponsors,” including developers, localgovernments, or financial institutions.
If selected, the project sponsor has five years to develop or rehabilitate the homes. Investors canclaim the credits on a rolling basis after each home iscompleted, inspected, and occupied by an eligible homeowner.
The homes must be affordable. The sales price of anew home generally cannot exceed 4 times the area median family income.
The Projected Impact of Neighborhood Homes Nationwide
The impact over 10 years with an average Neighborhood Homes Tax Credit of $60,000 would be:
500,000 homes built or substantially rehabilitated
$151 billion in total development activity
1.1 million jobs in construction/related industries
$102.7 billion in wages and salaries
$45.6 billion in federal, state, and local tax revenues and fees
Who benefits from Neighborhood Homes?
The Neighborhood Homes Investment Act targets communities that have been left behind—including rural areas and urban neighborhoods devastated by capital flight and that struggle to attract employers.
Homes must generally be located in communities characterized by relatively high poverty rates, low median family incomes, and low home values.
Importantly, states are given additional flexibility to serve rural areas, communities affected by natural disasters, lower-income families in gentrifying communities, and other communities the state identifies as needing additional investments in single family housing.
Families earning up to 140% of the area median income (AMI) will generally be eligible to purchase newly constructed or rehabilitated homes, and families making up to 100% of AMI will be eligible for owner-occupied rehabilitation loans.
Congressional Action Needed
Cosponsorship in the Senate (S. 1686): Contact Greg Warren (greg_warren@young.senate.gov) in Sen. Young’s office, or Alex Porter (alex_porter@warner.senate.gov) in Sen. Warner’s office.
Cosponsorship in the House (H.R. 2854): Contact Quinn Ritchie (quinn.ritchie@mail.house.gov) in Rep. Kelly’s office, or Emily Naden (emily.naden@mail. house.gov) in Rep. Larson’s office.
Join the Neighborhood Homes Coalition and call on Congress to enact the Neighborhood Homes Investment Act today! For more information, please contact the Neighborhood Homes Coalition at NeighborhoodHomes@naahl.org.