“Building the Future: How Small Home Builders are Closing America’s Housing Gap.”

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                  BUILDING THE FUTURE: HOW SMALL HOME5                  BUILDERS ARE CLOSING AMERICA'S HOUSING6                  GAP7=======================================================================89                                HEARING1011                               BEFORE THE1213                      COMMITTEE ON SMALL BUSINESS14                             UNITED STATES15                        HOUSE OF REPRESENTATIVES1617                    ONE HUNDRED NINETEENTH CONGRESS1819                             SECOND SESSION2021                               __________2223                              HEARING HELD24                              MAY 21, 20262526                               __________2728[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]2930            Small Business Committee Document Number 119-03631             Available via the GPO Website: www.govinfo.gov3233                               __________3435                U.S. GOVERNMENT PUBLISHING OFFICE3663-840                 WASHINGTON : 202637=======================================================================3839                   HOUSE COMMITTEE ON SMALL BUSINESS4041                    ROGER WILLIAMS, Texas, Chairman42                        PETE STAUBER, Minnesota43                        DAN MEUSER, Pennsylvania44                         BETH VAN DUYNE, Texas45                           JAKE ELLZEY, Texas46                         MARK ALFORD, Missouri47                        BRAD FINSTAD, Minnesota48                          TONY WIED, Wisconsin49                      ROB BRESNAHAN, Pennsylvania50                          BRIAN JACK, Georgia51             KIMBERLYN KING-HINDS, Northern Marina Islands52                         DEREK SCHMIDT, Kansas53                        JIMMY PATRONIS, Florida54                          CLAY FULLER, Georgia55               NYDIA VELAZQUEZ, New York, Ranking Member56                       MORGAN MCGARVEY, Kentucky57                       HILLARY SCHOLTEN, Michigan58                      LAMONICA MCIVER, New Jersey59                        GIL CISNEROS, California60                       KELLY MORRISON, Minnesota61                        GEORGE LATIMER, New York62                         DEREK TRAN, California63                       LATEEFAH SIMON, California64                       JOHNNY OLSZEWSKI, Maryland65                    MAGGIE GOODLANDER, New Hampshire6667                  Sean Dillon, Majority Staff Director68                 Melissa Jung, Minority Staff Director6970                            C O N T E N T S7172                           OPENING STATEMENTS7374                                                                   Page75Hon. Roger Williams..............................................     176Hon. Nydia Velazquez.............................................     27778                               WITNESSES7980Mr. Bill Owens, Chairman of the Board, National Association of81  Home Builders, Flagstaff, AZ...................................     582Dr. Ivan Rupnik, PhD, Founding Partner, MOD X, Professor of83  Architecture, Northeastern University, Cambridge, MA...........     784Mr. Eric Schaefer, Chief Business Development Officer, Fading85  West, Buena Vista, CO..........................................     886Ms. Emily DiVito, Senior Advisor for Economic Policy, Groundwork87  Collaborative, Washington, DC..................................    108889                                APPENDIX9091Prepared Statements:92    Mr. Bill Owens, Chairman of the Board, National Association93      of Home Builders, Flagstaff, AZ............................    3394    Dr. Ivan Rupnik, PhD, Founding Partner, MOD X, Professor of95      Architecture, Northeastern University, Cambridge, MA.......    4696    Mr. Eric Schaefer, Chief Business Development Officer, Fading97      West, Buena Vista, CO......................................    5698    Ms. Emily DiVito, Senior Advisor for Economic Policy,99      Groundwork Collaborative, Washington, DC...................    63100Questions for the Record:101    None.102Answers for the Record:103    None.104Additional Material for the Record:105    None.106107   BUILDING THE FUTURE: HOW SMALL HOME BUILDERS ARE CLOSING AMERICA'S108                              HOUSING GAP109110                              ----------111112                         THURSDAY, MAY 21, 2026113114                  House of Representatives,115               Committee on Small Business,116                                                    Washington, DC.117    The Committee met, pursuant to call, at 10:02 a.m., in Room1182360, Rayburn House Office Building, Hon. Roger Williams119[chairman of the Committee] presiding.120    Present: Representatives Williams, Meuser, Jack, Velazquez,121McGarvey, Scholten, McIver, Cisneros, Morrison, Tran,122Olszewski, and Goodlander.123    Chairman WILLIAMS. Good morning to everyone. I now call the124Committee on Small Business to order. Without objection, the125Chair is authorized to declare a recess of the committee at any126time, and I now recognize myself for my opening statement.127    Good morning and welcome to today's hearing titled Building128the Future: How Small Home Builders are closing America's129housing gap. I want to thank our witnesses for joining us today130and for lending their time and expertise to this important131conversation. And homeownership remains a cornerstone of the132American dream. Homeownership represents more than just a roof133over your head. It is the foundation of personal stability and134freedom and a place where families are formed, children are135raised, and memories are made. It is where much of America's136small business activity begins, with millions of entrepreneurs137launching and operating businesses from their homes. Roughly138half of all new businesses start in the home. But that dream,139for too many Americans, feels increasingly out of reach. Our140nation is facing a serious supply and affordability challenge.141Today, more than half, one-half of the American households142cannot afford a $300,000 home. And when housing construction143slows and housing becomes unattainable, communities stagnate,144growth slows, and young families are priced out. Priced out.145    Main street across the country feel that the consequences146as fewer people are able to plant roots, start businesses, and147invest in their neighborhoods. Amid these challenges, small148homebuilders have become essential. They have often the most149agile, responsive, and innovative builders willing to meet that150moment. Across the country, small business and small151homebuilders are pushing the boundaries of what is possible in152housing delivery. Whether through modular or manufactured153housing, or emerging methods like 3D printed construction,154small home builders are re-imagining how homes are built from155the concept to completion. These innovations offer real156promise. By reshaping our approach to housing construction,157these innovations can deliver faster construction timelines,158lower material costs, reduce waste, and offer greater159efficiency in bringing homes to the market.160    Yet despite this momentum, significant barriers remain for161the small homebuilders across the country. Key challenges such162as overregulation and access to capital continue to drive up163home costs and constrain supply. In some cases, much as 40164percent of the cost of multifamily home development is tied165to--is not tied to brick and mortar, but to navigating layers166of compliance costs, locally and state and federal167requirements.168    At a time when many families are struggling to find an169affordable place to live, we must ask hard questions about170whether our current system is helping meet those moments.171Because often the solutions already exist in the ingenuity of172builders and entrepreneurs across this country. What they need173is a space to build, the clarity to plan, and the freedom to174innovate as they can deliver their homes to Americans that we175need urgently. Local officials across the country are beginning176to realize this, and needless to say, whatever local177regulations have been loosened, like in Austin, Texas, the178housing market has boomed.179    Now, you also will hear from our witnesses today, small180business home builders are continuing to press forward despite181their barriers, but it is time to stop hamstringing our best182and our brightest. When small home builders are constrained, It183affects people far--it affects people far beyond the housing184market, and other industries feel the pressure. Local economies185lose momentum and worker mobility becomes restricted. Housing186is a driver of economic growth, and when workers cannot find187affordable homes near their jobs, certain employers struggle to188recruit and maintain talent. Productivity suffers and economic189expansion slows. A shortage of housing does not just limit190where people live, it also limits where people can grow, where191workers can move, and how strongly local economies can compete.192    So as a committee, it is our responsibility to look at the193challenges that facing small home builders and bring their194obstacles to light with clarity and with purpose. It is also195our duty to empower the people who build America to do what196they do best. And ur role is to ensure that the committee is a197partner in progress, not a roadblock to it. Just yesterday, the198Ranking Member and I, along with our colleagues, voted to pass199the House-led bipartisan housing bill that we passed out of200this chamber yesterday. We need to work together to ensure that201small home builders can compete, innovate, and deliver the202housing this country is counting on. I want to thank all of you203again for being here. Coming, it is a big deal that you will204come. I look forward to the conversation ahead today. With that205in mind, I now yield to our Ranking Member and my friend from206New York, Ms. Velazquez.207    Ms. VELAZQUEZ. Thank you, Mr. Chairman, for calling this208timely hearing on one of the most important issues facing our209economy. Let me also take this opportunity to welcome all the210witnesses and to thank you for being here.211    Nowhere is our affordability crisis more evident than in212housing where half of renters are rent-burdened and a quarter213pay more than half of their income. In New York City, our214rental market is out of control. On average, New Yorkers who215rent are paying 41 percent of their income. This isn't a red or216blue state issue either. Cities in states like Texas and217Florida also face rental affordability issues. Similarly,218homeownership is drifting further out of reach. According to219the Atlanta Fed, the salary needed to afford the median home is220roughly $116,000, 36 percent higher than the actual median221income of $85,000. Over just the past 6 years, the median home222price has surged over 30 percent, and elevated interest rates223are keeping many locked into their low in low-rate pandemic-era224mortgages. As a result, an entire generation has been priced225out of home ownership.226    According to the National Association of Realtors, the227first-time homebuyer share is now at a record low, and the228typical age of a first-time homebuyer is an all-time high of 40229years old. We are not building enough housing to meet demand.230Experts estimate we lack between 3 and 5 million units231nationwide. Tackling this issue will mean addressing shortages232of both single-family and multifamily housing developments. I233hope this hearing can identify causes and address solutions to234this crisis, including by leveraging the power of small firms235across the nation.236    Yesterday, the House began addressing some of those issues237by passing the 21st Century Road to Housing Act, which makes238important reforms to federal housing programs and includes239language I offer on cooperative housing developments and240oversight of monitors and receivers of public housing241authorities. This bill is an important first step, but it is242not the complete answer. I urge the Senate to act quickly and243pass this bill. Yet we must all recognize that we still need244substantial investment in housing programs to tackle this245issue. While the issue, slow housing construction, is caused by246many structural problems, from labor and materials to financing247to land regulations, it is clear that the administration who248campaigned on affordability is making the problem worse.249    For instance, this administration's cruel and racist250immigration policies have specifically targeted a large portion251of the construction workforce. As a result, threats of ICE252raids have deterred even documented workers and legal residents253from showing up to job sites, extending timelines and growing254costs. Tariffs enacted solely by the president are adding costs255to building materials, including Canadian softwood lumber,256steel, aluminum, and copper, and even kitchen cabinets and257furniture. These tariffs are inflating prices from foundation258to finish. To make matters worse, the war in Iran has caused259diesel to surge to over $6 per gallon in many states, causing260builders to face additional fuel surcharges in transporting261building materials. High prices and growing inflation threaten262to keep interest rates high, while further straining the263budgets of renters, homebuyers, builders, and sellers.264    Just last week, we received inflation data that confirmed265price hikes are once again outpacing incomes, driven primarily266by the president's signature policies, tariffs and the Iran267war. The Kraft Heinz CEO said this plainly to the Wall Street268Journal last week: consumers are literally running out of money269at the end of the month. Meanwhile, the administration is270proposing to gut the very programs, rental assistance,271community development grants, and home investment partnerships,272that help fill the gap between what the market can deliver and273what families can afford. Taken together, these policies and274economic conditions aren't alleviating the housing shortage.275They are making it worse.276    Rather than focusing on the issue he was elected to solve,277the president focuses on securing $1 billion in taxpayer funds278for a ballroom and even spending $30 million on an odd bid279contract to paint the reflecting pool. Not to mention spending280$1.7 billion on a slush fund for his insiders and cronies, some281of whom ransacked the Capitol on January 6th. A billion dollars282could build a lot of houses and go a long way toward helping283small businesses fill this gap. I look forward to hearing from284witnesses about how we could better allocate our resources to285address this crisis and make life more affordable for everyday286Americans. Thank you. I yield back.287    Chairman WILLIAMS. The gentlelady yields back.288    We will now move to the witness introductions. Our first289witness today is Mr. Bill Owens. Mr. Owens is Chairman of the290Board of the National Association of Home Builders. Mr. Owens291is also the principal of Owens Construction, an Ohio-based292residential construction firm he established in 1982, that is293recognized for award-winning energy-efficient home designs. Mr.294Owen has also held numerous leadership roles across the home295building industry, including Chairman and positions with the296NAHB Remodelers Council, Home Builders Institute, and the New297American Home and Remodel Task Force. Mr. Owens is a longtime298industry leader at the local, state, and national level. He has299served on the NAHB Board of Directors for more than 20 years.300He has previously served as president of the Ohio Home Builders301Association. Mr. Owens is also a Member of the Harvard Joint302Center for Housing Studies Remodeling Futures Steering303Committee and remains active in professional education,304workforce development, and community service along with his305wife, Betsy. I want to thank you again for being here today. It306is a pleasure.307    Our next witness is Dr. Ivan Rupnik. Dr. Rupnik is founding308partner of MOD X, a research-based advisory group focused on309accelerating the underutilized housing industry. Dr. Upnick is310also a professor of architecture at Northeastern University.311His research focuses on industrialized housing delivery,312particularly the regulatory and institutional barriers in off-313site construction in the United States. Dr. Rupnick's work has314been featured in the New York Times, and he has presented at315HUD, the Harvard Kennedy School, and the National Housing316Summit. Through multiple HUD-funded projects, MOD X has317produced major policy reports. Their work has identified318regulatory reform as a top priority for scaling industrialized319housing. Dr. Rupnick holds a PhD in architecture from Harvard320University, where his doctoral research examined the321relationship between building design Industrial Management and322Housing Policy, and he also holds a Master of Architecture with323distinction from the Harvard Graduate School of Design and a324Bachelor of Architecture summa cum laude from Louisiana State325University. I look forward to our discussion.326    Our next witness today is Mr. Eric Schaefer. Mr. Schaefer327is the Chief Business Development Officer at Falling West328Development, or Fading, sorry, Fading West Development, a329Colorado-based modular home builder focused on providing330affordable, high-quality homes, and he also helps lead Fading331West's innovative modular housing projects focused on meeting332the needs of communities. Mr. Schaefer also plays a key role in333building partnerships with developers, nonprofits, and334municipalities across Colorado, Hawaii, and the broader western335region. Since the company's manufacturing facility opened in3362022, he has helped advance 25 projects resulting in the337creation of more than 500 homes across the western United338States. Mr. Schaffer has testified before the Senate Banking339Subcommittee on Housing, Transportation, Community Development340in 2024 and the House Financial Services Committee on Housing341and Insurance in 2025. He holds a Bachelor of Science in342Communication from Florida State University and a Master of343Divinity from Columbia Theological Seminary. So I look forward344to your testimony.345    I now recognize the Ranking Member, Velazquez, to briefly346introduce our last witness appearing before us today.347    Ms. VELAZQUEZ. Thank you, Mr. Chairman.348    Our final witness today is Emily DiVito, senior advisor for349economic policy at Groundwork Collaborative, where she manages350the work on the housing crisis. Prior to Groundwork, she was351the director of finance, corporate regulation, and consumer352protection at Roosevelt Institute and a policy advisor at the353U.S. Treasury Department. Her research has been featured in The354Washington Post, The Guardian, and Bloomberg. She holds a355bachelor's degree from Wesley College and an MPA from Columbia356University. Thank you for joining us today, Emily. We look357forward to your testimony.358    Chairman WILLIAMS. The gentlelady yields back.359    And I want to also say thank you to our witnesses. We360appreciate all of you being here today. Now, before recognizing361the witnesses, I'd like to remind them that their oral362testimony is restricted to 5 minutes in length. That's an363important number here, 5 minutes. If you see the light turn red364in front of you, it means your 5 minutes has concluded and you365should wrap up your testimony. And if you continue on, you'll366hear this. That means you got to stop what you're saying, okay?367I know you'll do fine. So with that in mind, I now recognize368Mr. Owens for his 5-minute opening remarks.369370   STATEMENTS OF BILL OWENS, CHAIRMAN OF THE BOARD, NATIONAL371 ASSOCIATION OF HOME BUILDERS; DR. IVAN RUPNIK, PHD, FOUNDING372    PARTNER, MOD X, PROFESSOR OF ARCHITECTURE, NORTHEASTERN373   UNIVERSITY; MR. ERIC SCHAEFER, CHIEF BUSINESS DEVELOPMENT374OFFICER, FADING WEST; AND MS. EMILY DIVITO, SENIOR ADVISOR FOR375           ECONOMIC POLICY, GROUNDWORK COLLABORATIVE376377   STATEMENT OF BILL OWENS, CHAIRMAN OF THE BOARD, NATIONAL378                  ASSOCIATION OF HOME BUILDERS379380    Mr. OWENS. Chairman Williams, Ranking Member Velazquez, and381Members of committee, thank you for the opportunity to testify382on America's housing supply crisis. I am here today383representing NAHB's Members, most of whom are small businesses384who build 10 or fewer homes per year yet collectively, they385construct roughly 80 percent of all new housing in the United386States. At its core, today's affordability challenge is driven387by a simple imbalance: the nation is not producing enough388housing to meet demand. NAHB estimates a structural shortage of389roughly 1.2 million homes. Vacancy rates remain historically390low, and the resulting supply-demand mismatch has pushed both391home prices and rents beyond the reach of too many households.392    To explain why it is so difficult to build enough393attainable housing, NAHB often points to the 5 L's: lending,394lots, labor, lumber, and laws. These interrelated constraints395make clear that the crisis is structural and cannot be solved396by addressing a single factor alone. First, Lending. Housing397production depends on access to capital, and for many small398builders, that means financing from community banks. Credit399conditions remain tight, with borrowing costs elevated,400limiting the ability of builders to move projects forward. We401are encouraged by recent efforts to highlight project-based402working capital options for homebuilders and look forward to403working with the committee and the SBA to ensure these programs404are available to all builders.405    Second, lots. A shortage of buildable lots remains a major406obstacle as land development costs continue to rise.407Restrictive zoning, infrastructure limitations, impact fees,408local opposition, and federal permitting delays all constrain409the ability to bring land to market. These challenges are410especially acute for small builders who cannot spend or who411cannot spread high fixed development costs across large-scale412projects.413    Third, labor. The skilled labor workforce shortage414continues to significantly limit housing production. At any415given time, there are more than 200,000 open positions in416residential construction. In 2024 alone, labor shortages417prevented the construction of roughly 19,000 homes and added418nearly 2 months to project timelines. Congress can help by419strengthening workforce development programs, expanding420training and career pathways in the skilled trades, and421ensuring legal and efficient workforce access where domestic422labor supply is insufficient.423    Fourth, labor and materials. Construction input costs424remain elevated with continued price increases in 2026425compounding the challenges posed by financing costs, labor426shortages, and delays. Even modest increases in material prices427can determine whether a project is viable or not.428    Finally, laws, meaning regulation. Regulatory costs act as429a hidden tax on housing production. NAHB research shows that430regulation accounts for nearly 25 percent of the cost of a new431single-family home and over 40 percent of multifamily432development costs. These burdens increase carrying costs and433financing risk. Permitting challenges are particularly434burdensome for small builders. For example, under the Clean435Water Act, the difference between a streamlined nationwide436permit and an individual permit can add hundreds of thousands437of dollars and more than a year in delays, directly reducing438the number of homes that can be built. The bottom line is439clear: there is a supply problem. Small builders are ready to440help meet the challenge by delivering housing in local markets441and underserved communities.442    But progress will remain limited if costs and delays443continue to escalate across financing, land, labor, materials,444and regulation. Congress can play a role by advancing supply-445focused reforms that expand access to capital, strengthen446workforce pipelines, increase the availability of buildable447lots, and reduce the excessive regulatory costs and permitting448delays. If we want to make housing more attainable, we must449make it easier and less expensive to build. Thank you, and I450look forward to your questions.451    Chairman WILLIAMS. Thank you. The gentleman yields back.452    I now recognize Dr. Rupnik for his 5-minute opening453remarks.454455  STATEMENT OF IVAN RUPNIK, PHD, FOUNDING PARTNER, MOD X, AND456  ASSOCIATE PROFESSOR OF ARCHITECTURE, NORTHEASTERN UNIVERSITY457458    Mr. RUPNIK. Chairman Williams, Ranking Member Velazquez,459thank you. Thank you for the opportunity to testify.460    This year I co-authored or published a report from HUD that461examined why the United States has persistently struggled to462industrialize housing delivery while our peer economies have463not. What we found was that much of the work that was done464abroad was first proposed in the United States but never fully465implemented. The industrialization of housing delivery is the466integration of design, off-site production, and on-site467assembly into a coordinated system. Most American industries468operate within this regulatory framework that supports this469kind of integration, including automotive. Housing does not.470    In 1968, HUD documented exactly this issue and concluded471that the federal role is to create enabling conditions within472which companies can innovate to address housing affordability.473In response, Congress authorized HUD to pilot a form of474regulatory streamlining called Housing System Certification.475That pilot, Operation Breakthrough, validated this approach476through work in 8 different states and 20 different companies.477Six years later, Congress concluded that the lack of uniform478housing and building regulatory provisions increases the cost479of construction and thereby reduces the amount of housing and480other community facilities which can be provided. The '74481Housing and Community Development Act then produced two482performance-based regulatory reform actions.483    The first was the HUD Code, which has been discussed484extensively. The second, the more exciting part for me, was the485establishment of the National Institute of Building Science, or486NIBS, mandated by Congress to continue the work HUD had piloted487developing a performance-based fast track for small innovative488companies to deliver housing. The problem had been identified489and measured, a solution had been demonstrated, an institution490had been established, but what was never completed was491implementation.492    Our recent report renewed a call for housing system493certification for 3 concrete reasons. It was proven out at a494pilot level in the United States through Operation495Breakthrough. It has been operating successfully in Japan for496more than 50 years. Today more than 28 percent of Japanese497housing goes through this fast-track route and has serious498benefits. And it is also the same framework that we already use499to govern every other consequential American manufactured500product, automobiles, our aircraft, medical devices, our food,501our pharmaceuticals. A housing system is essentially a product502definition. The design logic, the structural and material503systems, the off-site manufacturing and on-site assembly504processes, quality insurance, and quality control of a defined,505repeatable housing offering treated as a unified whole rather506than a collection of discrete decisions made project by507project.508    What defines it as a system is the integration, the design509for manufacturing assembly, coordinated supply chains, serial510production, and continuous improvement. In other words,511industrialized housing delivery. Permitting through this would512be streamlined. Lenders and insurers could rely on the513certification as a basis for underwriting. Code officials would514retain their authority, but exercise it against a known and515tested baseline. Federal programs could utilize certification516for awards and subsidies. This is what's done in Japan. This is517not a proposal to preempt local code officials. It is a518proposal to give them a tested performance baseline against519which to exercise their authority. The savings would come not520from redoing the same approvals in every project.521    The quality gains would come from concentrating expert522review at the systems level rather than fusing it across523thousands of individual project reviews. In the U.S., the524strongest endorsement for housing system certification has come525from small vertically integrated companies like my friend Eric526Schaefer here, who's also serving on a technical committee to527support our work. Fading West will be discussed today.528Certification benefits factory, site, and hybrid delivery529equally because what it certifies is the integrated system, not530the technology itself. It also certifies the technology. Some531innovative site builders have also endorsed this regulatory532form for exactly the same reason, including Texas-based JPI, a533major multifamily builder.534    MOD X is working with NIBS and a steering and technical535committee of 21 people to develop the standard. We hope to be536completed by December of 2026. And we're happy to say that the537state of Washington is already working to pilot this at a state538level. Todd Beyreuther, who is an industry expert and also the539Chair of the Building Council, is developing this. I wanted to540make this committee aware of this important work, more than541half a century in the making, and I look forward to your542questions and your thoughts about how federal action can543support state, local, and government, and NIBS in helping to544scale. Thank you.545    Chairman WILLIAMS. Thank you.546    I now recognize Mr. Schaefer for his 5-minute opening547remarks.548549STATEMENT OF ERIC SCHAEFER, CHIEF BUSINESS DEVELOPMENT OFFICER,550                    FADING WEST DEVELOPMENT551552    Mr. SCHAEFER. Thank you, Chairman Williams, Ranking Member553Velazquez, and Members of the committee for the opportunity to554testify today.555    My name is Eric Schaefer, and I am Chief Business556Development Officer for Fading West in Buena Vista, Colorado.557We are a fully integrated design, construction, and modular558manufacturing company focused on the Lean process. The U.S.559faces a crushing housing deficit, and this burden falls on both560national builders and smaller home builders like Fading West.561With little or no innovation in the past 50 years in how houses562are built, Fading West and the modular manufacturing industry563firmly believe that this committee has a vital role to play in564helping small home builders innovate, scale, and actively565participate in resolving our national housing shortage. To566understand the challenges small home builders face, we must567look at how far the U.S. lags in manufacturing adoption. In our568country, modular construction represents less than 5 percent of569all housing. For comparison, in Scandinavia, modular makes up570over 45 percent. We are failing to address the root systemic571causes holding back our construction sector.572    First, it is because of a fractured labor pipeline. Forty-573one percent of the current construction workforce will retire574by the year 2031. With fewer skilled trade professionals575available, labor costs will rise and slow project timelines.576Second, the price of residential construction goods has gone up577over 40 percent since 2020. And third, the regulatory burden.578Regulations account for 25 percent of the average sale price of579a new home. And fourth, there are 43,000 individual building580code jurisdictions across the United States, and this makes it581difficult for modular factories to standardize.582    Fading West has shown that building homes using Lean583manufacturing principles in our 110,000-square-foot factory has584helped us reduce waste from 30 percent down to 3 percent. We585have over 100 employees who can build a house in less than 10586days in the factory and then complete the on-site work in less587than 30 days for a total of 40 days, far less than traditional588construction. We build homes 20 percent cheaper and 50 percent589faster. We recently built our 1,000th unit in our 4.5 years590since opening. To see this in action, I would like to highlight591a partnership that we have with Rural Homes, a nonprofit592developer in Telluride. In high-cost mountain and rural towns593in Colorado, traditional site building costs are prohibitive594for workforce housing. Together with Rural Homes, we have595scaled a unique public-private philanthropic partnership596blueprint. Under Governor Polis, Colorado has become a modular-597friendly state through initiatives like Proposition 123, equity598funding, and Senate Bill 2409, and the state is streamlining599factory certifications and has slashed red tape. By pairing600donated municipal land, low-cost philanthropic capital, and601Fading West's factory speed of delivery, we are building602workforce housing at prices well below regional and market603pricing.604    We are currently building projects all around Colorado, in605Wyoming, in Texas, in Montana, and have signed first contracts606in the Pacific Palisades for families that lost homes in the607fire. We built 85 homes in our Colorado factory and shipped608them to Lahaina for the FEMA disaster relief project in Maui.609We are currently building 24 homes for the Department of610Hawaiian Home Lands (DHHL) for a pilot project in Honolulu for611their beneficiaries. We are also partnering with DHHL to build612a factory in Hawaii which will speed up building and reduce613cost.614    To empower small businesses, I offer three recommendations:615provide direct capital incentives for facilities through616federal grants and 0 percent interest loans; to create regional617building codes for different climate zones, which will unlock618standardization and allow factories to flourish; and to619prioritize and reward vertically integrated public-private620partnerships. Housing policy is education policy, it is621economic policy, it is environmental policy, it is622transportation policy, it is community policy. The committee623can empower small businesses to be the master key that unlocks624a new era of attainable housing, vibrant communities, and625thriving local economies across America. Thank you, and I look626forward to questions.627    Chairman WILLIAMS. Thank you. And the gentleman yields628back.629    I now recognize Ms. DiVito for her 5-minute opening630remarks.631632STATEMENT OF EMILY DIVITO, SENIOR ADVISOR FOR ECONOMIC POLICY,633                    GROUNDWORK COLLABORATIVE634635    Ms. DIVITO. Chairman Williams, Ranking Member Velazquez,636and Members of the committee, thank you for the opportunity to637testify.638    My name is Emily DiVito. I am the senior advisor for639economic policy at Groundwork Collaborative, an economic policy640think tank in Washington, D.C. We face a housing affordability641crisis worsened by existing housing shortages and a failure to642build more homes of all types. Congress is already taking on643barriers to building, such as restrictive zoning, through the64421st Century Road to Housing Act. Such efforts are important,645but zoning reform alone will be insufficient to fix the housing646affordability crisis. Home builders and home buyers face647economic headwinds that Congress must tackle head on. As this648committee knows, small and medium-sized home builders play a649hugely important role in the U.S. housing system.650    I would like to highlight two particular cost challenges651for builders that ultimately put housing out of reach for many652families: the rising cost of construction and the high cost of653capital. The Trump administration is driving up the cost of654construction through its mismanagement of the economy,655specifically tariffs on core building materials, as well as656higher transportation costs and higher interest rates due to657the Iran conflict. In the latest Producer Price Index, the658price of goods used in residential construction was up 1.2659percent over the last month and up 6.1 percent from last year.660Higher prices place a particular strain on small builders who661do not have the resources or scale to mitigate tariff costs or662to pass rising transportation costs through to consumers.663    The Center for American Progress recently estimated that664higher building costs due to the tariffs will lead to 450,000665fewer homes built over the next 5 years. At the same time, a666lethargic labor market and the Trump administration's667immigration crackdown make it more difficult for firms to find668and retain construction workers, adding further time delays and669additional costs to the home building process. These higher670construction costs get passed on to home buyers in the form of671higher prices.672    Meanwhile, just months after DOGE cut staffing at federal673housing agencies, the Trump administration is pulling back on674federal housing funding by proposing the elimination of675programs like Home Investment Partnerships and Community676Development Block Grants. These programs have channeled677millions of dollars to local businesses and community partners,678helping meet the needs of over 2 million people and resulting679in the construction or rehabilitation of more than 1.3 million680units of affordable housing. Let's be clear, these challenges681didn't come out of nowhere. The higher prices we see today are682the result of specific policy choices by this administration683that Congress can rein in.684    But even before the price hikes, cost of capital had685already been a major constraint to new construction. Building686the capital stack, the specific debt, the specific blend of687debt and equity required for a given project can be costly for688firms raising capital from investors seeking returns. Small and689emerging developers without the same resources or established690track records of large firms have more challenges securing691construction loans and recruiting investors in the first place.692And even when small developers secure financing, investors693often impose strict repayment schedules and high return694expectations, which ultimately result in higher costs for695consumers.696    Congress should target interventions that lower the cost of697capital and make it easier for homebuilders to build to698affordability. First, Congress should allow entities like699Fannie Mae and Freddie Mac to buy and sell construction loans,700especially the tranches of debt costlier for developers.701Existing programs within the Federal Home Loan Bank System702should also be expanded. Second, government should leverage703their borrowing power to help cities and states establish704revolving loan funds that can extend financing with low705interest rates at long maturities to facilitate new706construction. Third, Congress should play a bigger role in707ensuring mortgages are affordable to homebuyers. This can be708achieved through popular policies such as providing low-rate709direct federal mortgages reducing mortgage insurance premiums,710and allowing families to utilize portable mortgages.711    Ultimately, policies such as these will make it easier and712cheaper for businesses to access the financing they need to713build more homes. If Congress can lower the cost of714construction and the cost of capital, more builders, especially715small ones, will be able to meaningfully expand the housing716supply at lower prices, which ultimately means more homes that717working families can afford. Thank you, and I look forward to718your questions.719    Chairman WILLIAMS. The gentlelady yields back.720    We will now move to the Member questions under the 5-minute721rule. I recognize myself for 5 minutes.722    Mr. Owens, as a Chairman of the National Association of723Home Builders, you spent more than 4 decades in the residential724construction industry and have seen firsthand how the725regulatory landscape has evolved in the local, state, and726federal levels. And small home builders play a critical role in727meeting housing demand. But many say increasingly complex and728costly requirements have made it harder to build homes729efficiently and affordably. So my question would be, to give a730small homebuilder a fair chance to succeed, how important is it731to reduce unnecessary regulations? And over the years, have732these regulations been easier to navigate or increasingly733burdensome for some homebuilders?734    Mr. OWENS. Thank you for the question, Chairman. That735definitely strikes home. I mean, we deal with this every day.736The, you know, what we've done with or what we've dealt with737over the 4 decades of increased regulation just isn't from a738code or a land use point of view. It has nothing to do with any739one particular item. But when we, when we talk about a740combination of factors at the land development phase, we talk741about issues with restrictive zoning, with impact fees. And742again, we understand this isn't all federal mandated. This can743be state as well as local regulation as well.744    But then when we look at infrastructure constraints, even745the NIMBY-ism, the local opposition, can, can add in, you know,746an interesting kind of twist into our ability to build. And I747think what we're trying to do right now is to just recognize748that, and as we bring this to Congress, and I knew at some749point I probably would be able to share this with you all, is750there's not one particular item as far as regulation goes,751there's not one thing in particular that if we did away with752today that we would be in a much better place tomorrow to753provide attainable and affordable housing. It is, I call it754death by a thousand cuts.755    But every one of these adds another layer of cost that we756simply just cannot absorb, and that ultimately is going to be757passed on to the consumer much like everything else. When our758costs go up, that is a direct impact then on the eventual home759buyer.760    Chairman WILLIAMS. All right. Thank you.761    Dr. Rupnick, as a professor of architecture and a leading762technical expert in off-site construction and building763innovation, you spent years studying how design, manufacturing,764regulation interact in the housing industry, and through your765work with MOD X, and your collaboration with the National766Institution of Building Sciences, you've exploring ways to767modernizing housing construction and reduce regulatory barriers768that slow the development. So offsite and modular construction769are often viewed as promising solutions to improve efficiency,770lower costs, and expand housing supply, but they also face771significant challenges because of codes, permitting, and772inspections, et cetera. Standardization. So my question is,773quickly could you walk us through some of the innovations,774technologies, and regulatory reforms you are exploring to make775the process more scalable and more manageable?776    Mr. RUPNIK. Thank you, Chairman, for that question. I think777that there's a lot of interesting technologies out there, but778the reality is, if we look globally, light wood frame779construction, an American form of construction, is actually780seen in many countries as an innovative form of construction.781So I say that there are a lot of innovative technologies. The782innovations that we're excited about are in the code compliance783space. And that's what we're really advocating for because as784Mr. Owens pointed out, there are a lot of regulations. We can't785point to one of them, but what we can point to is the structure786of code compliance.787    So we now have a smaller number of model codes that are788then adopted by states and then modified, adopted by counties789and modified, and then actually interpreted project by project.790The multiplication of what actually a company has to deal with,791small or large, is infinitesimal. The investment in792streamlining code compliance is the single tool that we think793would benefit both conventional builders and offsite builders.794And that is something where we've seen AI and other digital795tools used in this space. And every industrialized economy has796had the difficult process of saying our code compliance system797is fragmented. It doesn't work. It doesn't work for798conventional, doesn't work for new technologies, and we need to799reform it.800    Chairman WILLIAMS. Thank you.801    I now recognize the Ranking Member for 5 minutes. My time802is up.803    Ms. VELAZQUEZ. Thank you, Mr. Chairman.804    Ms. DiVito, Housing costs are at the root of the805affordability crisis, putting significant pressure on family806budgets and limiting the ability of people to save money or807even meet their basic needs. Can you outline some of the root808causes of the housing shortage?809    Ms. DIVITO. Thank you for the question. For decades, the810U.S. has underinvested in housing. Construction never really811recovered after the Great Financial Crisis, and since then812we've only had persistent labor and construction shortages. At813the same time, as my testimony mentioned, acute price hikes are814making it worse as builders and contractors contend with high815prices on core construction materials from tariffs. And one of816the biggest underlying challenges we face today is the high817cost of capital that makes it incredibly expensive, time-818consuming, and overall difficult for developers, especially819small firms, to build affordable housing. And this is why I820believe that if we want to fix our housing affordability821crisis, we have to fix our housing financing system.822    Ms. VELAZQUEZ. Thank you.823    Mr. Owens, the National Association of Builders testified824before the Financial Services Committee that uncertainty from825tariffs was constraining investment. What impact do Section 232826tariffs on lumber, steel, and aluminum, and kitchen cabinets827and finished wood products, as well as potential future 301828tariffs, have on small builders?829    Mr. OWENS. Thank you very much for the question. Our830research through our econ team has shown a fairly insignificant831burden when it comes to tariffs. Somewhere around--when we look832at total building cost, everything that goes into the home,833we're estimating that about 7 percent of building materials834that go into that home are actually imported. So we're835somewhere under 10 percent of our net costs here. So, you know,836currently with the administration working toward the American837First environment, that's influencing some of our work, but it838is fairly minimal.839    Ms. VELAZQUEZ. And you disagree with the member of the840National Association of Home Builders that tariffs are841constraining investment?842    Mr. OWENS. I don't think there's any question that they're843having some impact.844    Ms. VELAZQUEZ. Okay. Wouldn't you agree that these tariffs845have increased the cost of housing? You're saying no?846    Mr. OWENS. Slightly.847    Ms. VELAZQUEZ. Okay.848    The president has proposed significant cuts to programs at849HUD. Ms. DiVito, what are some of these cuts? How do they850impact housing affordability?851    Ms. DIVITO. That's right. The president has been trying to852eliminate some of the nation's most flexible housing programs,853including the Home Investment Partnerships Program and854Community Development Block Grants. In the president's proposed855budget for fiscal year 2027 that would cut funding for the856Department of Housing and Urban Development by roughly $11857billion, or 13 percent. Cutting this funding means that these858communities and businesses that are counting on these programs859for the flow of capital won't get it and may not be able to860build as many homes or at rates that families can afford.861    Ms. VELAZQUEZ. Do you agree that if the president and862Members in Congress are serious about addressing housing863production, that they will be increasing not decreasing HUD's864housing production programs?865    Ms. DIVITO. Yes, ma'am.866    Ms. VELAZQUEZ. On both sides of the aisle, Ms. DiVito, many867of us recognize that NIMBYs have abused land use regulation to868slow the construction of new housing starts, but solving that869issue is only part of the problem. Why is expanding government870options for access to capital so important for new871construction? And particularly for small builders.872    Ms. DIVITO. Thank you. Yeah, I mean, I think everybody on873the panel agrees that there's no doubt that zoning restrictions874and complex permitting processes have worsened our housing875affordability crisis. Unfortunately, though, I feel strongly876that fixing zoning alone will not dissipate the underlying877costs of securing financing, which is one of the major drivers878of the affordability crisis we see today.879    Ms. VELAZQUEZ. Thank you.880    Mr. Owens, to that end, your testimony mentioned exploring881SBA financing to help get more access to capital for small882developers. I am working on a bill to modernize the 504 CDC883program to support renovation of mixed-use developments for884commercial and residential units. Would this be a provision you885will support?886    Mr. OWENS. I think we'd want to look into that a little bit887more, but I think that we're absolutely in alignment and very888hopeful that the Small Business Administration grant process,889you know, the lending process will help us out. We represent890the small builders, and anything that we can do--capital is891always an issue for us, not just in mainly the carrying cost of892the business more so than just actually financing the land.893    Ms. VELAZQUEZ. Thank you. Oh yeah, my time expired.894    Chairman WILLIAMS. The lady's time is up. She forgets that895sometimes.896    I now recognize Mr. Meuser from the great state of897Pennsylvania for 5 minutes.898    Mr. MEUSER. Thank you, Chairman. Thank you all. Very899interesting and important discussion and, and hearing here. We900all agree construction costs, regulatory delays, outdated901zoning constraints fuel decades of underbuilding. Perhaps as902many as 3 to 4 million single-family homes we need to build and903make available. Small home builders play a vital role, Mr.904Owens, as you are clearly bringing out, as you did in your905testimony. Earlier this week, as has been mentioned, we did906pass a very bipartisan amendment to the 21st Century Road to907Housing Act that will address many of these housing shortage908issues by reducing unnecessary barriers to new home909construction, modernizing HUD programs, allowing banks to more910freely deploy capital, and have some restrictions on911institutional purchases of single-family homes. Not the912building of single-family homes, but the purchasing of them.913    So Mr. Owens, very intrigued by your testimony. You had914some real good ideas in there. I like this lending lots, labor,915lumber, laws. I mean, that's good. Sums things up and helps us916focus, I think.917    The banking, as the Ranking Member was just talking about,918you know, our Housing Act allows banks to lend more to finance919home construction. This should make a difference. It should920double it. It could actually double it according to the intent921of the law anyway. And I am intrigued, intrigued about the idea922of expanding 7a loans for home construction, maybe double it.923Right now it is at $5 million. We bring it up to $10 million. I924mean, one builder alone, perhaps that could equate to, well,925you do the math, 13, maybe 14, 15 new homes. Your thoughts on926that?927    Mr. OWENS. Thank you, sir, for the question. You know, for928us, access to capital is a must. We absolutely cannot build929without that. So when we talk about the possibility, as I said930earlier, we're encouraged by the SBA 7a or 7b program as a way931to finance direct costs. I think there are limits, though, to932that. What we had seen, for example, phased development would933be excluded from that, and actual project-based working capital934would be something that I think I understand would have been935excluded. I think when we're looking at the overall landscape936of construction financing, larger builders, I think, have more937varied access to different capital pathways. We represent the938small volume builders. Our average builder is building 10 or939less homes a year.940    Mr. MEUSER. The ones I know. Yeah, sure.941    Mr. OWENS. Yeah. So that's the one thing right now that942we're looking at is what are some means that these smaller943builders would have access to capital? And that's why we sort944of are, we're encouraged by some of your discussions with the945SBA on this.946    Mr. MEUSER. And the SBA would be, I think, more effective,947maybe faster, than the HUD programs that exist.948    Mr. OWENS. It may be.949    Mr. MEUSER. Okay. So Dr. Rupnick, well, first off yeah, Dr.950Rupnick, the 21st Century Road to Housing bill, the regulation951from a regulation standpoint, or any aspect of that bill. Could952you give me your feedback on that, some of your thoughts?953    Mr. RUPNIK. I haven't studied the specifics of it, but I954think the issue is that we have not yet really understood,955based on the conversation today, where the cost is, because956we're talking about the cost of regulations. We're not talking957about the structural cost of our code compliance. So that, I958think, from what I've seen in the bill, and I haven't spent as959much time as I'd like to because it has been changing. All I960would caution is that from our research from 20 years, it is961really code compliance, not the regulations themselves, that962have been a burden in the U.S. Also in Pennsylvania, which has963a very strong modular sector. What I don't see is specific964tools for really understanding first and then assessing those.965And that's where I think we really need to understand before we966even allocate funding, really understand the hidden costs of967our code compliance regime.968    Mr. MEUSER. Okay, thank you.969    Mr. Schaefer, any feedback you can provide on the on our970Housing Act?971    Mr. SCHAEFER. Yeah, certainly the innovation for modular is972the huge plus that we see in cutting the red tape which is big973for us. If entitlements take 12 to 18 months before you can974even build a house, a lot of times in affordable housing975projects, by the time you get to the entitled stage, it doesn't976pencil anymore. So we can't even do the project.977    Mr. MEUSER. Thank you very much. I yield back, Mr.978Chairman.979    Chairman WILLIAMS. The gentleman yields back. I now980recognize Mr. McGarvey from the great state of Kentucky for 5981minutes. Thank you, Mr. Chairman.982    Mr. MCGARVEY. Mr. Owens, in your testimony, you opened up983and said there were a shortage of 1.2 million homes in this984country. I think that number could be low. But regardless,985we're all agreeing that we are millions of homes short in this986country. And I think this is really important, because one of987the things we talk about here in the Small Business Committee988is the American dream. The American dream, you can work hard,989you can provide for your family, you can leave the world a990little better than you found it, and you can put your kids in a991better spot than you were in. And I think owning a home is a992foundational cornerstone of this American dream. We still know993that owning a home is a generational wealth a home builder, it994is an asset you can pass on.995    But when we're talking about building homes, I want to talk996about what people are going through right now when they want to997buy a home, because it is far from easy. So I wanted to run the998numbers a little bit for you. I am from Louisville, Kentucky,999and I was looking at my town, Louisville, Kentucky, and I1000wanted to find a home that was $250,000. Why? I wanted to make1001the math easier for me. So I got on Zillow and found1002immediately 4 homes listed for $250,000, one in Shively, one in1003Okolona, one in Germantown, one just east of J-Town. All have 21004bathrooms. One of them has 2 bedrooms, the other 3 have 31005bedrooms. 3 of them are between 1,200 and 1,400 square feet.1006One of them was 2,100 square feet, right there in Louisville,1007Kentucky. $250,000. Okay, so the area median income for1008Louisville, Kentucky is about $89,000 annually for a 4-person1009household. After taxes, that's about $65,500. So that shakes1010out about $5,500 per month that you're bringing home after1011taxes. If you want to buy a $250,000 home, let's pretend, and I1012say pretend because 50 percent of Americans don't have access1013to $500 cash. Let's pretend that you can put $50,000 down on1014this home. That's 20 percent. I told you I'd keep the math1015easy, 20 percent.1016    Now, you're going to look at a $200,000 mortgage. Current1017interest rate, 6.16 percent fixed on a 30-year mortgage. That's1018going to cost you $1,400 a month. That is $16,800 per year. Now1019your 65.5 is down to $48,700. Okay, let's say you're a young1020family of 4, you got 2 kids. Childcare. We all know what this1021looks like. In Louisville, Kentucky, the average cost, that's1022going to put you at $380 per week, $1,500 per month, $18,0001023per year. Now, that is down to $30,700 that you are bringing1024home after you've got your mortgage, after you've got your1025childcare. Bear with me. We know what grocery prices are doing1026right now. Just walk through the grocery, walk through a Kroger1027in Louisville.1028    So I am going to go conservative. I am going to say for a1029family of 4, you're spending $250 per week for all 4 of you.1030That's $13,000 a year. Now you're down to $17,700. But guess1031what? We haven't talked about taking care of these kids yet.1032Health care, especially with what Trump did to the Affordable1033Care Act, is now $1,800 per month on average in Louisville,1034Kentucky. That's $21,600 per year. Guess what? You are now1035minus $3,900. That's your family of 4 in a $250,000 home. You1036are $3,900 underwater. And what have we not talked about? We1037haven't talked about your utilities. You haven't talked about1038your water, your cell phone bill, your car payments, your1039insurance, your gas, which you can just drive--is $4.40 when I1040left Louisville on Bardstown Road this week. You're $3,900.1041    And guess what? We haven't even talked about what the1042actual payment on the home is. In the above scenario, we had a104330-year mortgage. By the end of it, you will have paid $250,0001044in interest on that $200,000 loan. So we got to get the1045affordability under control here. And one of the ideas has been1046floated, Ms. DiVito, is the idea of a 50-year mortgage. And I1047want to talk about what impact that has on affordability and1048what you think about what that would do for families.1049    Ms. DIVITO. Thank you for the question. Yeah, the 50-year1050mortgage, I think, is a misguided attempt to make it seem like1051it is providing relief for homebuyers without fixing the1052underlying problem. On a 50-year repayment plan, families would1053end up spending significantly more on interest over the1054lifetime of their loan and build equity much slower than other1055families. I don't think that Americans want their debt to last1056longer. They just want their housing to be more affordable.1057    Mr. MCGARVEY. Yeah, so you're going to pay significantly1058more over the cost of 50 years, and even if you're able to buy1059something a little bit cheaper up front, we're still looking at1060this math. You're still in a $250,000 $500,000 home, you're1061still in the red. And guess what? Even if you think you can buy1062it for a little bit cheaper up front, look at what the tariff1063policies are doing right now. You're looking at building and1064material prices up 3.5 percent year over year.1065    Mr. Owens, have you seen this in your business, that the1066cost of lumber and materials right now is rising?1067    Mr. OWENS. We have to a certain extent, but it is more in1068the metals, I think. As of recent, we've seen some stability in1069the lumber prices. Certainly from the, you know, the peak there1070during COVID Yeah.1071    Mr. MCGARVEY. And this, this rise in cost is making it1072harder to build homes. It is making it harder to find the1073American dream on every level. And I think we have to address1074the affordability crisis and start talking about this. Mr.1075Chairman, I yield back.1076    Chairman WILLIAMS. Yields back.1077    I now recognize Mr. Cisneros from the great state of1078California for 5 minutes. Thank you.1079    Mr. CISNEROS. Thank you, Mr. Chairman. I want to thank you,1080the Ranking Member, for bringing us together for this important1081hearing on housing. You know, I represent a district in1082Southern California in the San Gabriel Valley, and I don't even1083know where you can find a house for $250,000 anywhere there. It1084is just not possible, right? And the rising cost just continues1085to add, right? And look, I look at it in a very simple way when1086kind of looking at economics, and it is supply and demand,1087right? We need a lot more supply in order to help bring down1088the cost of housing. And it is not just single-family homes1089people could afford, but also renting rentals, right?1090    And then even as my I think of my grandmother years ago as1091she started to age, she moved into senior citizen housing that1092provided opportunities for more people to kind of move in there1093as well. And look, my district is not that far away from where1094the Eden fires were last year, which only adds to the shortage1095of housing there. And so, and now those people are going to1096need to build, and it is going to cost them even more as1097insurance companies continue to make higher demands on the way1098that construction happens and what they can do. And look,1099there's been a lot of great innovations there, I think, to kind1100of help and prevent fires or to help the homes become more1101stable during those times. But it comes at a cost as well,1102right? Not only at a cost to the owners of these homes who are1103going to have to rebuild, but also it is going to be rising1104insurance costs as well. So we definitely need to help, I1105believe, our home builders kind of do more. As you say, free up1106capital so that they can build more.1107    So, Ms. DiVito, I am going to ask you something about that1108kind of intrigued me in your opening statement there, is Fannie1109Mae and Freddie Mac providing construction loans to companies.1110What do we need to do in order to make that happen?1111    Ms. DIVITO. Thank you for the question. That's right, I1112think the government-sponsored entities Fannie Mae and Freddie1113Mac should be expanded to allow the, the securitization of1114construction loans. This will functionally spread risk for1115investors and free up capital. I think that could be an1116important way to make sure that already existing private1117capital out there makes its way to small and emerging1118homebuilders.1119    Mr. CISNEROS. Okay. So would that take--I guess it would1120take legislation from us in order to make that happen?1121    Ms. DIVITO. Oh, yes. I apologize.1122    Mr. CISNEROS. Okay. No. All right. I would love to work1123with you on that and see how we can kind of move forward and1124really kind of find a way to make that happen.1125    Ms. DIVITO. Fantastic.1126    Mr. CISNEROS. Great.1127    Mr. Owens, you're from Ohio and you're from that area, and1128I don't really know what the workforce what it is like over1129there, but I know what it is in California around homebuilders.1130And it is an immigrant workforce, right? A lot of people1131immigrate here to the United States and they get into this1132industry and they've become a very valuable resource to our1133construction companies out there that are building homes. But1134unfortunately, the president has asserted that these mass1135deportations are going to help free up jobs, actually, when I1136think it is actually done the opposite.1137    But what are you hearing from your home builders or the1138people in your association out west? What impact has these ICE1139raids and Border Patrol raids had on the workforce there out1140west, like in California and in other areas across the country?1141    Mr. OWENS. Thank you for the question. You know, the labor1142shortage existed way before we had the immigration crackdown.1143We lost, I think, about 1.5 million construction-related jobs1144during the great recession. So I think it is very localized,1145how you pointed it out. We see that a little bit. I build in1146Arizona as well, and we've seen this being a little bit more1147localized, but it has disrupted some of local operations, but1148we don't see that headwind, if you will, as a severe constraint1149right now in housing supply.1150    Mr. CISNEROS. Well, I feel like I am hearing different from1151some of the home builders I talked to out west, but it1152definitely is having an impact. Look, I am with you. I, again,1153I think we need to figure out ways so we can increase housing,1154whether it is modular housing. And I don't know how that would1155kind of really work. Like you said, there are a lot of1156restrictions, and California does have restrictions, especially1157around earthquakes and things like that. But would love to meet1158more with all of you to kind of find out you know, how we can1159make this work, right? How we can have more access to capital1160and how we can, you know, make things more available so that we1161can increase that supply number to help bring down the cost.1162But with that, I yield back. Thank you.1163    Chairman WILLIAMS. The gentleman yields back.1164    I now recognize Mr. Jack from the great state of Georgia1165for 5 minutes.1166    Mr. JACK. Thank you very much, Mr. Chairman. And if I1167could, I will start with Mr. Owens. Thank you for your1168testimony today. Could you walk this committee through the1169cumulative impact federal regulations, whether environmental,1170permitting, labor rules, energy codes, or financial reporting1171requirements, have had on the final cost of a home for an1172average American family trying to buy their first house?1173    Mr. OWENS. Thank you for the question. As I mentioned1174earlier, I think it is, it is, it is just, it is an aggregation1175of a lot of different cost impacts that come in. We could talk1176from the federal point of view, I think, about the wetlands1177permitting process. Perhaps when we look at permitting reform,1178that might be a possibility too that would give us some, some,1179some relief. When we looked at individual permits versus1180nationwide permitting, if we stayed on the Clean Water Act and1181the compensatory, pardon me, that's a mouthful, the1182compensatory mitigation reform that might be helpful for us.1183    I think again, when we go back in and we look at some of1184the OSHA regulations that are applied at the federal level,1185when we look at the heat compliance standard, the reporting,1186the electronic reporting requirement, again, we represent the1187smallest core of the, of the home builders. We don't represent1188the nation's largest home builders. That, you know, our1189builders are very much rooted in this small business1190environment. And that's where we look at some of these costs1191that might be able to be absorbed by the larger builders,1192particularly in the land development end of things. These are1193things that are almost prohibitive for many of our smaller1194builders to do any land development at all right now.1195    Mr. JACK. Your testimony indicated that you estimate, I1196believe, is it 25 percent of the cost of a home is due to1197regulations? You want to comment on that a little further?1198    Mr. OWENS. Sure. I think if my numbers are correct, I think1199through the land development phase it is about 10 percent, and1200I think we're a little bit north or more than 13 percent of the1201cost actually during, during construction. That make up that,1202that 25 percent cost of regulation and fees above sticks and1203bricks essentially. And it is even more than that around 401204percent in the multifamily.1205    Mr. JACK. Thank you. Could you comment, this week the House1206took action on housing, as you saw, no doubt, a few days ago,1207actually just yesterday, if I am not mistaken. Could you1208comment on how that's going to help Americans achieve that1209American dream, buying their first home and helping their1210families grow?1211    Mr. OWENS. Yeah, I very much appreciate that question1212because that's something that the effort that Congress has1213made, I think, is going to go a long way to really supporting1214what we feel is, you know, completely underserved housing1215inventory right now. I think one thing, although a little bit1216controversial, but in the end, again, because we don't1217represent institutionalized investment, removing the 7-year1218forced requirement to sell build-to-rent properties was1219something that is very, very important to us because that's1220about 10 percent of the overall addition to the inventory on an1221annual basis at this point. I think also, too, that the Road to1222Housing, the House version, increased stronger land use1223reforms, enhances multifamily finance tools, creates some new,1224new renovation programs, and I think one of the most important1225things that really helps the small builder contingent out there1226is it provides some regulatory relief for the community banks1227to get a little bit more flexibility where we typically go for,1228for our money to build these homes.1229    Mr. JACK. We often talk in this committee about workforce1230development. I am honored to Chair the Subcommittee on1231Workforce Development, thanks to our Chairman's appointment of1232myself in that capacity, and would welcome in these closing 501233seconds you talking about what more Congress can do to help1234ensure we've got a pipeline of skilled employees and folks1235coming out of trade schools to help build these homes.1236    Mr. OWENS. I'll be brief. Maybe we can circle back to it.1237The CONSTRUCTS Act certainly supports career tech schools as a1238primary alternative to traditional 4-year. We absolutely need1239your help on a program that started back in the mid-'60s, the1240DOL Job Corps program that's administered through the1241Employment and DOL's Employment and Training Administration,1242and probably a couple other ideas.1243    Mr. JACK. Thank you.1244    Well, Mr. Chairman, I appreciate you convening this hearing1245today. It was timely given everything else that happened in the1246House this week. And with that, I yield back, sir.1247    Chairman WILLIAMS. The gentleman yields back.1248    I now recognize Mr. Olszewski from the great state of1249Maryland, for 5 minutes.1250    Mr. OLSZEWSKI. Thanks so much, Chairman Williams. Thank you1251also to Ranking Member Velazquez, to my colleagues on the Small1252Business Committee, and to Thank you to our witnesses for being1253here today.1254    I believe that we all know that tackling the housing crisis1255in America is a top priority for Members of Congress across the1256aisle and across this committee. To be clear, America is facing1257an affordability crisis, and America's affordability crisis1258begins with housing. If you can't afford a roof over your head,1259little else matters. Unfortunately, this is a crisis that is1260exacerbated by President Trump's stunning ability to so easily1261turn his back on a promise that he made to lower costs for1262Americans on day one. President Trump said it himself, quote,1263``I don't want to drive pricing of--I don't want to drive1264housing prices down,'' and quote, ``I don't think about1265Americans' financial situation,'' when referring to impacts1266from the still unauthorized war with Iran.1267    Trump's war of choice has also increased mortgage rates to1268unattainable levels for many Americans who are also grappling1269with gas prices of $4.50 per gallon or more across the country1270while inflation surges to the highest level it is reached in1271nearly 3 years. As I've pointed out in this committee before,127299 percent of Americans are paying more out of pocket, in some1273cases much more than they were under Trump before Trump 2.0. I1274think my colleague Mr. McGarvey did a good job of going through1275some specifics. I don't know how anyone can call this a win for1276America.1277    Unlike the president, lowering costs for my constituents1278and the American people is my number one priority. When it1279comes to housing, more than half of Maryland families who rent1280their homes are cost burdened, which means they spend more than128130 percent or more of their income on rent and utilities. The1282share of Maryland households able to afford the median-priced1283home is also less than half. Alongside these unattainable1284realities to simply live in a home, the overall cost to build1285out our housing supply across the country has reached historic1286highs. The costs of material and labor have increased1287significantly. I want to thank the National Association of Home1288Builders for pointing out the impact of the tariffs, which have1289alone are projected to cost, raise the cost of imported1290construction materials by billions of dollars.1291    And before I turn to questions, I'll just conclude by1292saying this, we must view housing as a workforce issue. Without1293enough housing to accommodate job growth, housing prices1294increase, which pushes out current residents and deters1295prospective residents, only serving to slow economic growth. We1296must work to address attainability as a holistic problem, and I1297look forward to discussing what policies can help small1298homebuilders who need support from Congress at this time.1299    Ms. DiVito, I'll start with you. For much of our history,1300small builders were able to obtain loans from local financial1301institutions for homebuilding, but that access to capital has1302become more constrained in recent years. How can the U.S.1303government get more financing in the hands of small builders1304and contractors?1305    Ms. DIVITO. Thank you for the question. That's right.1306Getting more financing into the hands of small builders is1307vitally important to relieving the crisis. I think the federal1308government is well positioned to expedite that effort. We1309discussed, I think, allowing the government-sponsored entities1310to buy and sell construction loans. There are some existing1311programs within the Federal Home Loan Bank System that I think1312could be better utilized. And then finally, filling the gap in1313financing for needed projects that the private market is1314reluctant to fill or for which the private market would charge1315exorbitant, exorbitant returns are, I think, all required1316tools.1317    Mr. OLSZEWSKI. Thank you.1318    And Mr. Owens, I know that builders can occasionally gain a1319higher profit by building on a building with more square1320footage or adding more square footage, which can price out1321younger first-time homebuyers looking for a starter home. What1322do you think can be done to encourage the building of smaller,1323more affordable starter homes and multifamily units to help1324have a spread of a diversity of housing options?1325    Mr. OWENS. Again, being proud to represent the nation's1326small volume builders. I think that we follow the market. One1327thing that we have learned, and there's such little spec1328inventory, if at all, from our builder contingent. We've become1329a lot more custom builders, infill builders. We, you know, I1330think what we can do is to just simply say we're going to1331follow whatever makes sense for our buyers because we're1332basically building one at a time. And saying that, there is a1333sensitivity to these overall costs. The worst thing we can do1334is build something that people can't afford. We pay a lot of1335attention now, too, to the operating costs of a home. What is1336it once that house is built to your--I am sorry, an earlier1337point of how expensive it is to actually maintain that house1338and to have the monthly utility costs factored into that.1339    So I think it is incumbent upon us, again, we're, we're1340trying to be and always have been part of the fabric of these1341smaller communities. We're in every community in America versus1342the larger of the nation's builders that, that pretty much1343handpick and select their market. So we have to be very1344responsive to not only what the costs are but also to provide1345the proper product that people can afford.1346    Mr. OLSZEWSKI. Appreciate those responses.1347    Thank you, Mr. Chairman, for having this hearing. With1348that, I yield back.1349    Chairman WILLIAMS. The gentleman yields back.1350    I now recognize Ms. McIver from the great state of New1351Jersey for 5 minutes.1352    Ms. MCIVER. Thank you so much, Chairman, and thank you to1353our Ranking Member for holding this hearing today. And thank1354you to each one of our witnesses for being here today.1355    America's housing crisis is getting worse by the day.1356Thirty years ago, the average age of a first-time homebuyer was135728 years old. Today, that age is 40. Homeownership is quickly1358becoming a far-off dream for our younger generation. Reenters1359are being hit hard as well. Half of them are spending so much1360on rent that they have little left for anything else. Families1361across the country are being pushed out of stable, affordable1362homes, all while the construction of new homes is dwindling.1363What the nation needs now are more initiatives like those taken1364in my district in New Jersey's 10th, where we had nearly 2001365new affordable housing units built last year, helping families1366keep a roof over their heads.1367    The Trump administration's economic policies have only made1368these problems worse. Inflation has spiked to the highest level1369in 4 years, driving up costs all around the country. Today, gas1370is high, grocery prices are high, health insurance is high,1371prescription prices are high, utility bills are high. The list1372goes on and on. These price increases leave millions of1373hardworking Americans with nothing left over for savings after1374paying bills, ensuring the dream of homeownership remains even1375further out of reach. If we are serious about closing America's1376housing gap, we need policies that actually lower these insane1377costs and expand the supply of affordable homes.1378    Ms. DiVito, thank you for your testimony today. Very1379enlightening. And you talked a little bit about this today.1380Home buying is at its lowest level since the mid-1990s, while1381nearly half of the renters spend a third of their paycheck on1382rent. From your perspective, can you elaborate on what are the1383biggest drivers behind the worsening of the housing1384affordability crisis families face today?1385    Ms. DIVITO. Thank you. Yes, in addition to the acute1386pricing challenges that this committee has covered and is well1387aware of I think the trend of wealthier homebuyers purchasing1388larger and larger homes, and therefore especially large home1389builders being incentivized to build them is a big problem.1390Today it is increasingly challenging for young working-class1391families to find, but certainly to afford a home.1392    Ms. MCIVER. Yeah, especially when you're being beat out by1393cash prices. That is a big deal. Despite how dire the housing1394situation is today, the Trump administration is still finding1395new ways to make it worse, unfortunately. We have learned that1396the administration is preparing to privatize Fannie Mae and1397Freddie Mac, which are critical to keeping the mortgage rate1398stable, the mortgage market stable. How would this1399privatization affect first-time or low-income homebuyers?1400    Ms. DIVITO. So since the great financial crisis, Fannie and1401Freddie have been under government conservatorship. And their1402sort of operating model and overarching priorities have shifted1403from just serving shareholders or considering shareholder1404interests and returning profits to public interest. With the1405privatization, that could shift. And capital could be1406restricted, become more expensive, and shareholders would1407certainly benefit with some pretty sizable windfalls.1408    Ms. MCIVER. Yeah. Another thing too that I am hearing a lot1409of homeowners talk about is around insurance costs, right? That1410has been a big, you know, rising cost as well. How are1411increasing insurance premiums and climate-related risk1412affecting affordable housing projects and smaller home1413builders?1414    Ms. DIVITO. Yes, thank you. I mean, climate change is1415getting significantly worse by the year. I am from Florida and1416we have suffered many hurricanes that have wiped out entire1417communities, preventing them from moving back into their homes1418for months at a time. All of these climate risks just add1419insurance costs onto the cost of a home as increasingly1420insurers grow concerned about potential payouts and then1421certainly actually have to pay out more and more as catastrophe1422hits U.S. communities.1423    Ms. MCIVER. Yeah. Well, thank you so much for that.1424    You know, I appreciate everybody's comment and, you know,1425expertise on this. I think we definitely have to look at this1426issue as something that is a multifaceted, and it needs1427multifaceted solutions. It is not a one-all fix-all. And1428lastly, I think it is crazy too when you speak to a lot of1429young people these days who are paying $3,500 for studios but1430unable to get approved for a mortgage for a home. It is just1431incredibly crazy. And we need to really take a real strong look1432at this country and where we're headed and where we are1433currently at right now.1434    With that, I yield back, Mr. Chairman. Thank you.1435    Chairman WILLIAMS. The gentlelady yields back.1436    I now recognize Dr. Morrison from the great state of1437Minnesota for 5 minutes.1438    Ms. MORRISON. Thank you so much, Chairman Williams and1439Ranking Member Velazquez, for holding this important hearing.1440And thanks to our witnesses for being here and for your1441testimonies.1442    I think we all agree that the cost of housing is too high1443due to shortage of housing supply. We've seen housing prices1444skyrocket and families are being forced to spend more and more1445of their income paying for a place to live. Both renting and1446buying are increasingly unaffordable, and unfortunately, many1447of the administration's policies are only worsening this1448affordability crisis. The 21st Century Road for Housing Act is1449an important step toward addressing our affordable housing1450program, but the administration's policies continue to create1451serious headwinds. The Trump tariff policies and rising1452inflation are causing the cost of building materials to1453continue to increase, and of course, the terror of Trump's mass1454deportation policy is worsening the labor shortage in the1455construction industry.1456    Ms. DiVito, during your testimony, you mentioned that over1457half of builders reported rising inflation and the cost of1458building materials are significant problems they faced in 2025.1459You also highlighted that small builders are disproportionately1460impacted by the high price of building materials. Could you1461elaborate on why the tariffs imposed by the Trump1462administration hurt small builders more than large builders and1463put them at a greater disadvantage?1464    Ms. DIVITO. Thank you. Yeah, that's right. Even before the1465war in Iran and some of the tariffs went into effect, inflation1466was persistently above the Fed's 2 percent target. These broad1467pricing pressures make homebuilding significantly more1468expensive. Small builders often don't have the same kind of1469resources or margins to shift supply chains or stock supplies1470to defray these costs and end up either absorbing them or1471reducing production.1472    Ms. MORRISON. So how do small builders navigate the1473uncertainty around these tariff--these ever-changing tariff1474policies?1475    Ms. DIVITO. I think we're seeing that it is very1476challenging to. There is a lot of uncertainty in obviously the1477economic policy environment and especially the fiscal policy1478space. And so uncertainty about interest rates is driving1479mortgage rates up and the cost of capital becomes more and more1480expensive. There have been many vacillations of tariff policies1481for particular goods, which just creates more disruption and1482more concern about being able to consistently plan for the1483future.1484    Ms. MORRISON. Thank you.1485    You know, I have the honor of representing Minnesota's 3rd1486District, and I've been hearing from small business owners from1487across my district and the greater Twin Cities metro area about1488the devastating impacts of Operation Metro Surge on their1489businesses, with businesses across the Twin Cities losing over1490$610 million in revenue because of it. Foot traffic was down,1491staff were afraid to go to work, and some businesses were1492forced to close. We have an ongoing labor shortage that we've1493discussed some this morning in the construction industry, with1494contractors reporting that the shortage of skilled labor is one1495of their top issues and a leading cause of delays.1496    Ms. DiVito, I am returning to you on this one. How have ICE1497raids worsened our existing construction labor shortage, and1498what are the implications for housing affordability?1499    Ms. DIVITO. That's right. The ICE raids and mass1500deportation efforts that the president has made a priority for1501his administration create a huge shock to the construction1502labor market that had already been suffering from shortages.1503Immigrant workers comprise a large percentage of, of that1504workforce, especially of the construction trades. And ICE raids1505and threats of deportation are reducing their ability to show1506up. It is having a chilling effect. Many folks are scared to go1507to work. And then, of course, some are being specifically1508targeted for deportation. So builders, especially small1509builders, have reported many incidents of disrupted work, which1510just adds time delays and a, and a general inability to find1511and retain construction workers.1512    Ms. MORRISON. Thank you. And then lastly, you know, the1513housing insurance industry is facing substantial pressures.1514You're from Florida. From the escalating frequency and severity1515of extreme weather events, largely driven by climate change1516leading insurers to either increase premiums or exit high-risk1517regions altogether. How does the, this impact housing costs for1518Americans and the development of new housing?1519    Ms. DIVITO. Yeah, exactly. So, you know, insurers have1520every right to be concerned about the future of increasing1521costs, especially as climate change gets worse, in particular1522in specific states like Florida. So all of that just adds on to1523ultimate consumer costs as insurers obviously try to hedge1524against the potential for increased claims and consumers have a1525harder and harder time, I think, actually getting the help they1526need when a mass event like a fire in Hawaii or a hurricane in1527Florida damages their community.1528    Ms. MORRISON. Thank you for that context.1529    And I see that my time has elapsed, so I yield back. Thank1530you, Mr. Chair.1531    Chairman WILLIAMS. The gentlelady yields back.1532    I now recognize Ms. Goodlander from the great state of New1533Hampshire for 5 minutes.1534    Ms. GOODLANDER. Thank you, Mr. Chairman, and thank you to1535our witnesses for being here today for this really important1536hearing.1537    I am going to jump right into it because, Mr. Owens, I am1538very grateful for the five-L framework. I think this is very,1539very useful. My grandfather raised us with a six-P framework;1540prior planning prevents piss-poor performance. But I am a big1541fan of the five Ls. And I want to jump right in and on what1542you've designated your fifth L, the cost of laws and1543regulation. And I really look forward to reading the study from15442021. It was eye-opening for me. When you think about it right1545now, 65 percent of American households are priced out of a1546median-priced home in this country. And as you point out in1547your testimony, a $1,000 increase in home prices would price1548out another 156,405 households. So this is a genuine crisis.1549We've got to lower costs by increasing supply and by lowering1550the cost of building. And what you've pointed to, you know, as1551of 2021, more than $93,000 attributable to the cost of1552development and construction.1553    I want to ask you about something that I am not sure has1554come up in this hearing yet, but the Build America, Buy America1555provisions that were included in the Infrastructure Investment1556and Jobs Act, I am very supportive of the underlying goals. In1557practice, what I've seen on the ground in New Hampshire is that1558the way that they've been implemented, particularly as it1559relates to the construction of new residential housing, has1560created some really, I think, unintended effects and costs and1561made additional barriers to building quickly.1562    So I wanted to start with you, Mr. Ohms. Can you talk about1563some of the challenges that your Members have faced with1564respect to the Build America, Buy America, or BABA compliance?1565    Mr. OWENS. I wish I could. Yeah, I haven't seen any direct1566effects in, in my own business. We've seen delays being one of1567the bigger, you know, mainly on when we look at some of what1568happened with the lumber market, the domestic lumber market1569over the years where mills closed. We had less mills out there1570doing the OSB, and then when the when the reinvestment or the1571ask was, you know, the Build America, Buy America came back1572into play, it was one of those things. I lived that every day1573in Flagstaff, Arizona, where we've had our trees to be1574harvested marked for the whole 10 years I've been out there.1575And we just can't get enough workforce in quickly enough, let1576alone to get those logs to a mill versus even getting the mill1577back up to speed and producing OSB at maybe a more affordable1578rate than we're paying now. So that's really the only thing1579that I could comment on at this point.1580    Ms. GOODLANDER. Well, I'll submit questions for the record.1581I'd be interested to hear from all of our witnesses on that1582front. Just to go to the material cost, lumber, as you've put1583it. The costs of--the costs of material costs. You point out in1584your testimony that In April 2026, we've seen costs on the rise1585in 2026.1586    Ms. DiVito, you, you pointed to some pretty eye-popping1587numbers when, when we think about just the cost of tariffs on1588small home builders. Can you speak to that? Because this, of1589course, is directly in the lane of the United States Congress1590to end these unconstitutional and costly and chaotic tariffs.1591    Ms. DIVITO. Yes, thank you. Right, I think the president's1592policies are, are putting additional pressures on, certainly on1593families struggling with rising prices, but also on businesses,1594especially small businesses with tariffs on core construction1595materials. Recently 62 percent of small builders reported that1596building material prices are a significant problem that they1597face, and that's compared to just 25 percent of some of the1598largest builders. So small businesses are particularly prone, I1599think, to some of the suffering around tariffs on construction1600materials.1601    Ms. GOODLANDER. Mr. Schaefer, can you speak to this in your1602own experience?1603    Mr. SCHAEFER. Yes. For us, tariffs, the impact has been1604about 3 to 5 percent is what we've experienced. We're building1605200 to 300 homes a year, so we're in the middle. We can buy in1606bulk. We're not a big builder, but we're not building one or1607two homes. So the impact has not been dramatic, but about 3 to16085 percent.1609    Ms. GOODLANDER. Well, on thin margins and in the midst of a1610crisis, every cost increase has a massive impact. I want to1611thank you all. This is such an important hearing. With that I1612yield back.1613    Chairman WILLIAMS. The gentlelady yields back.1614    I now recognize Ms. Scholten from the great state of1615Michigan for 5 minutes.1616    Ms. SCHOLTEN. Thank you so much, Mr. Chairman. Came up here1617a little bit sooner than I thought, so I am just pulling my1618remarks up here. I am grateful for the opportunity to connect1619with our witnesses today.1620    And Ms. DiVito, thank you so much for your work and your1621help in my office.1622    I apologize. Let me just pull these up one quick second. It1623is okay, they're not in here. Okay, perfect. Okay, there we go.1624Sorry about that.1625    There is clearly a need across the country for diversified1626supply of affordable housing, and our small businesses should1627have a larger role in addressing that challenge. Do we want to1628pause? Okay. All right. In addressing that challenge, we know1629that the industry consolidation is an increasing trend across1630the economy, which puts small businesses at a disadvantage. My1631bill, the Main Street Competes Act, just passed out of this1632committee yesterday. Thank you for the committee's support on1633that. And would prompt the federal government to examine our1634antitrust laws to find ways for our small to compete in every1635market.1636    Ms. DiVito, my first question is for you. How does1637increasing builder consolidation create an unfair playing field1638for small businesses?1639    Ms. DIVITO. Thank you. And that's right. I mean, of course,1640there are still many, many small builders in the U.S., but we1641have seen more industry consolidation over the last several1642years. Housing markets are highly localized, and these impacts1643can look different from area to area, but small builders1644already at a disadvantage against larger players and the1645underlying economic uncertainty and pricing pressures are1646putting a lot of them on the brink. Consolidation is bad for1647home builders trying to compete, but it's also bad for home1648buyers and communities. So I, I commend you for attempting to1649stop this trend.1650    Ms. SCHOLTEN. Absolutely. In West Michigan, I consistently1651hear from constituents not only about the cost of housing, but1652also the quality of existing housing supply. According to an1653analysis by Housing Next, there's approximately 1,454 renter1654households and 1,095 owner households in Ottawa County, in my1655district, that live in substandard housing conditions. This1656means that they are living in spaces with issues like1657overcrowding or lacking basic features like plumbing or1658kitchens.1659    Ms. DiVito, sticking with you here, your testimony1660highlights how some of the largest construction companies are1661facing legal troubles for building low-quality housing. Are1662there accountability measures that Congress should consider to1663discourage these companies from cutting corners?1664    Ms. DIVITO. Thank you. Yes. And just this week, there was1665reporting that some of the largest homebuilders are increasing1666their legal costs due to litigation against sub-quality1667building. Ensuring strong federal enforcement, I think, is1668crucial. But Congress can also just help promote competition in1669the homebuilding industry to prevent some of the bad practices1670that we tend to see when larger builders have a larger share of1671the market without any competition.1672    Ms. SCHOLTEN. And what do you think in terms of enforcement1673and follow-up? Where are some of the gaps that you see in1674making sure that those are consistently enforced?1675    Ms. DIVITO. That's a good question. I am not as familiar1676with what actually happens when the home comes online, but I1677think making sure that there is clear and consistent federal1678oversight, state and local requirements. We've talked a lot1679about streamlining some of those codes, which does not need to1680mean compromising on health and safety standards.1681    Ms. SCHOLTEN. Yeah. I invite you and any of our other1682panelists into the conversation too, just about where we could1683be helpful there. And you feel free to follow up and submit1684them for the record after as well. One last one in the last few1685seconds remaining. We know that the President's tariff policies1686have created real instability. We've been--this is a theme of1687the morning. We've talked about it a lot. For many small1688businesses, particularly those in the construction industry who1689rely on critically imported housing materials.1690    Ms. DiVito, again, you mentioned how small firms often do1691not have the resources to navigate these erratic tariff1692policies. Can confirm. How can the Small Business1693Administration do more to insulate small businesses from the1694worst of these impacts?1695    Ms. DIVITO. Thank you. We can certainly provide, I think,1696more small business resources by returning investment to the1697agency after it lost significant workforce last year. But1698ultimately, I believe we need to address the root cause of1699these acute pricing pressures, which is the tariffs.1700    Ms. SCHOLTEN. Thank you. I yield back.1701    Chairman WILLIAMS. The gentlelady yields back, and I now1702move as Chairman to--for one more final question from my side,1703and recognize myself for 5 minutes.1704    Mr. Schaefer as a leader at the Fading West Development1705you've been at the forefront of using modular construction to1706deliver housing in communities facing urgent need, including1707supporting recovery efforts for disaster-impacted residents in1708Lahaina, Hawaii, as well as providing workforce housing in1709mountain towns like Breckenridge. So my question is, from your1710experience deploying modular housing in these very different1711contexts, could you explain the key advantages of modular1712construction compared to traditional construction? More1713broadly, how do you see modular housing helping to address1714challenges today's relating to housing affordability, speed of1715delivery, and overall supply constraints in high-need1716communities?1717    Mr. SCHAEFER. Yes, thank you for the question. It's speed1718to market. It takes us 10 days to build a house in the factory.1719Specifically in Lahaina, we built 85 houses in 2 months. They1720were shipped, and 2 months later people were moving in after1721experiencing complete loss of their homes and community. All of1722the subcontractors are in a factory. We are built as a1723manufacturing group, so we see ourselves as 18 stations. It's1724more set up like a car factory, so very high standard of1725building, high quality, and architecturally interesting homes.1726And what this allows us to do then is build cheaper and faster.1727The repetitive motion of doing a 3-bedroom, 2-bath house over1728and over again, means you can speed it up. And that's really1729what the affordable housing market is lacking right now. What1730manufacturing does then is it makes them cheaper and faster,1731which allows us to move folks in very quickly.1732    Mr. OWENS. Good.1733    In my time remaining, Dr. Rupnik, in your testimony you1734wrote about the need to standardize terminology for1735industrialized housing and how it impacts small builders. So1736the question would be, could you elaborate on the benefits of1737standardized terminology and why it is important to tackle it1738first?1739    Mr. RUPNIK. We have found through analyzing all of the1740great work that all the federal agencies do in supporting1741housing, not just at HUD but at the Department of1742Transportation, U.S. Department of Agriculture, that even when1743we talk about Industrialized, factory-built, modular,1744manufactured. The agencies themselves do not use consistent1745terminology, which makes it very difficult for that very well-1746intended funding to reach small businesses. And that signals to1747finance and insurance that they don't know what the heck we're1748talking about. It is very difficult to understand many of the1749barriers that we're talking about finance and some of the1750opportunities where this is a less risky process for insurance.1751We are still not consistent in what they are.1752    And so the United Kingdom, for example, has been very cost-1753effective in the use of public funds by just saying we're going1754to pick a term and we're going to stick with it, both for their1755equivalent of subsidies and awards, but also their way of1756signaling to finance and insurance that we are talking about a1757particular process.1758    Chairman WILLIAMS. Okay. Mr. Schaefer, in the time I have1759left in your testimony, you mentioned that 41 percent of the1760construction workforce will retire over the next 5 years. In1761February, the committee heard the testimony from witnesses who1762spoke about the role career and technical education strengthen1763the pipeline for high-demand jobs. So quickly, would you agree1764that opportunities through CTE, like that of the Boulder Valley1765School District, could support the next generation of the1766construction workforce?1767    Mr. SCHAEFER. Absolutely. Thank you for the question. Yes,1768working with trade schools, working with high schools, working1769in all university settings is going to be a big part of this1770because there will not be enough workers. We are already in1771that position. The good thing about modular is it's a1772controlled environment. You can cross-train. You can be a part1773of our workforce with very little training so we can train you1774while you are working. And it, hopefully, will allow for many1775more jobs for our workforce.1776    Chairman WILLIAMS. Okay, thank you very much. My time is1777up.1778    I now recognize Ranking Member Velazquez from the great1779state of New York for 5 minutes.1780    Ms. VELAZQUEZ. Thank you, Mr. Chairman.1781    You know, I am really struck by the fact that here we are1782discussing what can we do in Congress to facilitate increasing1783the housing supply. I really truly believe that immigration is1784part of the equation. I don't think that we will offend the1785administration by saying that a lot of the workers that are1786legally here do not show up to work because of the fear of1787being arrested and sent to a detention center and to any1788foreign country where they do not belong. Then there is a study1789that the New York Times wrote an article about in terms of who1790represents the workforce in the construction industry. A lot of1791Latinos, immigrants. A lot of them, and they are not showing1792up.1793    Mr. Schaefer, can you talk to us about the main barriers to1794financing for modular companies and how can the federal1795government fill the gaps?1796    Mr. SCHAEFER. Thank you for your question. The challenge1797with modular on the financing side is that you have to pay for1798the house before it is built. It only takes 10 days to build in1799the factory, but it is the opposite of how typical payments are1800done in construction. You're paying a large portion before the1801home is built. That is a challenge for many banks and, frankly,1802developers to understand. I think personally, that has been one1803of the problems why modular has not caught on more in our1804country. It's going to be education of banks, the federal1805government, and the state government, to allow for financing to1806happen, whether it is a bridge loan, whatever the case may be,1807to get the financing done so that we can build them. So that1808has been our biggest challenge.1809    Ms. VELAZQUEZ. Mr. Rupnik, in your testimony, you mentioned1810a dormant authority passed by Congress decades ago. What is1811preventing this authority from being used right now?1812    Mr. RUPNIK. The knowledge that it existed. So we very much1813thank HUD and the PD&R Department for funding us to look at1814what is out there and what we can use. And we discovered that1815National Institute of Building Sciences is really designed to1816help both local and state governments as well as industry to1817really streamline the regulations. Again, streamline1818compliance. I want to be specific about that. It is not the1819regulations themselves, it's how we meet those regulations.1820Those are very different things. We're working with mostly1821states, many of the states here, and we're working with1822industry right now. But going back to the question, the work1823and the standardization of award criteria that's brought up, is1824that for the federal government, what we would love to see is1825helping states and industry by adopting a single certification1826process for housing products, not for factories.1827    And then what other countries have done is to point as many1828federal programs as possible, simplifying compliance by saying,1829if you're certified as a housing product, you qualify for X, Y,1830and Z, whatever that is. That will bring standardization. It1831will increase competency. It'll make your lives easier because1832we're not constantly looking for new ways to create compliance1833for new societal issues because we will have new societal1834issues. Right now we create new compliance for new issues,1835which is where the real cost comes from, not from the societal1836goals that we should have. Aging in place, you know, natural1837resilience. We want those things, but every time we add one of1838those, that's where it is a federal, state, local, and industry1839piece. And the National Institute of Building Sciences has been1840set up for that, and we're trying to resuscitate that. And it1841was really federally funded research that discovered that1842needle in a haystack that has allowed us to think through that.1843    Mr. OWENS. Thank you. I yield back.1844    Chairman WILLIAMS. The lady yields back. I now recognize1845Ms. Goodlander from the great state of New Hampshire for 51846minutes. .1847    Ms. GOODLANDER. Thank you. I appreciate it.1848    I wanted to just come back to financing constraints and the1849cost of capital and just ask, you know, as I--before I came to1850Congress, I worked in the Antitrust Division at the Justice1851Department, and one of the things we see, and many of you1852pointed out in your testimony, the consolidation in the banking1853industry, the assault on community banks has been a huge1854barrier and cost driver for increasing the supply. The 21st1855Century Road to Housing Act had some good provisions to1856strengthen the hand and provide relief to our community banks,1857but I wanted to ask our witnesses if you have other ideas,1858anything that we left on the table that we could do to support1859our community banks. Did we get it all right? That would be a1860remarkable feat in the history of this Congress. Well, I'll I1861would--if Mr. Owens, unless you have something----1862    Mr. OWENS. If I may, please. A little bit out of my1863wheelhouse here, but we'll--staff will be happy to get back to1864you on that. I think we've consulted with you as well as the1865Senate, as much as probably any other entity to get this right.1866We truly appreciate all your efforts to carry this forward, but1867I think that's something that's more of a heavy lift for, for1868our staff to get back to you.1869    Ms. GOODLANDER. Great.1870    Ms. DiVito?1871    Ms. DIVITO. Thank you. Yes, I think there's a really good1872opportunity to work on follow-up legislation to maximize the1873effect of Road to Housing. Specifically, I think a bipartisan1874package that focuses on those financing constraints and1875leveraging all of the government's potential to resolve some of1876them.1877    Ms. GOODLANDER. Thank you.1878    I wanted to just come I want to go back for a moment to the1879homebuyer. And in New Hampshire, we have pioneered and seen1880real success in resident-owned communities, which are1881overwhelmingly communities with manufactured homes. This is1882truly one of the last remaining affordable paths to1883homeownership, and really look forward to working with you all1884in making--building on the progress that we made in the bill1885passed yesterday. But what I am seeing on the ground in New1886Hampshire, resident-owned communities work really well because1887it gives people a stake in the decision-making and the1888stability of their communities. But what we are also seeing is1889a trend of big corporate investors who are buying up1890manufactured home communities. What they're doing is, they're1891raising the rents, they are adding junk fees, and they're often1892leaving residents with nowhere else to go because moving a1893manufactured home, as you know well, is practically impossible.1894So I wanted to ask about, you know, these--I think1895unfortunately a disturbing trend in rising abusive practices by1896corporate owners of these communities, and the ways in which1897they're jacking up costs.1898    So I wanted to begin with you, Ms. DiVito. Do you think1899that there are measures Congress could take, including1900prohibiting corporate ownership of these types of communities?1901    Ms. DIVITO. Thank you. Yes, I think Congress should very1902much build on, I think, some of the negotiations in the Road to1903Housing package to make sure that institutional investors in1904particular and some of the biggest large, large builders are1905not able to just extract from communities by hiking up rates1906and rents and tacking on unnecessary fees.1907    Ms. GOODLANDER. Mr. Schaefer, could you just speak to what1908you've seen in your own experience and what you think Congress1909might be able to do to support resident-owned communities that1910are stable and affordable?1911    Mr. SCHAEFER. Yeah, thank you. The things that I1912highlighted were the public-private philanthropic partnerships,1913and we have seen those be the most successful. When we talk1914about the word ``affordable and housing,'' it really shouldn't1915even be used in the same sentence because there's no such thing1916as affordable housing. If you're already paying $100,000 before1917you even start building, it's almost impossible. So most of the1918projects we're involved in include either state funding to1919bridge that gap or federal funding. Local communities are in1920such dire need that they're waiving tap fees, and they're1921making the entitlement process quicker so that the cost of the1922overall house is cheaper to hit that 80 to 120 AMI, which is1923the area we work in. Thank you.1924    Ms. GOODLANDER. Thank you.1925    Well, thank you all. And with that, I yield back.1926    Chairman WILLIAMS. The gentlelady yields back.1927    And I'd like to thank our witnesses today for their1928testimony, for being here and for appearing. Without objection,1929Members have five legislative days to submit additional1930materials and written questions from the witness to the Chair,1931which will be forwarded to the witnesses. I'd ask the witnesses1932to please prompt--or please respond promptly. And if there's no1933further business or objection, the committee is adjourned.1934    [Whereupon, at 11:51 a.m., the committee was adjourned.]19351936                            A P P E N D I X19371938[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]19391940                                 [all]