Among the many divisions of the U.S. Department of Housing and Urban Development (HUD) is the Office of Policy Development and Research, or PD&R, as it’s known to its fans. For as long as I can remember, PD&R has periodically commissioned research to support HUD’s current or future activities or policies. Sometimes it requests research on a specific subject, such as evaluating a HUD program, and sometimes it outlines one or more topics with implications for future HUD policies and invites proposals from scholars. These invitations are known as a NOFA (Notice of Funding Availability) or a NOFO (Notice of Funding Opportunity).
This is wonky stuff, and few people outside the small housing research world ever pay attention to these notices. But sometimes such a document can, perhaps inadvertently, open a window into HUD’s policy thinking. After all—to pick a totally hypothetical example—it’s unlikely that PD&R would seek proposals for studies on the impact of selling the nation’s public housing inventory to a hedge fund unless somebody thought it was a good idea. (For the record, there’s no evidence that idea is on the table. Yet.)
On May 1, PD&R issued a new NOFO for housing research projects. It has set aside up to $8 million to fund 10 studies and identified nine research areas of interest.
The first research topic is Government-Induced Demand and Housing Affordability (emphasis mine, here and below). Here’s a quote from the NOFO. It’s a bit long, but it’s worth reading closely:
HUD is seeking proposals to answer one or more of the following research questions:
- Is housing demand more elastic than housing supply, and by how much? If so, is moderating demand a more effective policy lever than attempting to increase supply?
- What are the key drivers of housing demand and what is the role of government programs and/or public policies in driving housing demand?
- What approaches can government take to moderate housing demand when needed, in order to preserve affordability?
Applicants must submit proposals to address one or more of the research questions above. In responding to the research question(s) above, proposals may examine a range of government-driven demand factors, preferably including, but not limited to: immigration, loose monetary policy, supply-side and demand-side housing subsidies, federal backing of mortgages, down payment assistance, the mortgage interest deduction, inclusionary zoning, and benefit programs that disincentivize marriage. Proposals must include a specific focus on quantifying how these policies drive housing demand and thus housing prices, and proposals based on causal experimental evidence are especially preferred. Proposals should seek to determine whether moderating government-driven demand is a more feasible method of addressing the housing affordability crisis than attempting to increase supply and may include specific policy recommendations for moderating housing demand as a method of addressing the housing crisis. Outputs from this research may include short-term action plans to remedy any distortions found, as well as policy recommendations to address government policies that drive up housing demand faster than supply can keep up. Proposals must be focused on demand factors.
Some powerful assumptions are baked into HUD’s list of “demand factors.”
First, let’s step back and talk about what “housing demand” means. Housing demand stems from household formation. A household is generally defined as one or more persons occupying a single housing unit as their usual place of residence. A household—anything from a single woman to a multigenerational family to a commune—is more or less synonymous with an occupied housing unit. Most households are families, but many are made up of people living alone or unrelated people living together.
The more households, the greater the housing demand. As new households form—by an 18-year-old moving out of her parents’ home, a finance bro looking for an apartment in Brooklyn, a couple looking for a home to raise their children, a divorced couple looking for new places to live, and, yes, an immigrant arriving in the U.S.—they create housing demand. Ideally, the nation’s housing supply should grow to match the growth in households.
There’s an important catch to that description, however. Demand consists of new households being formed thatcan afford to buy or rent their own home or apartment. If you don’t have enough money and can’t get housing assistance, you may want a house, but since you can’t afford one, you’re not part of the demand equation. You may end up homeless, or, more often, doubling up, house-sharing, couch-surfing, or living with your parents or siblings. You’re no longer considered part of the demand-supply equation.
Going back to the PD&R NOFO, the underlying assumption that government actions can induce demand is probably correct in two ways. First, if you’re too poor to find a place to live, a Housing Choice Voucher (aka Section 8) can help pay your rent, or you might be able to get into public housing, where rent is set based on whatever small amount you can afford. Second, if you can afford to carry a mortgage on a home but can’t qualify for one or come up with the down payment, you may be able to get a government-guaranteed mortgage through the Federal Housing Administration or Veterans Affairs, or get help with the down payment through a government program. The first increases aggregate or overall demand for housing by taking people who are, one might say, non-player characters or NPCs and enabling them to participate in the market. The second increases demand for homeownership specifically, though not necessarily total demand.
So yes, the government can induce demand. But for more than 90 years, housing policy in this country, whether under Republicans or Democrats, has been based on the idea that this is a good thing. In fact, the Housing Act of 1949 set a national goal of “a decent home and a suitable living environment for every American family.” Every, not some. People need a place to live. And for all that time, we’ve believed that it’s a good thing to use government funds to help people find a decent place to live, even if they don’t make enough money to compete in the private housing market.
While homeownership is valuable, the proposition that government should help people have a place to live is a basic part of the social contract that defines a decent, civilized society. A wealthy country such as the U.S. should make it possible for every household to have at least a minimally decent roof over their heads, just as they should have enough food to eat and basic healthcare when they need it. That we only provide enough housing funds to meet the needs of roughly 1 in 5 families who need assistance is shameful.
The message in the PD&R NOFO suggests the opposite. If I had to put that message into my own words, in simple, straightforward language, it would read something like this:
We can’t figure out how to increase the housing supply, and it’s too expensive to subsidize folks anyway, so let’s forget about it and see if we can get more people to forget about buying or renting homes and instead go live with their parents, double up, leave the country, or live on the street. Then we won’t need as many houses, and the problem will be solved.
Put directly, the NOFO asks can we reduce housing demand by:
- Reducing or eliminating immigration
- Reducing or eliminating housing subsidy programs
- Making it harder for buyers to get mortgage financing
- Eliminating the mortgage interest deduction
- Changing benefit programs that disincentivize marriage
- Implementing other policy changes not specifically listed
Essentially, they are asking how could we moderate the housing crisis without having to build as many new units in the places people want to live and at the price points they can afford to pay?
This is far more radical than anything housing-related in Project 2025, let alone anything else on the topic that anyone in the Trump administration has openly suggested to date.
Some of the questions posed in the NOFO would be interesting as pure research questions. If I put on my pure researcher hat, as I do from time to time, I think the question of if and how immigrants affect the housing market—not just through the housing they occupy, but the extent to which immigrant money and immigrant construction labor make possible more housing construction—is an interesting one.
But PD&R doesn’t conduct pure research; it onlycommissions research that has some connection to current HUD policies or ideas for future ones. It is inconceivable that this NOFO could have been issued unlesssomeone in the Trump administration is at least considering pursuing these ideas.
It is possible that PD&R will fund a study under this NOFO that reviews the evidence and says, “Don’t do it, it’s a bad idea,” but I suspect that’s highly unlikely. The fact that PD&R identified nine research topics, plans to fund no more than 10 studies, and has a tight approval turnaround timeline suggests that it may have already identified the people it plans to fund. In funder’s jargon, this NOFO was “wired,” and strangers need not waste their time applying. That may not be true, but, as they say, if it walks like a duck…
I may be reading too much into this. It’s also possible that PD&R is interested in fine-tuning government programs, such as housing vouchers, so that their effect on housing demand is “moderated” while they continue to serve those who need them. But I don’t believe that.
You’ve been warned.
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