HUD Could Face Deep Cuts Under New Budget Proposal

February 11, 2020

In President Donald Trump’s $4.8 trillion budget for 2021, the Department of Housing and Urban Development could face significant cuts to its programs. Under the proposal, HUD would lose 15.2% of its funding, or about $8.6 billion.

Some housing analysts are concerned that the proposed HUD cuts come at a pressing time for the housing industry as it faces an affordable housing crisis. Home and rental prices have reached new highs across the country and are pricing more consumers out.

“Given that people are struggling with finding affordable housing due to fast-rising home prices and rents, cuts to programs that are designed to help with this very problem could have a negative impact,” warns George Ratiu, realtor.com®’s senior economist.

The budget is a proposal, however. Congress will still need to review and approve it, which is unlikely given the Democrat-controlled House of Representatives and the need for bipartisan support from the Senate—many of the proposed cuts are unlikely to be implemented.

HUD Secretary Ben Carson isn’t as concerned about potential budget cuts. “The President’s budget proposal provides HUD with the resources to serve America’s most vulnerable populations in an efficient and compassionate manner,” Carson said in a statement. “We must remember, compassion is not always how many people we can get on a government program, but rather how many people we can help graduate out of a program and into financial independence. The road to self-sufficiency is one that is sure to improve the lives of all Americans.”

Trump’s budget proposal does have allocations set aside for housing. For example, it allocates $20 million to modernize the Federal Housing Administration’s information technology systems. It proposes $180 million for building about 1,200 new units for seniors and disabled Americans. Also, it allocates $2.8 billion toward homeless assistance grants. It also grants $425 million toward mitigating health and safety hazards in a home, such as funding to remove dangerous lead paint from urban housing and protection against carbon monoxide poisoning.

HUD’s proposed cuts do affect some community housing programs the president has spoken of wanting to eliminate. For example, potentially on the chopping block could be the HOME Investment Partnership Program, which provides grants to states and communities for building, buying, and rehabbing affordable housing for rent or sale. The program can also be used to provide rental assistance to low-income consumers. Also, on the chopping block: the Community Development Block Grant program, which provides money to struggling neighborhoods trying to create or preserve affordable housing.

“What this will do will push down the affordable housing issues to the state and local levels,” Ken Johnson, a real estate economist at Florida Atlantic University in Boca Raton, Fla., told realtor.com®. But “the lack of affordability is so dramatic in coastal cities and rapidly growing Southern cities that there’s no real market solution. They need help from the federal government on this.”

The budget notes that to support state and local efforts, “the White House Council on Eliminating Regulatory Barriers to Affordable Housing is working to identify and support successful practices for removing burdensome rules and regulations that raise the cost of housing development.”

Read more about which programs could be cut under the president’s proposed budget.