Cutting HUD’s HOME program will exacerbate the housing crisis
The ‘Big, Beautiful Bill’ cuts a key component of affordable housing, citing burdensome regulations. Here’s what that program does and why eliminating it will make the housing crisis worse.
On March 2nd, Trump’s “Big Beautiful Bill” budget proposal dropped, and as we discussed previously, HUD was hit with larger cuts than any other domestic spending agency. Most of these cuts targeted affordable housing programs. I covered the proposed elimination of CDBG programs in my last post.
Today I want to focus on another program you may have never heard of: The HOME Investment Partnerships Program, usually just called HOME.
We’ll cover what HOME is, how it works, and why eliminating it would make the housing crisis worse. We’ll also examine the specific justifications made by Trump and Vought and why they are, to quote salesman/philosopher Dave Moss…
Welcome to Bow Tie Thursday.
What is the HOME Program?
HOME funds are provided to states, cities, and regional consortia of smaller towns and counties to be used specifically for affordable housing. They support both homeowner and rental housing, but the bulk of the funding has historically gone toward building or preserving affordable rental units, which is what I want to concentrate on.
Whether it’s rehabilitating a single blighted home or building a new 90-unit apartment complex, affordable housing developers need money. In fact, they often need more than market-rate developers, since the property will bring in less rent over time to cover maintenance and repairs.
Affordable housing developers must assemble what they call a capital stack to fund the project and ensure long-term property upkeep. That’s just a fancy way of saying: money from multiple sources—typically a combination of Low-Income Housing Tax Credits (LIHTCs), federal HOME funds, soft loans from state housing finance agencies like RIHousing, and private financing.
The capital stack is like a jigsaw puzzle. With construction costs soaring, all of these pieces must come together or the project won’t move forward.
HOME funds typically represent about 17% of a project’s total cost, either committed early as seed capital to help the developer secure other financing, or later as gap financing to cover shortfalls.
The key point is this:
The choice isn’t “The complex will have 90 units with HOME funds, or 80 without.” It’s “The complex will have 90 units with HOME funds—or it won’t exist at all.”
How Much Affordable Housing Has HOME Created?
HOME funds have been responsible for the creation or preservation of approximately 1.4 million affordable housing units over the past 30 years.
However, funding has declined sharply. It peaked in 2004 at $2 billion, and today stands at $1.1 billion—a 33% reduction in nominal dollars, or about a 57% drop in real dollars. That’s before even considering the fact that construction costs have risen faster than general inflation.
It’s also worth noting:
This decline has happened under both Democratic and Republican administrations and Congresses. The difference today is that past budgets reduced funding; this proposal eliminates it outright.
Why Funding Cuts, Not Regulations, Are the Real Problem
Meanwhile, building costs have skyrocketed, capital stacks have become more complex, and 2013 regulatory changes added further delays and compliance burdens. All of this has led to fewer projects being funded, longer development timelines, and a steep decline in the number of units delivered per federal dollar.
And all of this is happening against a backdrop of surging rents and home prices that only increase the demand for affordable housing.
Clearly, what’s needed is more funding, not elimination of the program.
The Trump Administration’s Case for Eliminating HOME
Here’s the official justification from the administration:
“The Budget eliminates HOME, a formula grant that provides State and local governments with funding to expand the supply of housing. The Federal Government’s involvement increases the regulatory burden of producing affordable housing. State and local governments are better positioned to address comprehensively the array of unique market challenges, local policies, and impediments that lead to housing affordability problems.”
This is a much softer tone than the rationale used to justify cutting CDBG, but it still doesn’t hold up.
Why That Argument Doesn’t Hold Up
First, while 2013 regulations have made HOME projects more difficult, the bigger issue is lack of funding. If regulatory relief were the real goal, those requirements could be adjusted without eliminating the program. Even without factoring in rising costs and increased demand, the budget should be doubling HOME’s allocation to match 2006 levels, not zeroing it out.
Second, in my experience working with cities, states, and regional consortia across multiple regions, the “unique” market challenges are not as different as this justification implies. There are local variations, yes, but the overwhelming barrier almost everywhere is simply cost.
Third, eliminating HOME does not “empower” local governments. It removes the critical final puzzle piece that makes affordable housing development feasible.
Fourth, while the proposal vaguely suggests reallocating funds to block grants, no actual funding has been proposed elsewhere in the budget to replace HOME.
Finally—and this is me stepping outside purely data-based analysis—the argument feels deeply disingenuous. You cannot argue there is too much federal oversight while simultaneously cutting off funding for any project you label as “woke” or “illegal DEI.”
Why This Matters for Everyone
So that’s what HOME does, and why cutting it would be disastrous.
Not only would it eliminate desperately needed affordable units for households earning 60% of area median income for rental units and 80% for homeownership, it would also worsen overall housing supply, pushing costs higher for everyone.
A few closing notes:
HOME funds can also be used for first-time homebuyer assistance and tenant-based rental assistance, both income- and cost-qualified. I didn’t focus on those here because they’re smaller portions of the program and rental assistance deserves a separate post.
The people eligible for HOME assistance are not who wealthy policymakers and media elites tend to imagine when they think of “affordable housing.” They are teachers, nurses, EMTs, city workers—the essential people who make communities function, yet increasingly cannot afford to live in the communities they serve.
I can’t believe they are doing a Broadway run of Glengarry Glen Ross with Bill Burr playing Dave Moss. What I wouldn’t get to see him say “bunch of f***ing nonsense” over and over.
Thanks for reading this far. There’s a cat picture below as your reward.
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Finally, as promised…
This is Blaise Pawscal. He is a very dapper gentleman in his tuxedo. After 16 months he finally got up in my lap this weekend. It was pretty much the best.
Thanks for a clear explanation of the Home program and what the impacts of cutting it are for cities and towns across the country.