Dr. Ben Carson
Secretary of Housing and Urban Development
Palm Beach County Business Development Board Luncheon Remarks
West Palm Beach, Florida, Kravis Center, June 14, 2019

As prepared for delivery. The speaker may add or subtract comments during his presentation.

Thank you all for inviting me to join you this morning. On behalf of HUD, it is a privilege to share my vision for promoting economic opportunity and addressing America's affordable housing challenges with the many distinguished industry participants and leaders here today.

With the help of President Trump's policies, the American people are witnessing record low unemployment, a historically strong national economy and unprecedented job growth. Consumer confidence, productivity, and financial optimism have all returned, and by many measures, this "rising tide is floating all boats."

But in the area of housing, a challenge that has long been chronic has reached crisis levels: there is a nationwide shortage of affordable homes.

Today, in the 50 largest metropolitan areas, on average only 37 affordable rental homes are available for every 100 low-income renter households, according to a study by the National Low Income Housing Coalition. Data indicates that we face a national deficit of more than seven million affordable and available rental homes - and that number is growing.

As a result, millions of hard-working Americans who seek affordable rents or sustainable homeownership simply cannot get their foot in the door. And we have reached the point where many of our nation's teachers, nurses, police officers, and firefighters struggle to live in or around the communities they serve.

Housing is the largest sector of our national economy, not only by GDP and by several more significant measures. Among them, responsible homeownership is a pillar of financial self-sufficiency, as it is the number one builder of financial capital for most American families. For instance, the average net worth of a renter is $5,000 [dollars], while the average net worth of a homeowner is $200,000 [dollars]. That's an extraordinary 40-fold difference.

But most importantly, homes are not simply physical structures - they are social, cultural and economic engines. They are where families are raised, and communities are interconnected. Housing problems are fundamentally human problems - and ultimately, that is the bottom line that truly matters.

But this challenge can be solved by a joint effort from both the public and private sectors, to increase the supply of affordable housing and provide a pathway to self-sufficiency for our country's most vulnerable residents.

This morning, I'd like to share three themes that are part of HUD's prescription: they are revitalization, innovation and deregulation.


Abraham Lincoln once observed, "You cannot help the poor by destroying the rich. You cannot lift the wage earner by pulling down the wage payer." The wisdom in Honest Abe's remark is that providing a pathway to self-sufficiency is the only equitable - and indeed, the only effective - way address the lack of economic opportunities for our nation's most vulnerable communities.

One of the operating principles of both HUD and the Trump Administration is that no individual should be abandoned, and no family should be forgotten. All people in need have the ability to succeed, if given the right incentives and proper opportunity.

But we cannot simply wait for opportunities - we have to create them.

For this reason, we have championed a tremendous new nationwide initiative: Opportunity Zones.

Few programs in modern American history have the potential to touch the lives of so many people as powerfully as Opportunity Zones, which are now home to nearly 35 million Americans - including 2.4 million HUD-assisted individuals - in all 50 states and five U.S. territories. That's roughly 10 percent of the country, deliberately targeted for revitalization.

The purpose of Opportunity Zones is to spur private investments into economically distressed communities through powerful tax incentives. These incentives allow a new investment vehicle, called "Qualified Opportunity Funds," to invest capital gains into projects situated in those neighborhoods of America that are often overlooked or forgotten. Investors can defer and reduce their tax liability on capital gains by investing their realized gains into new construction, rehabilitation, or businesses expanding in these areas of high need.

Anyone can invest in a Qualified Opportunity Fund, whether they are a large institutional entity or an ordinary individual. And in some cases, the capital gains tax for investors can be reduced all the way down to a perfect circle - zero.

But Opportunity Zones are also designed to serve local communities for the long-term. Only investors who commit capital for five, seven and ten years receive the benefits of this tax incentive. So for neighborhoods infused with new business, new growth becomes consistent growth, and new jobs become steady jobs.

The impact of Opportunity Zones is not some future theoretical; it's already here.

The fund directory maintained by the National Council of State Housing Agencies released data last month that Qualified Opportunity Funds have committed more than $29 billion [dollars] in anticipated investments. Nearly 60 percent of these funds plan to invest directly in affordable and workforce housing or community revitalization.

As for direct impact, online real estate database Zillow shows that growth rates for property sales prices in selected distressed communities - which were formerly negative - flipped to a positive growth rate of 20 percent following Opportunity Zone designation. And labor data shows that counties with a larger presence of Opportunity Zones are showing faster wage growth than those with a smaller presence. Prior to the creation of Opportunity Zones, there was no difference in these counties' wage growth, which suggests a causal connection.

To ensure Opportunity Zones reach their full potential, last December, President Trump established the White House Opportunity and Revitalization Council, which I have the privilege to chair. The Revitalization Council - which consists of members from 16 federal agencies and federal-state partnerships - has a mission to make better use of public funds in the revitalization of economically distressed communities.

As of now, the Council has identified more than 160 programs that could increase targeting to Opportunity Zones through grant preference points, loan qualifications, reduced fees, and eligibility criteria modifications. We have already implemented 50 of these actions across agencies.

The Revitalization Council is also conducting a listening tour of Opportunity Zones throughout the nation to incorporate input from community leaders, entrepreneurs, and investors - so the voices of the American people are always in our ear.

One such action at HUD involved our announcement last month that our Federal Housing Administration, or "FHA", is unveiling a new package of incentives to encourage multifamily property owners to invest in developments located in Opportunity Zones. These new incentives involved tens of thousands of dollars in reduced application fees for FHA mortgage insurance in Opportunity Zones, and the appointment of a dedicated team of underwriters to ensure expert and efficient processing of such applications in Opportunity Zones.


Beyond Opportunity Zones, there is also the broader issue of technological innovation.

Our nation's shortage of affordable housing is ultimately an issue of supply and demand. With millions of people in need, high demand is already guaranteed. That's why HUD has focused our strategy on increasing supply - namely, by promoting initiatives, programs, techniques, and technologies that produce more affordable homes.

Since the key constraint on supply is the cost of new construction and development, the solution to the problem is to change the cost side of the equation. Among the many new technologies being evaluated by our recently created Office of Innovation, manufactured housing is one sector shows promising potential.

According to reports by the Manufactured Housing Institute, the average cost per square foot of a manufactured home is nearly half that of a site-built home - $49 [dollars] per square foot, as opposed to $107 [dollars]. These dramatic cost savings in construction enable responsible citizens to secure housing that may be considerably less expensive than renting or purchasing a site-built home.

And yet, even at this lower price, manufactured homes appreciate in value at a rate similar to site-built homes, according to the Federal Housing Finance Agency Housing Price Index. That means manufactured homes also carry an extraordinary potential to be a wealth creation tool for ordinary, everyday American families.

Manufactured homes could also play an important role in improving disaster relief. And natural disasters are certainly an issue that South Floridians know all too well.

Natural disasters do not just devastate housing capital - they devastate human capital, through lives interrupted, school days missed, and communities fragmented under strain. As a result, last year, HUD allocated more than $35 billion [dollars] in funding to 16 state and local governments, to help America's hardest hit regions. These grants represented the largest single amount of disaster recovery assistance in HUD's history.

Manufactured housing could mitigate this kind of damage through the use of environmentally resilient construction materials, as well as by providing an affordable and permanent housing solution for lower-income survivors.

On a recent visit to Alabama, I was shown a site that was demolished by massive tornadoes - and the only homes in the area that successfully weathered the storm were manufactured houses. It was a silent testament to their resilience and to their potential.


Lastly, HUD is also promoting deregulation by aiming to break down regulatory roadblocks that get in the way of building and developing new homes that are affordable.

Expert research indicates that more than 25% of the cost of a new home is the direct result of federal, state and local regulations, including from outdated zoning and land use laws. Sometimes the price tag is much more than that: including up to 42% of the cost for some new multifamily construction.

To quantify that cost, data from the National Association Home Builders shows that regulations add nearly $85,000 to the cost of a house, which is also an increase of more than 30 percent since 2011.

Regulations such as density limitations, height restrictions, parking requirements, lengthy permitting and approval processes, and "not in my backyard" - otherwise known as "NIMBY" - opposition are the primary reasons for housing supply restrictions and increased housing costs.

As expected, some of the most heavily regulated cities are also some of the nation's costliest. San Francisco, for example, saw median home value per square foot rise by 15 percent more than income, according to Brookings Institute. The median home value in San Francisco is now $1.35 million. In Los Angeles, more than a third of the households earning 80-100 percent of the area median income are cost burdened, according to Brookings. To exacerbate the problem, last year California mandated that all new homes must have solar panels, which will further drive up the price of a new house.

The solution to this problem is one that economists have known for centuries. In the year 1776 - the same year as America's founding - Adam Smith published The Wealth Of Nations. There, he wrote that the incredible power of the free market is unleashed by "An Invisible Hand."

But we cannot tap into that power while we are still shackled by "invisible handcuffs" - the costly, excessive, and overly burdensome government barriers and regulations that hold us back.

As a result, HUD is working with local public officials, business leaders and community leaders to mobilize support for smart but significant deregulation at the local level.


There are many challenges on the road ahead, and the work won't be easy - but nothing worth doing ever is. So I am grateful to those in the room who are in ways large or small already partners with HUD, and encourage those who are not yet pursuing public-private partnership efforts to look for how you can get involved.

There is nothing that can stop these United States as long as we stay United. We all share a common commitment to this great nation, to its principles, and to its people. On behalf of HUD, I look forward to serving with you, and for you, in the months ahead.

Thank you.


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