A new housing plan wants to give middle-class Americans the kind of support typically reserved for low-income households

• Rep. Alexandria Ocasio-Cortez and Sen. Tina Smith introduced a bill to build "social housing."
• The HOMES Act would build and rehabilitate permanently affordable homes for low- and middle-income people.
• It takes inspiration from local legislative efforts across the country and European models.

Politicians still agree: The rent is too damn high.

Rep. Alexandria Ocasio-Cortez, a New York Democrat, and Sen. Tina Smith, a Minnesota Democrat, on Wednesday introduced legislation in the House and Senate that would — if enacted — massively expand the nation's affordable housing stock.

The HOMES Act would establish a new federal housing development authority charged with building and rehabilitating more than a million permanently affordable homes. These homes — for both renters and buyers — would be managed by local entities, including public and tribal housing authorities, cooperatives, tenant unions, nonprofits, and the like.

"There has been a lot of talk about building new housing in this country, but too often we don't talk about who will be building that new housing," Ocasio-Cortez said during a press conference unveiling the legislation on Wednesday afternoon.

While 40% of these homes would be reserved for extremely low-income residents and 30% for low-income households, about 30% would be available to middle-income households. This so-called "social housing" is notably different from traditional public housing, which is entirely reserved for the poorest households. Rent for all tenants in social housing would be capped at 25% of their income.

"Having middle-income tenants makes the financial model more viable. But also, importantly, having middle income tenants in these developments helps fight segregation. It helps build a constituency for this kind of housing," said Gianpaolo Baiocchi, director of New York University's Urban Democracy Lab and an advisor on the legislation.

In a New York Times op-ed unveiling their legislation, Ocasio-Cortez and Smith criticized the federal government's historical approach to ensuring lower-income Americans have access to affordable homes. They argued that federal funding — in the form of subsidies for developers, homeowners, and public housing — has too often propped up a for-profit market that doesn't serve the neediest.

"There is another way: social housing," Ocasio-Cortez and Smith said in their op-ed. "Instead of treating real estate as a commodity, we can underwrite the construction of millions of homes and apartments that, by law, must remain affordable."

Baiocchi stressed that social housing would take all kinds of forms. "In some places it would look like public housing, in other places would be community land trusts, in other places it would be cooperatives," he said. About half of the 1.25 million homes would be new, while the other half would be purchased from private owners and redeveloped, Baiocchi said.

The housing construction would be funded by "a combination of congressional spending and Treasury-backed loans, making financing resilient to the volatility of our housing market and the political winds of the annual appropriations process," Ocasio-Cortez and Smith wrote.

Currently, rentals are hard to come by, with national vacancy rates at 6.6% in the second quarter of 2024.

The legislation comes amid a progressive push for investments in social housing across the country. Baiocchi pointed to New York State Assemblymember Emily Gallagher's similar legislation to create a state housing developer. And in California, lawmakers introduced a bill to construct mixed-income social housing on government-owned land.

Ocasio-Cortez and Smith also pointed to the social housing system in Vienna as a model. Baiocchi said they looked to both European and Latin American examples.

It's a particularly notable development as both presidential campaigns stake out their economic policies leading into the 2024 election. Vice President Kamala Harris has already proposed a housing plan to build 3 million additional new homes in her first term, with tax incentives for builders creating starter homes; she's also proposed giving first-time homebuyers $25,000 towards down payments.

Former President Donald Trump has proposed opening up federal land to build new housing; the 2024 GOP platform says that he would "promote homeownership through Tax Incentives and support for first-time buyers, and cut unnecessary Regulations that raise housing costs."

Any congressional proposals on housing costs — especially from legislators as prominent as Ocasio-Cortez and Smith — will likely attract increased attention in the run-up to a tight election. When reached for comment, the Harris-Walz campaign directed BI to their current housing proposals. But the bill's proposal now signals that efforts to address housing costs could be top of mind for Democrats should they hold the White House.