Home Builders Urge Fannie, Freddie to Get Behind Mixed-Use Development

Urbanists have won an important victory in their campaign to reverse Fannie Mae and Freddie Mac’s bias against mixed-use development, enlisting the National Association of Home Builders to help push for a critical reform to Fannie Mae and Freddie Mac’s lending standards. The mortgage giants currently require that projects they finance be no more than 25 percent commercial (20 percent for Fannie and for multifamily HUD projects.)

This San Diego condo development has ground floor retail to provide walkable services to the neighborhood. Photo by ##http://www.flickr.com/photos/hercwad/4366962841/##LA Wad##
This San Diego condo development has ground floor retail, making the neighborhood more walkable. Photo by ##http://www.flickr.com/photos/hercwad/4366962841/##LA Wad##

The Congress for the New Urbanism has waged a battle against these mandates. “Every Main Street in America violates Fannie Mae’s and Freddie Mac’s rigid standards,” CNU President John Norquist has said.

According to CNU, Fannie and Freddie’s commercial-space maximums have had “a distorting effect on building types and development patterns,” especially disadvantaging low- to mid-rise buildings with retail on the first floor and apartments or condominiums above. “Before these regulations, low-mid rise mixed use buildings were common.”

But CNU has won over an important ally in its fight against Fannie and Freddie’s anti-urban lending practices. The board of the National Association of Home Builders has joined with CNU and the National Town Builders Association in asking the lenders to raise the commercial space cap to 45 percent. That would allow significantly more retail space to be built into residential developments, providing those residents and nearby neighbors with convenient services that they don’t have to drive to.

CNU has tailored its urbanist message to a more conservative audience, arguing that free enterprise demands these changes:

This change would allow market forces to better determine characteristics of development rather than federal mandates. It would allow the market to respond to recent consumer preferences for mixed use neighborhoods, as most recently reported in the Urban Land Institute/Pricewaterhouse Coopers Emerging Trends in Real Estate 2011. Government generated regulations that suppress development that responds to consumer demand can negatively effect growth and recovery. CNU and NTBA’s proposal is to remove or substantially ease these restrictions.

  • A very good move, the joint forces will have a much better chance to do something about these ridiculous regulations from Fannie and Freddie. If successful, we could be looking at a nice shift in the development trends which would IMO higher the quality of living in neighbourhoods with four to five storey buildings as it would enable to make the ground floor into commercial space. It could even provide a small boost to the overall home building market, who knows. Sure hoping that they’ll succeed in their efforts.

  • LazyReader

    The last thing we need is a nearly bankrupt organization to get behind these developments. Mixed use development has almost no market value considering who encourages their building. http://www.youtube.com/watch?v=uDjLJY6q6yY

  • LazyReader

    As for new urbanist communities, housing is artificially inflated by price and apartments & townhomes alone fetch almost 400,000 and single family homes fetch for a million dollars or more and do so almost quickly after they’re built. Homes for instance in Seaside, Florida fancy over 5 million dollars. We need to fight this, the reason we’re in a recession is because of a housing bubble. Caused by urban planners who created bubbles resulting in artificial shortages of housing in the first place. They brought in a lot of speculators to take advantage of the housing and drove the prices way up. Then lobby to the federal government “we want to make housing affordable to people”, where the local governments wanted it to be at market rate to draw in residents who would pay willingly. Forcing Freddie Mac and Fannie Mae to buy junk loans in the first place. In places where urban planning and zoning laws dont exist, housing is largley still affordable and those areas have been less hit by declines in home values.