Dive Brief:
- Sens. Josh Hawley (R-Mo.) and Jeff Merkley (D-Ore.) introduced the Homes for American Families Act and an update of the HOPE (Humans Over Private Equity) for Homeownership Act on Thursday, a package that aims to bar large institutional investors from buying up single-family homes and increase homeownership.
- The Homes for American Families Act would amend the bedrock Sherman Antitrust Act to make it illegal for investment funds with over $150 million in assets to buy single-family homes, condominiums or townhouses. Changes to the HOPE for Homeownership Act would leverage tax changes to push large institutional investors and hedge funds to divest their holdings of single-family homes.
- Rental housing economist Jay Parsons told Multifamily Dive that the bills are grounded in misinformation. “It assumes homeownership is down, when in fact it's higher today than it was pre-COVID and it's above the long-term average,” Parsons said in an email. “It assumes investors are ‘invading’ the housing market, when in fact they've been retreating — with investors selling 1 million-plus more homes than they bought over the last decade.”
Dive Insight:
In January, President Donald Trump took many in the housing industry by surprise when he signed an executive order barring large institutional investors from buying single-family homes in an effort to boost homeownership. It contains a key carveout for build-to-rent communities.
On Tuesday during his State of the Union address, Trump said he would ask Congress to make his ban permanent. He highlighted a Houston woman in the audience who had bid on 20 homes but lost to “gigantic investment firms that bypassed inspection, paid all cash and turned those houses into rentals, stealing away her American dream.” The major investor ban has not yet appeared in the separate bipartisan Housing for the 21st Century Act, now before the Senate.
Also on Tuesday, Merkley and Sen. Elizabeth Warren (D-Mass.) introduced a bill to prevent Wall Street investors from buying up single-family homes that uses a different tactic: ending tax breaks for depreciation and mortgage interest on properties for owners with 50 or more homes.
Two days after the State of the Union, Hawley said in a press release announcing the legislative package that Wall Street has exploited the housing crisis and turned the nation’s housing stock into a portfolio of rental properties. He said the proposed legislation would empower the U.S. Justice Department with enforcement authority for civil violations and prioritized antitrust review for major investors’ purchases of residential real estate.
“Families deserve to be able to buy their own homes and achieve the American dream without competing with big investment companies that irrevocably drive up housing prices,” Hawley said in the Thursday press release. “That’s why I am introducing legislation to ban Wall Street from buying single family homes once and for all.”
However, housing industry experts have pushed back against both this framing and the solution.
“While housing affordability is a real problem, we can't solve the problem until we focus on the root issues — which is that most renters can't qualify for a mortgage, don't have the cash for a down payment and can't afford the more than $1,000 in additional ongoing monthly costs to own a home versus renting one,” Parsons said.
In their response to Trump’s State of the Union remarks, National Apartment Association President and CEO Bob Pinnegar and National Multifamily Housing Council President Sharon Wilson Géno pointed out that institutional investors support everyday people who invest their retirement savings in multifamily housing via pension funds, life insurance companies, real estate investment trusts and other similar investment funds.
“Solving our affordability crisis will require everyone engaged in residential real estate – from for-sale to rental – and must incorporate a range of solutions that support new investment and reduce our supply shortage,” Pinnegar and Wilson Géno said in the joint statement.
In a Feb. 9 coalition letter to the House Committee on Financial Services following Trump’s executive order, NAA, NMHC and seven other real estate industry groups argued that the housing affordability problem is driven by demand exceeding supply, which has resulted in a decades-long shortage of homes for sale and rent across all housing types.
“While not a core focus of all of our memberships, the single-family rental industry plays an important part in providing housing across the nation,” the groups said. “As the Committee considers legislative action, we urge you to proceed carefully in this area and ensure that housing supply is not inadvertently constrained.”
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