The Senate advanced a bill that seeks to make it easier and less expensive for individuals to buy housing, including a provision to limit the number of single-family homes large institutional investors can own.
The 21st Century ROAD to Housing Act, backed by senators 89-10, marries the Senate's Renewing Opportunity in the American Dream to Housing Act and the House of Representatives' Housing for the 21st Century Act.
The limit on big purchases by corporate investors was a provision that found the White House and top Democrats in rare agreement. Sen. Elizabeth Warren, a Massachusetts Democrat, and Republican President Donald Trump have been staunch advocates of the concepts behind the measure. It would limit institutional investor ownership to 350 homes; Trump had sought a 100-home limit.
"Homeownership is out of reach for too many families. This landmark housing bill tackles the root of the problem," Warren said on the Senate floor after the vote. "This is the biggest package of bills to make housing more affordable in 30 years." Warren crafted the new bill with Sen. Tim Scott, Republican of South Carolina and chairman of the Banking, Housing and Urban Affairs Committee.
The bill now returns to the House with amendments, including a provision that would set limits on the creation of a federal digital currency. The House must decide whether to accept the changes and put it to a full-floor vote. If it passes, the bill goes to Trump for his signature.
The 300-page bill looks to, among other steps:
- Boost financing for federal housing counseling programs to prevent foreclosures.
- Increase the nation's housing stock by expanding federal grant funding and streamlining environmental reviews.
- Expand loan limits for manufactured housing.
- Provide incentives for lenders to offer smaller mortgages — including loans under $100,000 — and modernizing appraisal standards.
- Ban the Federal Reserve from establishing a central bank digital currency until at least 2030.
The National Housing Conference commended legislators for passing a bill, saying it will also offer support for state, local and tribal housing planning; increase the public welfare investment cap, and modernize the HOME Investment Partnerships program.
"With the country millions of homes short of what is needed and housing costs continuing to rise, it is encouraging to see Congress come together around bipartisan solutions aimed at expanding supply and modernizing key housing programs," David M. Dworkin, the organization's president and CEO, said in a statement.
Builders, industry pros blast corporate ownership limit
The corporate homeownership ban has drawn pushback from several industry and policy groups.
The National Association of Home Builders, a Washington, D.C.-based trade group representing about 140,000 members, backs the bill overall, but opposes the limit on institutional investors.
"While the Senate-passed housing package includes several favorable provisions that would streamline environmental reviews, encourage land use and zoning reforms and improve our aging housing stock, we are very concerned about a provision that could significantly curtail housing supply," Bill Owens, NAHB chairman, said in a statement. "Specifically, the provision requiring institutional investors to sell built-for-rent single-family homes within seven years would severely reduce investment in rental housing and could slash single-family production by nearly 40,000 units per year."
The American Enterprise Institute, also based in Washington, D.C., argues that the policy could backfire on cash-strapped renters who find it more affordable to rent single-family homes by the room rather than pay for a studio or one-bedroom apartment.
The National Multifamily Housing Council said the investor limit "will have an immediate chilling effect on housing supply, affordability and investment."
Built-to-rent "housing opens the door to better employment and educational opportunities and is a vital part of our nation’s housing affordability solution. Fewer housing units means higher rental costs for Americans," Sharon Wilson Géno, housing council president, and Bob Pinnegar, CEO and president of the National Apartment Association, said in a statement. "The aforementioned disposition requirement would effectively deny housing to Americans who choose to rent at different stages of life — limiting housing choice for seniors, military service members, families and students."
Institutional investors own only a small share of single-family homes nationwide, Brad Case, Homes.com's chief residential economist, said in his Jan. 23 column and video explainer on the topic.
"If they were required to sell the homes they own, that wouldn’t suddenly release a big wave of properties onto the market. The number of homes likely to become available would total around 0.8 percent of all single-family homes nationwide, about the same as what builders put on the market every nine months."
He added that "institutional buyers — meaning large companies that buy homes to operate as rentals — don’t generally win bidding wars against individual buyers, especially for higher-quality homes. Often the homes they buy need repairs, but an individual looking at the same home may be willing to pay more because they figure they can save money by doing the work themselves. Because of that, the institutional investors are more likely to buy houses when and where they don’t face much competition from individual buyers."
The National Association of Realtors estimates the United States needs about 1.2 million more homes to meet the current demand.
“Americans continue to face high housing costs," Dennis Shea, executive vice president and chair of the J. Terwilliger Center for Housing Policy at the Bipartisan Policy Center, said in a statement. "The Senate’s vote today moves practical solutions forward. Differences with the House remain, but given how far lawmakers have come working together, we’re hopeful they can keep building momentum to deliver a strong bill to the president’s desk.”