[ad_1]
On Tuesday, U.S. Senator Jeff Merkley (D-Oregon) and U.S. Representative Adam Smith (D-Washington) introduced the “End Hedge Fund Control of American Homes Act” in both chambers of Congress, seeking to push institutional investors out of the U.S. housing market.
The bill aims not only to ban hedge funds from amassing large portfolios of single-family homes but also to force them to sell off their portfolio. The bill would require hedge funds to “sell at least 10% of the total number of single-family homes they currently own to families per year over a 10-year period. After a 10-year full phase-out, all hedge funds will be completely banned from owning any single-family homes.”
Merkley argues the bill would improve housing affordability.
“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street. Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” wrote Senator Merkley in the press release. “It’s time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford.”
The bill has yet to gain the support of the White House, nor has it garnered support from Democratic leadership in the Senate or Republican leadership in the House.
The press release for the bill cited an Urban Institute study that claimed as of June 2022, institutional investors owned roughly 574,000 U.S. single-family homes.
A close examination of the Democratic bill, co-sponsored in the Senate by Tina Smith (D-Minnesota), reveals a broad definition of “hedge funds,” encompassing real estate investment trusts (REITs) and corporations. This suggests that the bill would not only force out giant single-family rental operators but also halt many future build-to-rent projects, as the buyer is often a large institutional investor.
That raises the question: Would this bill—which could also drive out institutional investors helping to create more supply—actually improve housing affordability?
To understand if Senator Jeff Merkley’s bill would actually improve housing affordability, ResiClub reached out to housing economist Kevin Erdmann. (Hint: He isn’t a fan of the bill).
[ad_2]
Source link