On Wednesday, both Republicans and Democrats in the House voted to pass a significant bill addressing the nation’s housing affordability crisis. The legislation aims to stimulate homebuilding across the country and restrict corporate landlords from acquiring more than 350 single-family homes.
The bill was approved by a wide margin, 396 to 13. This version is an amendment to a proposal passed by the Senate two months prior. To move forward, the two legislative chambers need to agree on a unified version of the bill before it can be sent to the President.
With the housing crisis impacting many American families, the issue has become a priority for both parties, seeking legislative success before the upcoming midterms. The shortage of homes has driven average prices to around $400,000, making them inaccessible for many. Realtor.com estimates a gap of 4 million units between available housing and demand. If enacted, this legislation would be one of the most substantial housing measures in recent history.
Restriction on Corporate Buying
The House bill specifies that any entity owning more than 350 houses is prohibited from purchasing additional single-family homes. Legislators express concern that corporate landlords are buying homes to rent, making it difficult for American families to compete with cash-rich investors.
Research indicates mixed results on home prices due to corporate purchases. While it might increase home selling prices, it can also lower rent costs by expanding the available supply. Nationally, such investors constitute approximately 3% of the single-family rental market, with higher concentrations in locations like the Sun Belt, Indianapolis, and Seattle.
Politicians from various backgrounds oppose corporate homeownership, further fueled by President Donald Trump’s executive order in January deterring federal support for large institutional investors. Senator Raphael Warnock, D-GA, advocated barring corporations from home purchases, which was integrated into the Senate’s proposal.
Opportunity to Build Rentals
The Senate’s version provides a pathway for investors to build homes for rental purposes. Build-to-rent homes represent about 7% of single-family construction over the past decade. These homes are intended explicitly for renting. Industry supporters assert this approach helps reduce housing expenses by introducing more units.
The Senate’s condition that large landlords sell build-to-rent homes to families after seven years met resistance from the homebuilding sector. An open letter from 79 industry groups criticized this limit as detrimental to the production of such housing. The House bill removed this provision, along with previous exceptions for certain investors from the ban.
Diverse Ingredients to Tackle Housing Challenges
Beyond the corporate ban, the bill does not focus on a single solution for the housing crisis. Senator Elizabeth Warren, D-Mass., described the legislation as a “meatball” of provisions from both sides of the aisle. The bill contains varied measures aimed at deregulation.
Key proposals include eliminating the requirement for factory-built homes to have permanent chassis, easing environmental reviews for construction in urban fill-in areas, and granting communities resources to develop preapproved housing designs, known as “pattern books.” Such ready-to-go designs have led cities to faster, cheaper construction, according to The Pew Charitable Trusts.
President Trump recently urged House Republicans to support the original Senate proposal, but he has yet to comment on the revised version. The bill now returns to the Senate for further consideration.