The Battle for Affordable Homes – Proposed Bill Takes on Hedge Funds
For a long time, many people have faced challenges finding homes for sale. This shortage has led to increased competition and higher prices, leaving potential homebuyers with limited affordable options. However, a new bill introduced in Congress could bring relief to borrowers.
The proposed “End Hedge Fund Control of American Homes Act,” introduced in 2023 by Senator Jeff Merkley and Representative Adam Smith, aims to address the shortage of homes for sale in the market. The bill targets institutional investors, preventing them from buying single-family properties and requiring them to sell their residential real estate holdings over a 10-year period. Here’s a breakdown of the key points:
What is the End Hedge Fund Control of American Homes Act?
The bill, introduced to increase the supply of homes for sale, takes on hedge funds and other institutional investors that use their substantial financial resources to buy up available properties. This practice reduces the already limited inventory in the market, making homes less affordable for regular buyers. The bill seeks to ensure that housing serves as homes for people, not just profit centers for Wall Street.
Key Provisions of the Bill:
- Ban on Future Purchases: The bill would prohibit hedge funds from buying single-family homes going forward.
- Gradual Sell-Off: Institutional investors would be required to sell at least 10% of the homes in their portfolios every year for a period of 10 years.
- Empty Portfolios: At the end of the 10-year period, the portfolios of these investors must be completely empty.
Impact on the Market:
As of June 2022, institutional investors owned an estimated 574,000 properties. Reintroducing over half a million single-family homes into the market could significantly benefit homebuyers by increasing available options.
Current Status:
As of December 2023, the bill has not been passed. Congress still needs to approve the legislation before it can become law. The timeline for its approval is uncertain, and it may face delays or potential defeat in the process.
Other Legislative Efforts:
In addition to the End Hedge Fund Control of American Homes Act, there are other proposed bills in the legislative pipeline that could benefit homebuyers:
- Neighborhood Homes Investment Act: Allocates $16 billion for building and rehabilitating around 400,000 homes.
- First-Time Home Buyer Tax Credit: Offers up to $15,000 in refundable tax credit to first-time borrowers.
- Downpayment Toward Equity Act: Provides eligible first-time homebuyers with a $25,000 cash grant for their purchase.
America’s Choice Realty’s Perspective:
Informed businesses like America’s Choice Realty are keeping their clients updated on the real estate market. They understand the challenges buyers face and are likely to provide valuable insights and guidance as these legislative changes unfold.
It remains crucial for potential homebuyers to stay informed about these developments, as they could significantly impact the housing market and homeownership opportunities.