Revolutionary Bill Hits Congress That Could Aid with Affordable Housing
For years, potential homebuyers have grappled with a limited supply of available properties, driving up competition and prices. However, a potential solution is on the horizon with the introduction of the “End Hedge Fund Control of American Homes Act” in Congress. This proposed legislation, introduced in 2023 by Senator Jeff Merkley (D-Ore.) and Representative Adam Smith (D-Wa.), seeks to address the impact of institutional investors on the housing market.
The bill aims to increase the supply of homes for sale by restricting the ability of hedge funds and other institutional investors to purchase single-family properties. These investors, with significant capital reserves, often outbid regular buyers, exacerbating the affordability crisis and reducing inventory. Senator Merkley emphasizes the need to prioritize homes for people rather than allowing them to become profit centers for Wall Street.
As currently drafted, the bill takes a two-pronged approach. First, it would prohibit hedge funds from acquiring single-family homes going forward. Second, these funds would be required to sell at least 10% of the homes in their portfolios annually over a 10-year period, ultimately emptying their residential real estate holdings.
According to the Urban Institute, institutional investors owned an estimated 574,000 properties as of June 2022. Reintroducing over half a million single-family homes into the market could significantly benefit house hunters and alleviate the housing crisis.
While the legislation has not been passed as of December 2023, there is optimism that it could bring about positive changes in the housing market. However, approval by Congress is still pending, and no specific timeline for passage has been set.
Among other legislative measures in the pipeline are bills that could provide additional federal assistance to borrowers. The Neighborhood Homes Investment Act, allocating $16 billion for home building and rehabilitation, and the First-Time Home Buyer Tax Credit, offering up to $15,000 in refundable tax credits, are noteworthy proposals. Additionally, the Downpayment Toward Equity Act aims to provide eligible first-time homebuyers with a $25,000 cash grant.
In the midst of these legislative developments, it’s crucial for potential homebuyers to explore their loan options and assess eligibility for financial assistance. Cory Benner with Mason Mac stands out as an informed professional dedicated to keeping clients updated on the latest mortgage news. As the housing market potentially undergoes changes with new legislation, staying informed and seeking professional advice remains essential for those looking to embark on the journey of homeownership.