A rare bipartisan bill passed the Senate on Monday with the goal of making homeownership more affordable by expanding the nation's housing supply and limiting how many single-family homes large investors can buy.
The 21st Century ROAD to Housing Act would cap institutional investors, such as private equity firms and real estate investment trusts, at 350 single-family home purchases across the entire country. The bill now heads to the House for a final vote. President Trump has said he expects to sign it if it passes, calling it "the most comprehensive and consequential housing legislation in the history of our country" in a proclamation earlier this month.
The median home price in the United States now sits around $403,000, up 77% from roughly $227,000 in 2011, according to data from the Federal Reserve Bank of St. Louis. Real estate firm Redfin estimates that Americans need an annual household income of $116,780 to afford the average home.
Economists and housing analysts point to a long-running gap between supply and demand as a primary driver of those prices. "There's a general recognition that a big part of the reason why home sale prices and rents have gone up significantly is that we have under-built housing by millions of homes since the Great Recession," said Dennis Shea, executive vice president at the Bipartisan Policy Center, a Washington, D.C., think tank that has expressed support for the bill, according to CBS News.
During the 2007-08 housing crash, institutional investors bought thousands of foreclosed properties using low-cost financing. That helped stabilize the market at the time, but financial firms have continued buying residential real estate in the years since.
Beyond the investor cap, the bill includes several other provisions aimed at boosting construction. It would establish pre-approved home designs, streamline environmental reviews, and encourage zoning reforms. A grant program called the Innovation Fund would award $200 million a year for five years to localities that have a documented record of increasing housing supply.
The legislation would also create a pilot program to help local governments convert vacant commercial buildings into affordable housing, unlock more federal funding for factory-built homes, and eliminate a rule requiring homes to be built on a steel chassis used for transport.
Trump had also pushed for a ban on institutional investors buying up single-family homes during his January State of the Union address, making the bill's investor provision consistent with his stated priorities.
