In a significant move that could reshape the housing market landscape, Democrats in Congress have recently introduced a groundbreaking bill aimed at curbing the influence of hedge funds in the single-family homes sector.
The “End Hedge Fund Control of American Homes Act of 2023”
The legislation, known as the “End Hedge Fund Control of American Homes Act of 2023,” seeks to prevent corporations, partnerships, and real estate investment trusts defined as hedge funds from owning single-family houses in the United States.
A Ten-Year Roadmap to Curb Hedge Fund Influence
The proposed bill, introduced in both the House and Senate, outlines a comprehensive plan to phase out hedge fund ownership of single-family homes over a ten-year period.
Tax Penalties and Transition
During this transitional period, the legislation imposes substantial tax penalties on hedge funds, with the generated revenue earmarked for down-payment assistance programs.
Freeing Up Housing
The ultimate goal is to limit these entities from owning any single-family homes, potentially freeing up more housing for individual buyers.
Addressing Housing Market Dynamics Impacting Ordinary Americans
Senator Jeff Merkley of Oregon, one of the bill’s sponsors, highlighted the urgency of addressing the current housing market dynamics.
Bidding Wars Against Billionaires
He emphasized the impact on ordinary Americans, stating, “You have created a situation where ordinary Americans aren’t bidding against other families.
They’re bidding against the billionaires of America for these houses.”
An Unsettling Trend in the Housing Market
Merkley believes this trend is driving up rents and home prices, making homeownership increasingly elusive for many Americans.
Disrupting the Status Quo
The proposed legislation, if enacted, could disrupt a burgeoning sector of the housing market that has seen institutional investors, particularly from Wall Street, entering the single-family rental market.
The Legislative Push Against Institutional Investors in Housing
The bill reflects a response to the growing influence of corporations on the housing market, particularly in cities like Charlotte, N.C., where investors purchased a significant percentage of homes in cash, outcompeting traditional homebuyers who rely on mortgages.
A Complementary Approach to Housing Market Challenges
The American Neighborhoods Protection Act, introduced by Representatives Jeff Jackson and Alma Adams of North Carolina, complements the broader legislation.
Corporate Owners of Multiple Single-Family Homes Targeted
This separate bill proposes that corporate owners of more than 75 single-family homes pay an annual fee of $10,000 per home into a housing trust fund, which would be used as down payment assistance for families.
Challenges in a Divided Congress
While the bills face challenges in a divided Congress, their introduction sparks a necessary conversation about the role of hedge funds and corporations in the housing market.
Wall Street’s Role in the Housing Market
The move comes after The New York Times published an investigative piece shedding light on the impact of corporate-backed investments in cities like Charlotte, where investors purchased homes and converted them into rentals, affecting local communities.
Critics’ Perspective
Critics argue that the root issue lies not with Wall Street but with the insufficient production of new housing.
Root Issues in Housing Production and Development
David Howard, the CEO of the National Rental Home Council, contends that the country needs between 2 million and 6.5 million new housing units, and policies should focus on supporting their production and development.
David Howard’s Warning: New Bills Could Exacerbate Existing Housing Challenges
He warns that bills hindering these efforts may exacerbate existing challenges.
Housing Market Evolution
As the housing market landscape continues to evolve, the proposed legislation raises critical questions about the balance between corporate investment, individual homeownership, and the overall health of the housing market.
An Uphill Battle in Congress
The bills may face an uphill battle in Congress, but they undeniably bring attention to a crucial issue affecting communities nationwide.
21 States Where Squatters Can Legally Claim Your Property
Discover how squatters’ rights, or adverse possession, are more than just legal jargon—they’re stories of unexpected twists in the world of real estate. From sunny California to the historical landscapes of Pennsylvania, here’s how these laws could turn the tables on homeowners and squatters alike. 21 States Where Squatters Can Legally Claim Your Property
14 Things That Are Banned in the U.S. but Totally Fine Elsewhere
Ever feel like America’s rulebook was written by someone with a dartboard? Across the pond or down under, things get even wackier. Let’s take a walk on the wild side of global “Do’s” that are definite “Don’ts” in the Land of the Free. 14 Things That Are Banned in the U.S. but Totally Fine Elsewhere
25 American States Nobody Wants to Visit Anymore
Across the United States, some states capture the hearts and itineraries of many, while others remain quietly on the sidelines, overshadowed or misunderstood. These 25 states, facing what you might call a popularity crisis, are brimming with hidden wonders, cultural riches, and natural beauty, awaiting those willing to look beyond the usual tourist trails. 25 American States Nobody Wants to Visit Anymore
20 Foods That Are Cheaper to Eat Out Than Making at Home
In a world where convenience often wins, certain culinary delights come with a lower price tag when enjoyed at a restaurant rather than crafted in your own kitchen. Here are twenty foods that might save you both time and money when indulged in at your favorite eatery. 20 Foods That Are Cheaper to Eat out Than Making at Home
17 Things You’re Paying For, but You Don’t Have To
In the land of the free, there’s a price tag on everything, but savvy Americans know better than to open their wallets for just anything. Here are 17 expenses you’ve been shelling out for without realizing there’s a cheaper or even free alternative. 17 Things You’re Paying For, but You Don’t Have To
The post Democrats Push Against Hedge Funds’ Grip on Housing Market first appeared on From Frugal to Free.
Featured Image Credit: Shutterstock / goodluz.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
