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Democrats want to ban hedge funds from buying houses in an effort to improve housing affordability.
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A bill introduced in the Senate would require hedge funds to sell off their single-family homes over the next 10 years.
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It would also prohibit hedge funds from owning any single-family homes at all.
Some streets aren't for Wall Street. As the housing affordability crisis drags on, lawmakers are seeking to kick big investors out of the housing market.
Two bills proposed by Democrats in Congress this week aim to curb home ownership by big investors in an attempt to improve buying conditions for Americans, the New York Times reported.
In the Senate, the End Hedge Fund Control of American Homes Act of 2023 would force big investors to sell off all the single-family homes they own over a period of 10 years, and eventually ban hedge funds from owning any single-family homes entirely.
"The housing in our neighborhoods should be homes for people, not profit centers for Wall Street," co-author of the bill, Senator Jeff Merkley, D-Ore., said in a press release. "Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices. It's time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford."
At the other end of Capitol Hill, Democrats in the House proposed a separate bill that would discourage Wall Street's involvement in the housing market by charging investors who own more than 75 homes an annual fee of $10,000 per home. The money would be pooled into a housing trust fund to be used to support families with down payments.
While the Senate bill has hedge fund in the title, it appears to be targeting any large investor. The language defines "hedge fund taxpayer" as any applicable entity with $50,000,000 or more in net value or assets under management. Indeed, the truly massive insitutional buyer of single family homes in the US has been private equity, with giants like Blackstone and Starwood Capital snapping up large numbers of homes in recent years.
And yet, it is also worth noting that large firms aren't the only entities buying up houses. Small mom-and-pop landlords in previous years have been the major money behind the investor home-buying spree.
According to CoreLogic, investors accounted for 26% of all single-family home purchases in June. That's up from pre-pandemic levels of less than 20%. Yet, a report from the Department of Housing and Urban Development also notes that institutions accounted for just 3% of all home purchases in 2021.