Wall Street firms in recent years have spent billions aggressively scooping up single-family homes with cash — but a growing number of US lawmakers and state officials want to put an end to the controversial practice.
Democrats in the US Senate and House of Representatives have sponsored legislation dubbed the End Hedge Fund Control of American Homes Act, which would force large owners of single-family residences to sell their swath of homes to family buyers, The Wall Street Journal reported.
Should the rule pass, corporations would have to sell off all of the single-family homes they own over a 10-year period, at which point they would be barred from owning that type of property entirely.
Separately, a Republican-backed bill in the Ohio state legislature aims to drive out institutional owners through heavy taxation.
Lawmakers across Nebraska, California, New York, Minnesota and North Carolina are among those proposing similar laws, according to The Journal, arguing that investors at the helm of hundreds of thousands of rented-out homes has driven up prices for families across the country.
Despite the increasingly unaffordable housing market — where mortgage rates are high and inventory is low — first-time homebuyers are now also presented with the challenge of competing with Wall Street-backed investment firms and their all-cash offers, The Journal reported.
Investors ramped up their spend on single-family homes during peak pandemic days in 2022, when more than one in every four properties of this kind went to wealthy corporations.
In late 2022, The Real Deal reported that institutional investors set a staggering $110 billion aside to purchase or build single-family rentals.
Of the sum, $30 billion was earmarked for a new development — and it marked enough to contruct some 400,000 new homes, according to The Real Deal, which found that investment titans Blackstone and KKR were among the players in the $4.4 trillion single-family rental market.
Publicly traded home-buying firms Invitation Homes and Tricon Residential, as well as wealth managers and pension funds such as CalPERS and Invesco, were also gearing up for a real estate shopping spree at the time, per The Real Deal.
In response to lawmakers who have been critical of companies’ homeownership, the firms have argued that renting out single-family homes gives renters the ability to live in desirable neighborhoods where they wouldn’t otherwise be able to afford a home, The Journal reported.
And though most calls to block large companies from buying up homes comes from Democratic officials, some Republicans have joined the crackdown — including Texas Gov. Greg Abbott.
Abbott wrote on X last month that this “corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home.”
“This must be added to the legislative agenda to protect Texas families.”
Though surveys reviewed by The Journal have shown that close to an equal number of voting-age Democrats and Republicans would be in favor of passing legislation blocking Wall Street firms from buying homes, none of the bills in Congress — or in any of the state houses — has reached a floor vote.
The bills currently in the House and Senate would cap rental-home ownership at no more than 50 homes for many companies, according to The Journal.
The laws would also require the firms to sell off any more they already own.
A bill in Minnesota, meanwhile, would limit ownership to 20 homes.
Louis Blessing III — a Republican representing suburbs of Cincinnati in the Ohio Senate who’s in favor of taxing large landlords so heavily they’re inclined to sell their properties — called the intiative “an antitrust in spirit bill,” per The Journal.
