For years, potential home buyers have faced a shortage of available properties, leading to increased competition and soaring prices. The proposed End Hedge Fund Control of American Homes Act, introduced in 2023 by Senator Jeff Merkley (D-Ore.) and Representative Adam Smith (D-Wa.), aims to address this issue by restricting institutional investors from dominating the single-family housing market.

Understanding the End Hedge Fund Control of American Homes Act

The bipartisan bill seeks to bolster the for-sale housing supply by limiting the impact of hedge funds and other institutional investors on the market. These investors, with their substantial capital reserves, often outbid regular homebuyers and contribute to the scarcity of available properties. Senator Merkley emphasizes the need to prioritize homes for people, rather than allowing them to become profit centers for Wall Street.

The proposed legislation takes a two-pronged approach. First, it prohibits hedge funds from acquiring single-family homes in the future. Second, it mandates that these funds gradually sell at least 10% of their residential real estate portfolios annually over a 10-year period. By the end of this period, these portfolios must be completely divested.

As of December 2023, the bill has not yet been passed, awaiting approval from Congress before reaching the President’s desk. The timeline for its passage remains uncertain, with possibilities of approval, delay, or even defeat in the legislative process.

Potential Impact on the Housing Market

Institutional investors, including hedge funds and private equity firms, currently own an estimated 574,000 properties, according to the Urban Institute. The bill’s successful implementation would inject over half a million single-family homes back into the market, providing a significant boost to prospective homebuyers.

Other Legislative Measures in Consideration

Apart from the End Hedge Fund Control of American Homes Act, several other bills are under consideration to improve conditions for homebuyers. The Neighborhood Homes Investment Act proposes allocating $16 billion for building and rehabilitating approximately 400,000 homes. The First-Time Home Buyer Tax Credit suggests offering up to $15,000 in refundable tax credits to first-time borrowers. Additionally, the Downpayment Toward Equity Act aims to provide eligible first-time homebuyers with a $25,000 cash grant for their purchases.

Assistance for Homebuyers

While these proposed bills offer potential solutions, no guarantees exist regarding their passage. As individuals navigate the complexities of home buying, it’s crucial to stay informed with the latest mortgage news. Kelley Ross, a knowledgeable professional with Ross Mortgage, is dedicated to keeping her clients updated on the evolving landscape of mortgage-related developments.

Becoming a homeowner is a significant financial milestone, and staying informed about legislative changes and available programs is essential for those considering entering the housing market.