Rival bills want to make homebuying more affordable. Here’s how they would tackle the problem.
As Americans continue to grapple with the housing affordability crisis, lawmakers are taking action to address the issue by introducing rival bills aimed at curbing institutional investors’ purchases of single-family homes. President Trump recently reiterated his call to ban institutional investors from buying single-family homes, sparking a debate on the best approach to tackle the issue.
One of the proposed bills, known as the American Homeownership Act, seeks to eliminate tax advantages for large real estate investors who own more than 50 single-family homes. This would prevent them from taking deductions for depreciation and mortgage interest payments, as well as block them from federally backed mortgages and buying foreclosed homes sold by federal agencies. The goal of this bill is to level the playing field for individual homebuyers and prevent deep-pocketed investors from dominating the market.
On the other hand, the Homes for American Families Act, introduced by Senators Merkley and Hawley, takes a different approach by outright banning investment companies with assets over $150 million from purchasing single-family homes, townhouses, and condominiums. This bipartisan legislation aims to prevent Wall Street from exploiting the housing crisis and driving up housing prices, ultimately allowing more families to achieve homeownership.
While these bills address the issue of institutional investors in the housing market, some experts argue that the root cause of the affordability crisis is the lack of new housing supply. They suggest that focusing on spurring new construction of single-family homes and apartments would be a more effective solution to reduce housing costs and address the shortage of affordable housing.
In a report by Joe Gyourko from the Brookings Institution, it is highlighted that banning institutional investors from purchasing single-family homes may not effectively address the housing affordability problem, especially in markets where investors play a significant role. Instead, the focus should be on increasing housing supply to meet the growing demand and lower costs for homebuyers.
As the debate continues on the best approach to tackle the housing affordability crisis, it is clear that a comprehensive strategy that addresses both the role of institutional investors and the need for new housing construction is essential. By implementing measures that promote homeownership and increase housing supply, lawmakers can work towards making housing more accessible and affordable for all Americans.
