Bipartisan Home Affordability Bill Advances in the House

The House of Representatives has passed a significant bipartisan bill to tackle the housing affordability crisis in the United States. The bill, approved by a 396 to 13 vote, encourages homebuilding nationwide and restricts corporate landlords from acquiring over 350 houses. This version of the bill amends a prior Senate version from two months ago. Both legislative bodies must now agree on a single version before it reaches the president for final approval.

Amid rising home prices, averaging around $400,000, legislative action becomes crucial. The shortage of homes has pushed prices beyond the reach of many Americans. Realtor.com estimates a 4 million unit gap between available homes and demand. This proposed legislation represents the largest housing policy initiative in decades, aiming to alleviate the shortage by introducing more homes to the market quickly.

Restrictions on Corporate Investors

The House’s bill restricts corporate entities owning more than 350 houses from purchasing additional single-family homes. Lawmakers from both sides express concern that well-financed investors often outbid American families for home purchases, potentially driving up sale prices. Although these corporate investors constitute only about 3% of the single-family rental market nationally, their impact is more pronounced in areas like the Sun Belt, Indianapolis, and Seattle.

President Donald Trump previously issued an executive order discouraging federal support for large institutional investors buying single-family homes. Similarly, Sen. Raphael Warnock, D-GA, advocated for restricting corporate home purchases in the Senate’s version of the bill.

Provisions for Build-to-Rent Homes

A notable allowance in the Senate’s proposal permits corporate investors to construct homes for rent. ‘Build-to-rent’ homes, specifically built for renters, represent 7% of new single-family home construction over the past decade. Such homes are considered beneficial in increasing available units and reducing housing costs. However, the Senate’s version included a clause mandating the sale of these homes to families after seven years, a provision encountering resistance from the homebuilding sector. The House’s version eliminates this requirement.

Initially, the House bill allowed for exceptions to the investor ban, including allowances for homes owned for less than a year or properties that had only been rentals. Exemptions also existed for land trusts and nonprofits, but these provisions were removed before the House vote.

Comprehensive Policy Approach

While the corporate buying ban is a significant feature, the bill does not focus solely on one solution for the housing crisis. Described as a policy ‘meatball’ by co-sponsor Elizabeth Warren, D-Mass., it contains diverse measures endorsed by members of both political parties.

The bill’s deregulation features include allowing factory-built homes to omit permanent chassis, thus revising previous requirements. It also seeks to streamline environmental reviews for infill housing projects. Additionally, a grant initiative supports communities in creating ‘pattern books’ of preapproved housing designs, simplifying and speeding up construction processes. Cities employing such designs have reported reduced construction costs and improved affordability, as highlighted by The Pew Charitable Trusts.

President Trump encouraged House Republicans to back the Senate’s original version without alterations, but has yet to comment on the revised House bill. This bill now returns to the Senate for further consideration and potential final passage.