New legislation introduced by Democrats in both chambers of Congress seeks to prevent hedge funds from purchasing single-family homes.
The End Hedge Fund Control of American Homes Act of 2023 was presented in the House by Rep. Adam Smith (D-WA) and in the Senate by Sen. Jeff Merkley (D-OR). The lawmakers cited a 2022 Urban Institute study that found that large hedge funds and other institutional investors owned roughly 574,000 single-family homes, exacerbating the shortage of available and affordable homeownership opportunities.
If the bill is signed into law, it would ban hedge funds from owning these types of homes and require them to sell at least 10% of the total number of single-family homes they currently own to families per year over a 10-year period. After a 10-year full phase-out, the lawmakers added, hedge funds will be completely banned from owning any single-family homes.
“In 1971, my father was able to buy the house I grew up in for $15,000 on the salary he earned as a baggage handler at SeaTac Airport,” said Smith. “That same house would cost nearly $500,000 today, yet wages for workers like my father have not kept up. Too many families in the Puget Sound region and across the country are struggling to afford to rent or buy a home. This crisis has been exacerbated in recent years by an increasing number of large investors purchasing a significant percentage of single-family homes, squeezing out prospective buyers.”
“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street,” said Merkley. “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.”