The Senate just passed the bill 89-10. Pretty resounding approval for it. There are still hurdles: It’ll have to go to the House, pass without amendment, and then the President will have to sign it.
What Problem are They Trying to Fix?
In one word: affordability. Despite interest rates increasing, home prices have continued to increase. This is pricing out a large proportion of the population, especially young people looking to buy their first house. Legislators are looking for any way they can to drive prices down or at least keep them at the current levels for a while.
What Provisions are in it?
There are a bunch of them, but the one getting a lot of attention is a ban on large investors buying single family homes (SFRs). This bill targets SFRs. Anyone who owns 350 homes would not be allowed to purchase more under this bill. The theory is that these large investors are driving prices up by buying all the homes and renting them out or sitting on them for later sale at a higher price.
Additionally, this bill will relax restrictions on building manufactured homes, as they cost less to build and are built faster. There are other provisions on construction as well.
How Will the Bill Affect Investors?
There are always hidden consequences to legislation, but the big institutional investors are the ones who need to be worried. Their model is on a cycle of buying and selling. They won’t be able to buy any more, so it’ll destroy their business. Those investors with less than 350 houses (which is the vast majority) and those in the multifamily or commercial space, will likely only be affected downstream. For instance, more people will be able to buy houses, so less will rent, and rents will decrease. This will ultimately affect all of us, but probably not as severely as some think.
In the end, you can always write to your legislator about it, but it probably won’t have much effect on your investments. Any price changes that it causes will likely be years down the road, so I wouldn’t change what you are doing just now. And, it hasn’t even passed yet. President Trump said he won’t sign any legislation until the Save America Act is passed. Who knows what he will do if that bill fails?
