(Yahoo! Finance) - A wide-ranging bipartisan bill designed to improve housing affordability easily passed the Senate on Thursday, despite concerns from some industry groups and senators about terms that would restrict institutional investors from the market.
The 21st Century Road to Housing Act, sponsored by GOP Sen. Tim Scott and Sen. Elizabeth Warren, a Democrat, passed 89-10. The package blends elements from previous housing bills considered by both chambers of Congress.
The bill contains a number of provisions designed to lower costs and boost housing supply. Among them are initiatives to change manufactured home requirements to lower their costs, simplify environmental review processes for small building projects, and tie certain state and local government grants and funding to housing production goals.
Congress and the White House have been seeking ways to address housing affordability as the issue becomes a mounting political and economic crisis nationwide.
Since 2019, home prices have risen more than 50% on average, far exceeding 22% wage growth in the same period. Many aspiring homebuyers have found themselves priced out of the market, while many current homeowners are reluctant to move in a pricier, higher-rate environment.
“We can do what so many folks failed to do in this legislative body for the last few decades — not few years, but few decades — and that is pass consequential legislation that makes it easier to become a homeowner for those who are ready for that part of their journey,” Scott said in a speech before the vote.
The bill has drawn support from organizations focused on low-income housing issues, advocacy groups for cities and state housing finance authorities, and trade groups like the National Association of Realtors and the Manufactured Housing Institute.
“It’s very good that Congress is taking meaningful action,” said Dennis Shea, executive vice president and chair of the J. Ronald Terwilliger Center for Housing Policy at the Bipartisan Policy Center, which supports the bill.
He noted that he was also encouraged to see state and local officials working to improve affordability in their communities.
“We really need to have multiple levers of policy. It’s a tough problem to solve.”
Investor involvement
While the portions of the bill designed to encourage building and unlock new housing funding have broad support, one section of the package could prove deeply divisive.
That provision prohibits many large investors from buying single-family homes and requires others to sell off rental home holdings to individuals after seven years. It has drawn concerns that the rules could end up worsening the housing shortage, especially for rentals, by discouraging future investment in the burgeoning build-to-rent business.
In the aftermath of the financial crisis, large investment groups bought up single-family homes at fire-sale prices and turned them into rentals. But in recent years, as home prices surged and financing became more expensive, many have turned their attention away from the resale market and toward purchasing or building new-construction rental communities.
“It would significantly curtail further development,” said Chris Nebenzahl, vice president for rental research at housing consultancy John Burns Research & Consulting. “It really shifts the strategy and the nature of the development that these homes are built under.”
Remaining hurdles
The bill now heads to the House, where conservative Republicans have raised objections to a variety of provisions, and divisions between the two chambers could lead to an acrimonious amendment process in the weeks ahead.
The White House has said it supports the bill in its current form and that President Trump’s advisers would recommend he sign it. Trump has issued an executive order to curb institutional investors’ single-family home purchases and has floated other housing affordability initiatives, like 50-year mortgages.
issued an executive order to curb institutional investors’ single-family home purchases and has floated other housing affordability initiatives, like 50-year mortgages.
Trump has historically been able to overcome objections from the conservative wing of his party simply by pressuring them to vote yes, but the president’s commitment to the issue appears to have ebbed in recent days. Trump has instead been focused on another piece of legislation, the voting access-focused Safeguard American Voter Eligibility (SAVE) Act.
Trump hammered on that bill above all others during a gathering with Republican lawmakers earlier this week in Miami. He’s gone so far as to pledge not to sign other bills until that legislation is passed. Senate Majority Leader John Thune, however, says he doesn’t have the votes to advance the bill.
Questions around Trump’s interest in getting the housing bill over the line increased Wednesday when Punchbowl News reported that the president recently spoke to House Speaker Mike Johnson about the bill and dismissed it, saying, “No one gives a [bleep] about housing.”
By Claire Boston and Ben Werschkul
