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The measure would stop hedge funds from buying single-family homes

By Mark Huffman of ConsumerAffairs

• A bipartisan group of U.S. senators has introduced legislation aimed at preventing private equity firms from purchasing single-family homes.

• Lawmakers say the measure is designed to ease housing affordability pressures and curb investor-driven price spikes.

• The proposal reflects growing concern in both parties over Wall Streets expanding role in the residential housing market.

Its not often these days that Republicans and Democrats in Congress can agree that a bill needs to be passed. However, Sen. Elizabeth Warren (D-Mass.) and Sen. Josh Hawley (R-Mo.) are cosponsoring a bill to bar private investment firms from buying up single-family homes.

In his State of the Union address last week, President Trump also lent his support to the idea.

Supporters argue that large-scale investor purchases have intensified competition for homes, driving up prices and rents and putting homeownership further out of reach for middle-class families.

Wall Street has exploited the American housing crisis, turning the nations housing stock into a portfolio of rental properties, Hawley said in a statement. Families deserve to be able to buy their own homes and achieve the American dream without competing with big investment companies that irrevocably drive up housing prices. Thats why I am introducing legislation to ban Wall Street from buying single-family homes once and for all.

Small investors not affected

The legislation would apply specifically to private equity firms and other institutional investors that manage pooled funds on behalf of outside investors. Individual landlords and smaller-scale real estate investors would not be subject to the ban. Lawmakers say the goal is to curb large-scale acquisitions that can shift entire neighborhood markets, rather than penalize small property owners.

Under the proposal, covered firms that currently own single-family rental homes would be required to sell those properties within a set timeframe, potentially three to five years. Penalties for noncompliance could include financial fines and restrictions on future real estate activity.

The legislation would reverse a trend that began during the housing market crash of 2009-10, when millions of subprime foreclosures flooded the market with homes, dragging down prices. Seeing bargains, large investors bought up thousands of homes for rental property, effectively taking them off the market and creating shortages, which in turn drove up prices.

The issue of affordability

Housing affordability has become an increasingly urgent issue nationwide. Home prices surged during the pandemic-era buying boom, fueled by low interest rates and limited housing supply. Although mortgage rates have since risen, prices in many markets remain elevated, and inventory continues to lag demand.

Supporters of the bill argue that when private equity firms purchase homes in bulk often making all-cash offers they can outcompete individual buyers and contribute to upward pressure on prices. Some research suggests institutional investors account for a significant share of purchases in certain markets, though nationally they still represent a minority of total homeownership.

The push-back

Industry groups have pushed back on similar proposals in the past, arguing that institutional investors provide rental housing options and professional property management at scale. They also contend that the primary driver of high housing costs is insufficient new construction, not investor ownership.

Real estate and private equity trade associations are expected to oppose the measure, saying it could reduce rental supply and discourage investment in housing development. They may also raise concerns about potential legal challenges, particularly regarding property rights and retroactive divestment requirements.

The bills prospects in Congress remain uncertain. While bipartisan sponsorship increases its visibility, housing policy proposals that directly restrict private investment often face strong lobbying opposition and procedural hurdles. Still, the introduction of the legislation underscores a rare area of cross-party agreement: that housing affordability has become a political and economic flashpoint demanding federal attention.