Senate Approves Major Bipartisan Housing Bill
The U.S. Senate has approved bipartisan legislation, the largest housing bill in decades, by a vote of 89 to 10.
The bill aims to enhance housing affordability and availability through deregulation, expanding existing programs, and introducing restrictions on institutional investors in the single-family home market.
Key Provisions and Goals
Senators Elizabeth Warren (D-Mass.) and Tim Scott (R-S.C.), co-sponsors of the bill, emphasized its bipartisan development and its objective to assist families in achieving homeownership.
A primary goal is to increase the country's housing supply, addressing an estimated shortfall of 4 million units and typical home prices around $400,000.
Institutional Investor Regulation
A significant element of the bill is a ban preventing investors who own at least 350 homes from purchasing additional properties.
Senator Warren stated the intent is to prioritize families living in homes over using them solely as investment vehicles.
Research on the impact of large investors on housing prices is varied; a report from Urban indicated large investors (owning 1,000+ homes in three or more markets) possess only 3% of single-family rentals nationwide, while Freddie Mac suggested their role in price increases is less significant than other factors like limited construction.
Exceptions and Industry Reactions
The bill includes exceptions, permitting investors to acquire homes needing substantial renovation to meet code, and to own new "build-to-rent" homes.
However, investors would be required to sell these build-to-rent properties after seven years, with the renter having the first opportunity to purchase.
Industry groups, including the Institute of Real Estate Management, expressed concern that this sale requirement could hinder the production of build-to-rent housing.
Conversely, the National Association of Realtors supports the bill.
Deregulation of Manufactured Homes
Another section aims to boost the construction of factory-built homes by removing the requirement for a permanent chassis.
This change could reduce construction costs by approximately $5,000 to $10,000 per unit and allow for more flexible designs, such as adding second stories or basements.
Policy experts suggest manufactured housing can address the shortage of affordable "starter homes."
Increased Investment in Affordable Rentals
The legislation increases the Public Welfare Investment (PWI) cap for banks from 15% to 20% of their risk-adjusted capital.
This change is intended to enable banks to invest more capital in affordable housing construction through the expanded low-income housing tax credit program, potentially unlocking billions of dollars in additional investment capacity.
Streamlining Construction and Funding
Additional provisions seek to expedite home building through deregulation.
These include streamlining environmental reviews for infill development and establishing a grant program for communities to create "pattern books" of pre-approved housing designs, which could reduce approval processes.
The bill also expands existing block grants and introduces new ones for innovative construction projects.
Criticisms and Legislative Path
Some organizations, such as the Cato Institute, have criticized the bill, characterizing it as a continuation of previous federal housing policies that have not resolved the current crisis.
The bill must now be reconciled with a version passed by the House, with key differences including the scope of investor regulation and language regarding a potential federal digital currency.
President Trump has indicated he will not sign new legislation until the SAVE America Act is passed, though a bill can become law without a presidential signature if no action is taken within 10 days while Congress is in session.