In recent times, the debate over housing affordability has intensified as corporate investors increasingly purchase single-family homes, prompting lawmakers to consider restrictive measures. Despite popular support, translating these ideas into legislation has proven challenging, according to experts.
Restricting Corporate Homebuyers
President Trump has voiced support for banning large investors from acquiring additional single-family homes, a notion that resonates with many. However, NPR’s Jennifer Ludden reveals the complexities of enacting such policies.
In 2020, Ashley Maxwell and her husband embarked on a home-buying journey near Indianapolis, facing fierce competition from investors.
ASHLEY MAXWELL: “We looked at over 80 homes in probably a span of two months.”
They were compelled to move due to their landlord’s decision to sell the rental property. At property showings, they often encountered multiple cash offers, typically from investors.
This scenario reflects a nationwide trend where institutional investors purchase single-family homes, aiming to rent them out. Scott Fadness, the mayor of Fishers, Indiana, noted a significant increase in investment purchases in local neighborhoods.
SCOTT FADNESS: “We have neighborhoods today that are now creeping up to 35-, 38% of the homes have been purchased for investment purposes.”
Efforts to Curb Investor Influence
Fadness, a Republican, advocated for capping rentals at 10% per neighborhood to safeguard local homeownership. He emphasized homeownership as a cornerstone of middle-class wealth in America.
Despite opposition from realtor groups citing property rights concerns, the city council unanimously supported the cap, and it became effective this January. This local measure stands out as most attempts across the country have stalled.
The Housing Market Dynamics
California Governor Gavin Newsom recently expressed a commitment to tackle investor dominance. However, housing experts argue that blaming corporate landlords oversimplifies the issue.
Laurie Goodman, an economist at the Urban Institute, explains that while investor activity correlates with rising prices, these investors typically target already booming areas and often invest in fixer-uppers.
LAURIE GOODMAN: “Most of us don’t have the knowledge to do the repairs. If we did, we couldn’t get the financing.”
Nationally, major companies account for only 3% of the market. The primary driver of high prices is a housing shortage, with some investors now contributing by constructing rental homes.
GOODMAN: “The best way to make housing affordable is to simply build more of it to increase supply.”
Continued Debate
In Las Vegas, Democratic state Senator Dina Neal remains concerned about investor influence on homeownership opportunities. One corporation there has developed an entire rental neighborhood.
DINA NEAL: “They didn’t build the whole entire neighborhood to give it up. They wanted to make sure they were going to secure rental income from 200 different families and keep it.”
Neal highlights the challenge of saving for a down payment amid high rents. She has proposed capping corporate landlords multiple times, though Nevada’s Republican governor, Joe Lombardo, has consistently blocked these measures.
As President Trump aligns with her cause, Neal reflects on the unexpected political convergence.
NEAL: “I am trying to figure out how I entered into a universe where I became aligned with a president who is a nemesis to the Democratic Party.”
Despite the unusual alliance, Neal sees potential for broader Republican support.
This article was originally written by www.npr.org
