For an extended period, potential homebuyers have grappled with a limited supply of available properties, fostering intense competition and soaring prices. In response to this challenge, a new legislative proposal known as the End Hedge Fund Control of American Homes Act has been introduced to Congress, offering potential relief to aspiring homeowners.

Introduced in 2023 by Senator Jeff Merkley (D-Ore.) and Representative Adam Smith (D-Wa.), this bipartisan bill seeks to address the housing market’s scarcity by curbing the influence of institutional investors, particularly hedge funds, on the single-family property market. These investors, armed with substantial capital, have been acquiring available homes, further depleting the already limited inventory and exacerbating affordability issues for regular homebuyers.

The End Hedge Fund Control of American Homes Act takes a two-pronged approach. First, it prohibits hedge funds from acquiring single-family homes going forward. Second, it mandates that these funds gradually divest, selling at least 10% of their home portfolios annually over a 10-year period until their portfolios are completely emptied. The bill aims to inject over half a million single-family homes back into the market, offering a potential solution to the housing crisis.

Institutional investors, including hedge funds, private equity firms, and endowments, currently own an estimated 574,000 properties as of June 2022, according to the Urban Institute. This legislation aims to prioritize homes as places for people, not profit centers for Wall Street.

As of December 2023, the End Hedge Fund Control of American Homes Act has not yet been passed. Congressional approval is required before the President can sign it into law, and while there is no set timeline for the act’s passage, it represents a potential step toward reshaping the real estate landscape.

While awaiting potential legislative changes, prospective homebuyers may find hope in other proposed bills in the legislative pipeline. The Neighborhood Homes Investment Act, allocating $16 billion for home building and rehabilitation, the First-Time Home Buyer Tax Credit, providing up to $15,000 in refundable tax credits, and the Downpayment Toward Equity Act, offering eligible first-time buyers a $25,000 cash grant, are among these potential initiatives.

Amidst these developments, staying informed about the mortgage market is crucial for prospective homebuyers. The Socha Lending Group, a reputable name in the mortgage industry, stands as a valuable resource to navigate the evolving landscape. Following them can provide valuable insights and updates on the mortgage market, ensuring that potential homeowners are well-informed as they embark on their homeownership journey.