Dems Introduce Bills to Ban Hedge Funds From Housing Market

by NEW YORK DIGITAL NEWS


Wall Street has been slowly withdrawing from the housing market in recent months. Some members of Congress want to block investors from single-family homes altogether.

Democrats introduced bills in both the House of Representatives and the Senate this week that seek to ban hedge funds — defined as corporations, partnerships and real estate investment trusts managing investors’ funds pooled funds — from buying and owning single-family homes, the New York Times reported.  

Under the legislation, hedge funds would have 10 years to sell the single-family homes they already own. During the decade-long phaseout, the government would levy taxes on the funds with proceeds diverted towards down payment assistance for individuals looking to buy from investors.

In the House of Representatives, the bill would force corporate owners with more than 75 single-family homes to pay an annual fee of $10,000 per home. Those proceeds would also go towards down payment assistance.

“You have created a situation where ordinary Americans aren’t bidding against other families, they’re bidding against the billionaires of America for these houses,” Sen. Jeff Merkley said upon the introduction of the bill, co-introduced by Rep. Adam Smith of Washington.

The bills are not expected to pass in the divided Congress. 

Since seizing on housing market opportunities after the onset of the pandemic, investors have become a boogeyman for homeownership woes. They are accused of driving up home prices and rents as would-be homebuyers are forced to settle in as single-family tenants, rather than owners.

Investor purchases dropped 29.7 percent annually in the third quarter, according to Redfin, outpacing the 22.2 percent decline recorded in the broader housing market.

Investors purchased nearly 49,000 homes in the third quarter, the lowest for the July-to-September period since 2016. Market share also declined for investors, as the 15.9 percent of homes snapped up by investors for the quarter represented a decline of nearly 2 percentage points year-over-year.

Holden Walter-Warner

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