The Senate recently passed a major housing bill aimed at improving affordability and availability in the housing market. This bipartisan effort came together with a vote of 89 to 10. It introduces several key measures, including deregulation, the expansion of existing housing programs, and a ban on institutional investors buying single-family homes, except in special circumstances.
Senators Elizabeth Warren, a Democrat, and Tim Scott, a Republican, co-sponsored the bill. Warren emphasized its bipartisan nature, stating, “It’s Democrats. It’s Republicans. It’s pieces they built out together.” Scott highlighted that the bill addresses a common goal: helping families achieve homeownership.
The U.S. housing market is currently facing a significant shortage. The typical home price is around $400,000, well beyond what many families can afford. According to Realtor.com, there is a shortfall of approximately 4 million homes. Warren pointed out that to lower housing costs, “we’ve got to build a lot more,” noting that the bill includes over 40 provisions to encourage new housing construction.
The Senate’s version of the bill largely mirrors one passed recently by the House, with 84% of the provisions aligned. The main difference is the Senate’s restriction aimed at limiting investors to owning a maximum of 350 homes.
Research on the impact of large institutional investors in the housing market is mixed. A report from the Urban Institute notes that these investors own only about 3% of single-family rentals nationwide. Freddie Mac similarly found that their role in driving up prices is smaller compared to factors like limited construction and migration to high-cost areas.
While the bill places limits on most institutional investors, exceptions exist. Investors can purchase homes in need of substantial renovation or properties intended for build-to-rent. However, they must sell these homes after seven years, giving renters the first opportunity to buy.
The trend of build-to-rent properties is growing. Currently, these make up around 7% of new single-family construction. Advocates believe this model helps increase supply and manage housing costs.
Additionally, the bill aims to ease regulations on manufactured homes, which are generally more affordable and quicker to build than traditional homes. Recent changes in zoning across several states are designed to promote the use of manufactured housing, which could significantly alleviate the housing shortage.
Housing policy experts claim that simplifying rules surrounding manufactured homes can save builders between $5,000 and $10,000. This move could also encourage innovation in housing design.
Moreover, an earlier initiative, the One Big Beautiful Bill Act, revised the low-income housing tax credit program. This enables banks to invest more capital in affordable housing projects, which could mean billions in additional funding for housing development.
The bill’s supporters believe that streamlining construction processes is essential for tackling the housing crisis. A proposal to speed up environmental review processes and to create pre-approved design templates aims to simplify the building of new homes.
However, not everyone is in favor of the federal government’s approach. Critics argue that such solutions have historically fallen short, merely perpetuating the existing crisis. For example, Norbert Michel from the Cato Institute contends that this bill continues ineffective policies.
Despite the challenges ahead, both chambers of Congress are working towards refining the bill, especially around how it treats institutional investors and the Federal Reserve’s potential digital currency.
In the end, the future of this bill remains uncertain as it heads to President Trump, who has linked his support for new legislation to other political priorities.
For additional insights, you can read more from the Urban Institute’s analysis on institutional investors and the housing market here or from Freddie Mac’s research on home prices here.
