House Passes Bipartisan Housing Affordability Bill Amidst Disagreements
On Wednesday, the House of Representatives voted overwhelmingly, 396-13, in favour of a bipartisan housing affordability bill, signaling a significant step towards potentially reaching President Trump’s desk. However, critical disagreements over certain aspects of the legislation could hinder its progress towards becoming law.
The proposed 21st Century ROAD to Housing Act, which has a corresponding version already approved by the Senate in March, marks the first substantial housing initiative in decades. The bill addresses the pressing housing affordability crisis by proposing various strategies, such as decreasing production costs for manufactured homes, minimising regulatory barriers, updating financing options, and motivating local governments to relax zoning restrictions. These measures enjoy widespread bipartisan support in both the House and Senate.
Nonetheless, contention remains particularly regarding the treatment of the burgeoning build-to-rent sector within the housing market. The Senate version of the bill mandates that major investors who construct homes for rental purposes must sell those properties to individuals within seven years. This stipulation has sparked backlash from builders, trade organisations, and advocates for affordable housing, who argue that it could jeopardise construction and diminish rental supply by compelling builders to hastily divest. Consequently, this provision was eliminated from the House bill.
Chris Nebenzahl, the Vice President for rental research at John Burns Research & Consulting, highlighted the significance of protecting the build-to-rent concept, positing that such properties contribute to housing supply, ultimately enhancing rental affordability.
A Shifting Housing Market Landscape
The trend of constructing single-family rental homes has surged as home prices have escalated, prompting many potential buyers to favour longer-term rentals, primarily in suburban areas over urban apartments. In the wake of the financial crisis, some large corporations capitalised on declining prices by acquiring existing homes to transform them into rental properties. This model has faced scrutiny from politicians, including Trump, with both versions of the bill aiming to restrict landlords owning over 350 homes from acquiring additional properties. However, institutional landlords have generally ceased purchasing homes for rental purposes due to escalating prices and interest rates, instead switching to new constructions.
In 2022, there were 68,000 build-to-rent homes under construction, a decrease from the record 84,000 in the previous year, according to the Census Bureau and National Association of Home Builders. Homes built specifically for rentals currently constitute about 7% of new construction, up from 2.7% during the period of 1992-2012. The influx of these rental homes has proven beneficial for renters; cities like Dallas, Phoenix, Denver, and Charlotte, where build-to-rent firms have been particularly active, have experienced declining rental prices in recent years.
However, the Senate’s version of the bill raises concerns that builders might reconsider their involvement in the build-to-rent market. Richard Ross, CEO of Quinn Residences, which oversees over 5,000 single-family rentals in the Southeast, expressed worries that the seven-year requirement creates an untenable situation for financing construction projects that generally operate under longer terms.
On a broader scale, the resolution of disagreements between the House and Senate regarding build-to-rent policies remains uncertain. Additionally, legislators will need to reconcile the differing approaches to a proposal for a permanent ban on central bank digital currencies, as outlined in the House bill compared to a temporary prohibition in the Senate version.
In a collaborative effort, Senators Tim Scott and Elizabeth Warren, who sponsored the Senate bill, affirmed their commitment to advancing legislation that prioritises families and addresses the housing crisis. They acknowledged the necessity for further negotiations to develop a housing bill acceptable to both chambers and conducive to reaching the President.
Shifting Dynamics in Political Support
Trump’s backing of the legislation, although previously wavering, has featured calls for the House to align with the Senate’s version. Recently, he proposed leveraging the housing bill to promote the SAVE America Act, a contentious piece of voter identification legislation. Meanwhile, the White House has expressed support for the House bill and urged expedited resolution of any outstanding differences between the chambers.
As the housing crisis persists, the legislative outcomes surrounding the various proposals will significantly impact market dynamics and housing accessibility for families across the nation.
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