{"id":166251,"date":"2026-03-17T15:16:29","date_gmt":"2026-03-17T15:16:29","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/166251\/"},"modified":"2026-03-17T15:16:29","modified_gmt":"2026-03-17T15:16:29","slug":"the-big-problem-with-congresss-housing-bill","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/166251\/","title":{"rendered":"The Big Problem With Congress\u2019s Housing Bill"},"content":{"rendered":"

In an era of partisan gridlock, Republicans and Democrats have found something to agree on: America needs more housing. A bipartisan federal bill<\/a> moving through Congress, the 21st Century ROAD to Housing Act<\/a>, aims to cut red tape and encourage construction, with broad support from both parties.<\/p>\n

Unfortunately, lawmakers also appear to agree on an unhelpful idea: that large institutional investors are to blame for the housing shortage. This misdiagnosis will, if acted upon, discourage the construction of new rental homes and make the housing shortage worse.<\/p>\n

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As it approved the ROAD to Housing Act last Thursday, the Senate included a late-stage provision that would restrict large institutional investors from purchasing single-family homes. Specifically, the bill prohibits investors that own at least 350 homes from purchasing more. Large investors that build or purchase more than that would need to sell those homes to homebuyers within seven years.<\/p>\n

The target of the policy is the growing build-to-rent sector\u2014essentially the single-family equivalent of apartment complexes. In build-to-rent, a single investor owns a large number of single-family homes, all built with the explicit purpose of renting rather than being owner-occupied. New construction of this kind constitutes a rapidly expanding segment<\/a> of many housing markets as population growth and high mortgage rates have pushed more households toward renting.<\/p>\n

Institutional investors\u2014pension funds, real-estate investment trusts, and large asset managers\u2014play a central role in financing these projects. Restricting their ability to own rental homes therefore risks choking off investment in a segment of the market that is actually adding supply. Forcing investors to exit projects after a fixed period would make it harder to finance long-term rentals.<\/p>\n

The popular narrative<\/a> doubtless driving the new proposal is that Wall Street is buying up homes that would otherwise go to families. But the reality is that institutional investors account for<\/a> only a small share of single-family housing nationally\u2014between 2 and 4 percent of units, depending on how the category is defined.<\/p>\n

More importantly, the firms the bill targets are disproportionately involved in new construction. Whereas smaller landlords tend to acquire existing properties to rent out, large investors frequently finance projects that add housing inventory<\/a>. Many build-to-rent developments simply wouldn\u2019t exist without institutional financing.<\/p>\n

In other words, institutional investors are building when everyone else isn\u2019t. As Manhattan Institute senior fellow Brad Hargreaves recently documented<\/a>, institutional ownership tends to expand the supply of rental housing and modestly reduce rents in the markets where it occurs. It can also broaden access to neighborhoods that might otherwise be financially out of reach for renters, including areas with stronger job markets and better public schools.<\/p>\n

Restricting who can own homes does not magically create more homes. At best, it redistributes existing properties among different types of buyers. At worst, it reduces the flow of capital needed to build new housing in the first place. If the federal housing bill caps institutional ownership\u2014or forces the eventual sale of newly built units\u2014developers and investors will simply build fewer projects.<\/p>\n

That outcome would be especially unfortunate because the ROAD to Housing Act gets several important things right. It reflects a growing bipartisan recognition that the housing crisis is fundamentally a supply problem\u2014and that federal policy should encourage cities to allow more construction.<\/p>\n

For example, the bill ties certain federal housing funds to measurable production outcomes rather than vague planning commitments. It also encourages more predictable permitting timelines<\/a> and reduces bureaucratic barriers that add years\u2014and significant costs\u2014to new projects.<\/p>\n

Those ideas move federal housing policy in the right direction. If local governments want access to certain federal resources, they will need to show that they are actually enabling housing production. That\u2019s a far more promising strategy than trying to micromanage who is allowed to own homes.<\/p>\n

The United States does not have a \u201cWall Street ownership\u201d problem; it has a \u201cnot enough homes\u201d problem. If Washington tells investors that they are unwelcome in the rental market, developers will build fewer rental homes. And when supply falls short of demand, renters will pay the price.<\/p>\n

Shawn Regan<\/a> is a senior fellow at the Manhattan Institute.<\/p>\n

Photo by Justin Sullivan\/Getty Images<\/p>\n

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City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).<\/p>\n","protected":false},"excerpt":{"rendered":"In an era of partisan gridlock, Republicans and Democrats have found something to agree on: America needs more…\n","protected":false},"author":2,"featured_media":166252,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[75,84,83,9,24,63],"class_list":["post-166251","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-new-york","tag-new-york-city","tag-nyc"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/166251","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=166251"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/166251\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/166252"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=166251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=166251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=166251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}