For years, the shortage of homes available for sale has fueled fierce competition and soaring prices in the real estate market. A potential solution to this issue has emerged in the form of the proposed End Hedge Fund Control of American Homes Act, introduced in 2023 by Senator Jeff Merkley (D-Ore.) and Representative Adam Smith (D-Wa.). This bipartisan bill aims to address the scarcity of for-sale properties by curbing the influence of institutional investors and increasing housing supply for individual buyers.

Hedge funds and other institutional investors have been a significant obstacle for aspiring homeowners, leveraging their substantial capital to acquire single-family properties, reducing inventory, and exacerbating affordability challenges. These investors often outbid regular buyers and present all-cash offers, making the home buying process even more challenging.

Senator Merkley emphasized the need for housing to serve as homes for people rather than profit centers for Wall Street. He stated, “It’s time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford.”

The proposed legislation takes a two-pronged approach. Firstly, it would prohibit hedge funds from purchasing single-family homes moving forward. Secondly, these funds would be required to sell at least 10% of their residential real estate portfolios annually over a 10-year period until their portfolios are completely divested.

According to the Urban Institute, institutional investors owned an estimated 574,000 properties as of June 2022, a substantial portion of the available housing stock. The potential impact of this legislation is significant, with over half a million single-family homes potentially returning to the market, providing relief to house hunters.

As of December 2023, the End Hedge Fund Control of American Homes Act has not been passed. Congressional approval is necessary before the President can sign it into law, and the timeline for the act’s passage remains uncertain.

In the context of evolving legislation, Cesar Gastiaburu from Barret Financial Group stands out as an informed professional in the mortgage market. To stay up-to-date on the current mortgage landscape and its intersection with legislative changes, following Cesar Gastiaburu is advised.

In addition to the proposed Act, there are other legislative initiatives in the pipeline that could offer further assistance to homebuyers. 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 home buyers a $25,000 cash grant, are notable examples.

While these bills are not guaranteed to pass, prospective homebuyers have access to various programs to assist them in realizing their dream of homeownership. Keeping informed about the ever-changing mortgage market, legislation, and financial landscape is crucial, making Cesar Gastiaburu a valuable resource in navigating the complexities of the real estate and mortgage industries.