Archived link of Vice article.
House Bill 6608
Senate Bill 3402
Hedge Funds Have Invaded the Housing Market. A New Bill Would Ban Them.
A sweeping new bill introduced in Congress would essentially ban hedge funds and private equity firms from buying single-family homes.
Hedge funds, private equity firms, and investment trusts have been snatching up single-family homes all around the country for years, creating concern that homeowners themselves would be pushed even further out of the market. But a sweeping new bill introduced by U.S. Senator Jeff Merkley and Washington Rep. Adam Smith would, if enacted as written, essentially ban such corporate investors from the practice moving forward.
The bill, which was introduced in both the U.S. Senate and the U.S. House of Representatives on Thursday, would over a ten-year period require hedge funds and large institutional investors to completely divest from single-family home ownership. Called the End Hedge Fund Control of American Homes Act, the bill would require large funds to sell off 10 percent of their homes each year over a decade.
“We shouldn’t allow private equity firms to buy up vast quantities of American homes and create a generation of lifelong renters. Congress needs to act fast and help promote access to safe, affordable housing and homeownership for American families, not Wall Street,” Smith said in a press release.
The bill would require the Internal Revenue Service to tax large funds that fail to sell off their single family homes over that timeframe. It already has some support in the house, where it is co-sponsored by the U.S. Representatives Nikema Williams and Linda Sánchez, as well as in the Senate, where it is cosponsored by Senator Tina Smith. Advocacy groups Private Equity Stakeholder Project, Consumer Action, and National Consumer Law Center have offered additional support.
The bill defines a hedge fund as partnerships, corporations, or real estate investment trusts that pool funds from investors and have $50 million or more in net value or assets under management, with exemptions for nonprofits and companies primarily focused on construction. Hedge funds failing to report single-family home purchases would face a $20,000 fine that would go toward a housing down payment trust fund. Funds that fail to sell off their housing stock in the timeframe required would face a tax of 50 percent of the fair market value for each property, with funds also going to the housing trust fund.
Merkley and Smith cite data from an Urban Institute report that said in 2011, no single entity owned more than 1,000 single-family rental homes, whereas by June 2022 hedge funds and institutional investors owned a cumulative 574,000 single-family homes. This includes large corporate owners like Invitation Homes, which owns more than 80,000 homes across the country. While corporate investors only own 5 percent of the nation’s single-family housing stock, the ownership is often concentrated in majority Black and Latino neighborhoods and in some neighborhoods, entire blocks have been purchased by investors.
The practice has ramped up since the beginning of the pandemic, with 28 percent of all homes sold in 2022 going to institutional investors according to Pew Charitable Trust. In 2021, a venture-funded company backed by Jeff Bezos and other billionaires also got in on the act.
Institutional investors have also been buying up multifamily apartments, and tenants across the country have been fighting back by forming unions to demand maintenance and push for stronger regulations.
I know about this piece of legislation what it is is he's proposing a 20% tax on investors buying up real estate basically. In other words it's not going to do jackdiddly squat except Jack up the cost of housing wherever it's implemented by about 20% because The big investment firms can literally afford to buy these houses with cash even with the 20% tax, and all they're going to do is pass the cost of the tax off to the consumer in other words me and you
Not to be rude, but there's multiple problems with that. As pointed out in the post, they want a 50%, not 20% tax.
That is neither sustainable, nor legal, in many places. Quite a few of the biggest markets in the country (California and New York for example), have rent control that prevent landlords from raising rents more than the inflation rate+2-5% a year.
So a 50% cut would be bankrupting once you account for all the costs involved with owning and upkeeping a rental.
Likewise, yes, quite often these properties are purchased with cash. But then they immediately go out and put a massive 80/20 mortgage on them by doing what's called a cash out refinance (where you get a mortgage on a property you own to free up cash for further investment).
Which means that 50% tax would make literally every one of these investments less that worthless, since they'd have vastly more debt than income.
Believe me, I LOATHE agreeing with any liberal, but for once, I actually do agree with this, and I do believe it would work.
Now having said that, I also believe it won't go anywhere, since this is exactly what the deep state wants.
But I do believe these bills, or something similar SHOULD be done at some point to prevent hedge funds from commercializing people's homes. This isn't how it's meant to be. Normal people are supposed to own their own home, buy a handful of rental houses themselves that they rent out to students, young people, vacation goers, etc. And then gradually sell and move up until they're into commercial real estate territory.
That's how literally 90% of wealthy people made their money. It's a slow, gradual process, where you buy and/or sell properties every few years, thus keeping supply and demand in relative equilibrium, which keeps prices down overall.
Institutionalizing the basic building block, single family homes, messes with the entire process and pushes normal people out of both home ownership, and wealth building.
Yeah the problem with your whole argument is that the people who can buy the houses are also the people who print the fucking money they use to buy the houses.
......That is....I don't actually know how I should put it, but it's just wrong. Not EVERYONE who owns a rental property is a cabal stooge. You do realize that right? A lot of people's grandparents or parents have a small property portfolio of 10-20 houses that they rent out for extra retirement income.
Is every well off boomer now a member of the rothschild family? Because that's what you're implying with you're bizarre logic.
I don't even know what to say, since your rebuttal was actually retarded. And I'm not trying to be mean, I just legit don't know how else to describe such a one dimensional, childish response.
"Everyone who owns a rental property is part of the cabal!"
Do you realize how insane that sounds?
Didnt you just answer your own question? Do you think this law will be evenly enforced? Who buys up the majority of the housing? Blackrock and affiliates. Black Rock is a direct subsidiary of the Fed, in other words the central bank, in other words the private owned company that prints out our money for us under contract with the US government. Do you really think that Black Rock will get in trouble if they just I don't know ignore this law? Do you really think BlackRock won't get a concession in there so that they won't be prosecuted and it's only used to consolidate property? This legislation as you describe its effects Will dramatically affect boomers in retirees and people who had been accumulating wealth the way it's always been done. Mom and pop landlords will have to go out of business while the big boys will be able to stay afloat and eat the cost or bribe their way into not having to pay it. You're assuming that we live in a non-corrupt society, but if we were living in a non-corrupt society we wouldn't even be having this discussion. Why in the fuck would a guy who's getting kickbacks from these major investment firms proposed legislation that would harm his largest donors?