By KIMBERLEY HAAS
A bicameral bill that would force hedge funds out of the single-family home market has been introduced.
U.S. Sen. Jeff Merkley (D-OR) and U.S. Rep. Adam Smith (D-WA) introduced the End Hedge Fund Control of American Homes Act of 2023 this week, with Merkley stating, “The housing in our neighborhoods should be homes for people, not profit centers for Wall Street.”
“Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” Merkley said in a statement. “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 act, if passed, would force hedge funds to sell at least 10% of the total number of single-family homes they currently own to homebuyers every year for a 10-year period. After a 10-year full phase-out, all hedge funds will be completely banned from owning any single-family homes.
The argument for the ban is that, “To meet investors’ return expectations, hedge funds and other investors maximize profits by imposing high rent increases, inflating fees, and delaying home maintenance and improvements, which diminishes the quality of housing over time.”
In a YouTube video, Merkley said rents are sky-high and families can’t afford to buy a home in their chosen community.
“Hedge funds and big financial corporations are fueling the fire,” Merkley said.
Merkley and Smith cite statistics from the Urban Institute estimating that large hedge funds and other institutional investors owned roughly 574,000 single-family homes as of June 2022.
“Congress must take action to crack down on corporate greed and get hedge funds out of the single-family home market. The bill I’m introducing today with my colleagues would ban these problematic hedge funds from the single-family housing market and claw back some of the homes they already own so that more American families have a fair shot at becoming homeowners,” Smith said in a statement.
The bill is cosponsored by Sen. Tina Smith (D-MN) and Reps. Nikema Williams (D-GA) and Linda Sánchez (D-CA).
Williams said in a statement that in Atlanta investors purchase homes 10 or more at a time.
“When people buy homes, doors open to opportunity. When hedge funds buy homes, those doors shut,” Williams said. “Homeownership is one of the most powerful tools to close the racial wealth gap, and that power is diminished when hedge funds dominate the housing market. I am introducing the End Hedge Fund Control of American Homes Act so that people can buy homes and enjoy the opportunity homeownership provides — no matter your ZIP Code, no matter your bank account.”
The text of the bill can be found here.
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