To address what they describe as an affordability crisis in America's housing market, Senators Mark Kelly (D-AZ) and Jeff Merkley (D-OR) have put forward the Humans Over Private Equity (HOPE) for Homeownership Act. As announced, the bill targets hedge funds and institutional investors whose presence in the housing market, senators argue, has propelled rent and purchase prices skyward for single-family homes. Supporting the initiative are Senators Ruben Gallego (D-AZ), Angus King (I-ME), Chris Van Hollen (D-MD), and Bernie Sanders (I-VT), alongside Representatives Adam Smith (D-WA-09) and Linda Sánchez (D-CA-38), who have introduced a companion bill in the House.
"Rents are too high, and for many Arizona families the dream of owning a home feels out of reach," Kelly expressed, emphasizing the role of hedge funds in inflating house prices. Merkley echoed this sentiment, adding that "houses should be homes for families, not profit centers for hedge funds." The legislation comes in response to an increasing trend of financial entities investing heavily in residential properties – a practice said to be exacerbating the affordability gap for many Americans.
The proposed act includes several measures meant to deter hedge funds from further involvement in the single-family housing market. These include a tax penalty, repeal of certain tax breaks, and an additional yearly penalty for failure to divest from their current holdings. According to Kelly's press release, the bill proposes a 15% tax penalty on the sale price or $10,000 (whichever is greater) for new home purchases by hedge funds, the discontinuation of depreciation and mortgage interest tax breaks, and a $5,000 per home tax penalty for not selling a certain percentage of owned homes each year over a ten-year period.
Endorsements for the HOPE Act have come from Americans for Financial Reform and Consumer Action, with Caroline Nagy, Associate Director for Housing at Americans for Financial Reform, stating, "Our housing market needs to work for U.S. families, not hedge funds." On the forefront of consumer advocacy, Ruth Susswein of Consumer Action praised the act for providing hope against "predatory hedge funds" that impede homeownership opportunities.
The aggressive acquisition of single-family homes by hedge funds has shown no sign of slowing down, with analysts predicting that institutional investors could own up to 40% of all single-family home rentals by 2030. The HOPE for Homeownership Act aims to counteract this trend and assist everyday Americans in their pursuits of homeownership and wealth building. Full details and the text of the bill can be read by clicking here.
