‘Bidding Against Billionaires’: New Bill Would Ban Hedge Funds from Buying, Owning Single Family Homes

WASHINGTON–Democrats in Congress have introduced a bill in both houses of Congress that seeks to ban hedge funds from buying and owning single-family homes in the United States, which some critics have said is driving up the cost of home ownership in the country.

The bill would require hedge funds, defined as corporations, partnerships or real estate investment trusts that manage funds pooled from investors, to sell off all the single-family homes they own over a 10-year period, and eventually prohibit such companies from owning any single-family homes at all, according to the New York Times.

Jeff Merkley

During the decade-long phaseout period, the bill would impose stiff tax penalties, with the proceeds reserved for down-payment assistance for individuals looking to buy homes from corporate owners, according to the report.

“If signed into law, the legislation, called the End Hedge Fund Control of American Homes Act of 2023, could upend a growing sector of the housing market, and potentially increase the supply of single-family homes available for individual buyers,” the Times reported. “Homeownership, long a cornerstone of generational wealth in the United States, is increasingly out of reach for Americans as home prices and interest rates soar.”

‘Driving Up Home Prices’

Sen. Jeff Merkley (D-OR), who introduced the bill along with Rep. Adam Smith (D-WA), said, “You have created a situation where ordinary Americans aren’t bidding against other families, they’re bidding against the billionaires of America for these houses. And it’s driving up rents and it’s driving up the home prices.”

In separate legislation, in the House Reps. Jeff Jackson and Alma Adams of North Carolina, both Democrats, introduced the American Neighborhoods Protection Act, which require corporate owners of more than 75 single-family homes to pay an annual fee of $10,000 per home into a housing trust fund to be used as down payment assistance for families, according to the Times.

What One Report Found

The Times earlier published a story examining the impact of corporate-backed investment on Charlotte, N.C., where, in 2022, investors purchased 17% of the city’s homes in cash, “often outcompeting first-time buyers who rely heavily on mortgages.”

It's a pattern that’s been seen around the country, the report added.