One of the greatest challenges for current homebuyers is a lack of available homes. Right now, there are more qualified buyers than there are homes listed for sale. The lack of homes has caused home values to continue rising, albeit at a slower pace than from 2020 – 2022. In many metro areas, including Atlanta, investors own a large percentage of single-family homes (“SFHs”). In October 2023, my colleague, Clay, suggested one approach to increase inventory by motivating investors to sell SFHs. And the Wall Street Journal recently posted an article about bipartisan efforts to reduce Wall Street’s ownership of SFHs.
I’m not a huge fan of government economic regulations. They often have unpleasant unintended consequences. However, I would probably support legislation carefully encouraging investors to sell SFHs. I would support such legislation to help individual Americans. Long-term home ownership is widely considered a powerful tool to build individual wealth over time. However, when cash-laden investment companies buy up available homes, they make it much harder for individuals to win home contracts and grow their own wealth.
The Journal article notes almost 11% of rental homes in a 5-county Atlanta area are owned by three real estate companies. It also reports that a 2022 HUD study found “21% of Atlanta rental homes were owned by some large institution.” Ultimately, a small number of corporate executives can make decisions impacting thousands of SFHs and limiting the ability of individual Atlantans to buy their own home.
Representatives from both parties in Congress and state legislatures are now proposing legislation to help reduce large investor ownership of SFHs. Proposals include:
- Bills in the US House and Senate would cap SFH ownership for companies at 50 units, and require them to sell off any excess.
- A Minnesota bill would limit SFH ownership to 20 units.
- An Ohio Senator proposed legislation to tax large landlords so heavily they would feel compelled to sell their units.
- Texas Governor Abbot posted online that large-scale corporate purchases of SFH were distorting the market and legislation should be added to “protect Texas families.”
- State legislatures in Nebraska, California, New York, and North Carolina are also proposing similar laws.
The article does report none of the bills in Congress or the state legislatures have reached a floor vote.
While I like the idea of improving individuals’ opportunities to buy their own homes, I do hope the legislatures will be very thoughtful with their legislation. Forcing companies to sell large numbers of SFHs quickly could cause a supply shock and push home prices down significantly. This approach helps home buyers but can hurt older Americans considering selling their homes in the next few years, as they look to move to senior care communities. I would support legislation that limits the number of investor-owned homes sold in any single year and requires the home sales over a 5-to-10-year period, to help prevent price shocks.
Considering a Georgia home purchase? Don’t wait for the politicians to help you. Who knows when, if ever, they will implement helpful legislation. And while you wait, Georgia home prices will likely keep on rising. If you can afford a home purchase, I recommend you make it happen now while competition for available homes is not as intense as in recent years. We at Dunwoody Mortgage can help make your offer a winner in this environment. Contact me and I’ll help you make your offers and win the contract.
