Sen. Jeff Merkley (D-Ore.) and Rep. Adam Smith (D-Wash.) introduced a bill to prohibit hedge funds from buying and owning single-family homes in an effort to provide more families with the opportunity for homeownership.
“The purchasing of single-family homes by hedge funds, especially in the current housing market, serves only to make profits for the investors and provides no value to the communities where these homes are located,” the members of Congress stated. “People should not have to go up against hedge funds when they are trying to buy a home in their community. Banning hedge funds from the single-family housing market will help enable more families the opportunity to purchase a home and combat the growing large investor landlord model.”
Large-scale hedge fund investors have significantly increased their share of the housing market over the last 10 years. In 2011, no single hedge fund owned over 1,000 single-family rental units. As of June 2022, a study by the Urban Institute estimated large hedge funds and other institutional investors owned roughly 574,000 single-family homes. According to Merkley and Smith, this trend of increased hedge-fund ownership is continuing, with these entities purchasing 27 percent of single-family homes during the first three months of this year.
“Predatory hedge funds disproportionately target Black families and vulnerable single parents, as revealed in a recent House Financial Services Committee report,” Merkley and Smith stated. “The report found these investors focus on neighborhoods with larger Black populations and approximately 30 percent more single mothers than the national average. Additionally, studies show that hedge funds are 68 percent more likely than small landlords to file for evictions and often impose high rent increases, inflated fees, and deteriorating housing conditions to maximize profits.”
If enacted, the End Hedge Fund Control of American Homes Act will:
Several public interest groups have stated their support of the bill, including the National Consumer Law Center (NCLC), on behalf of its low-income clients.
“The NCLC, on behalf of its low-income clients, supports the End Hedge Fund Control of American Homes Act legislation because it centers the needs of communities and families over the profits of hedge funds by seeking to keep homeownership in the hands of individuals and families,” NCLC Senior Attorney Alys Cohen said. “By limiting access of institutional investors to neighborhood homes, especially in communities of color, the bill recognizes the importance of owner-occupied homeownership to the growth of thriving neighborhoods and to narrowing the racial wealth gap.”
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