'There's A Growing Mindset That Renters Don't Deserve To Live In Single-Family Homes' — Housing Economist Says Proposed Legislation Will Make Rentals Less Accessible And More Expensive

In a time of soaring home prices and mortgage rates, proposed legislation in the U.S. Congress aims to restrict hedge funds from owning single-family homes, a move critics say could exacerbate rental housing issues. Housing economist Jay Parsons warns that such measures could unintentionally harm renters and reduce their access to single-family homes.

Recent bills introduced in both the U.S. House of Representatives and the Senate seek to limit the involvement of hedge funds in the single-family housing market. Sen. Jeff Merkley's (D-Oregon) End Hedge Fund Control of American Homes Act of 2023 and Rep. Adam Smith’s (D-Washington) House version, along with a separate bill by Reps. Jeff Jackson (D-North Carolina) and Alma Adams (D-North Carolina), aim to address the affordability crisis by targeting corporate ownership of residential properties.

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Housing Affordability Crisis

With the median home price in the U.S. having risen over 31% since early 2022, homeownership is increasingly out of reach for many Americans. The spike in mortgage rates from 3.22% to 7.08% within the year has compounded the issue, pushing the dream of homeownership further away for prospective buyers. This affordability crisis occurs against the backdrop of a significant housing shortage, estimated to be as high as 6.5 million homes.

Institutional investors like Invitation Homes Inc. INVH, the largest owner of single-family homes in the U.S., have been in the spotlight for their extensive portfolios. Invitation Homes, with over 80,000 properties, grew from just 3,000 homes after being funded by Blackstone Inc. BX in 2012. Critics argue that such corporations are making it harder for individuals to compete in the housing market.

Is A Housing Ban On Hedge Funds The Solution?

Parsons offers a different viewpoint. In a recent post on X, he expressed concern about the growing sentiment against renters of single-family homes:

"It feels like there’s a growing mindset that renters don’t deserve to live in single-family homes and instead only in multifamily rental apartments," Parsons said. "We’re seeing this not only in proposals like this one but also from HOAs trying to ban rentals."

Parsons argues that policies forcing rental housing providers to sell their properties could make single-family rentals both less accessible and more expensive. He emphasizes the importance of considering renters’ needs, particularly young families for whom apartment living might not be suitable.

"We need to remind policymakers that renters are people, too. And for young families especially, renting an apartment unit is often not a great fit, so it’s critical to have a healthy single-family rental market," Parsons said.

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As the debate over the housing crisis continues, the implications of proposed legislation on the rental market remain a crucial point of contention. Parsons' comments highlight the need for a balanced approach that acknowledges the varied housing needs of all Americans, including those who choose to rent.

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