Authored by Mike Shedlock via mishtalk,
The Road to Housing Act by Senators Scott (R) and Warren (D) is seriously bad policy.
21st Century ROAD to Housing Act
Please note the Senate Passes Bipartisan Housing Bill Targeting Large Investors
The Senate has passed the largest housing bill in decades — bipartisan legislation designed to improve housing affordability and availability through deregulation, expanding old programs and banning institutional investors from buying single-family homes, with few exceptions.
The bill passed 89 to 10.
“It’s Democrats. It’s Republicans. It’s pieces they built out together,” said Sen. Elizabeth Warren, D-Mass., a co-sponsor of the bill, in an interview with NPR. “That is the strength of this bill.”
“It’s not a Republican issue or a Democrat Issue,” said Sen. Tim Scott, R-S.C., the bill’s other sponsor, speaking in advance of the vote on the Senate floor. “It’s an issue about helping moms like the one who raised me, the amazing woman that she was, become homeowners.”
“If we want to bring down the cost of housing, we’ve got to build a lot more,” said Warren. “And what I love about this bill is that it has more than 40 different provisions in it, all of which aim in the same direction, which is to give a push toward building more housing.”
Much of the bill mirrors one passed by the House last month, with 84% of the provisions from the latter making their way into the Senate version.
The major difference between the two bills is the Senate’s introduction of a ban that would prevent any investor that owns at least 350 homes from buying more.
Senators Warren and Scott Toot Affordability
Please consider the US Senate Committee press release Scott, Warren Release 21st Century ROAD to Housing Act Legislative Package to Boost Housing Supply and Bring Down Costs
“The 21st Century ROAD to Housing Act will boost housing supply and bring down costs,” said Ranking Member Elizabeth Warren. “The package includes the vast majority of the Senate’s unanimously supported ROAD to Housing Act, incorporates bipartisan housing ideas from the House, and takes a good first step to rein in corporate landlords that are squeezing families out of homeownership. Congress should pass this package and continue working on further legislation to combat our nation’s housing crisis.”
“2026 is the year of affordability. This week, the Senate is set to vote on housing affordability legislation, the 21st Century ROAD to Housing Act, and my colleagues and I stand ready to deliver it to President Trump’s desk, fulfilling the promise he made to Americans at the State of the Union. Not only is this bill about cutting regulatory red tape, lowering costs, and expanding housing supply while generating no new spending, but it’s about making sure people like the single mom who raised me in North Charleston, South Carolina, have even greater access to economic opportunity and the American dream of homeownership,” said Chairman Tim Scott.
21st Century ROAD to Housing Act Will Backfire
John Burns Consulting comments on The housing bill that will make affordability worse, not better
We might as well call this the “Rental Inflation Bill.” We are not policy experts, but we do understand how demand, supply, and new development underwriting work in the housing market.
The proposed “21st Century ROAD to Housing Act,” which aims to make housing more affordable, includes provisions that will make housing more expensive. The bill:
- Decreases new construction by requiring rental home developers to sell the homes to homeowners within 7 years. These companies rent homes to people who don’t want to buy at this time, including many who are saving for a down payment or simply want to live in an expensive area with great schools. The capital devoted to rental development will have to look for opportunities elsewhere. Some of these parcels of land may be developed as for-sale homes instead, but overall, we believe the number of new homes constructed in America will be less.
- Increases rents, which is what happens when new supply is reduced. Rental home tenants will have fewer homes to choose from and rents will increase, making it more difficult for renters to save for a down payment.
- Increases home prices by reducing overall supply, not just from build-to-rent developers, but also from for-sale homebuilders who partner with single-family rental companies to deliver for-sale and for-rent housing supply.
The supply risk: build-to-rent in the crosshairs
BTR is technically an “excepted purchase,” meaning institutions are not outright banned from developing new rental communities. However, the new language calls for a 7-year disposal requirement for single-family/duplex BTR product types layered on top of that exception, which fundamentally undermines the product’s financial viability.
- The bill requires that BTR homes be sold to individual homebuyers within 7 years of purchase, a forced-sale horizon that is incompatible with how BTR communities are planned, designed, financed, and managed as integrated rental assets.
- The analogy to apartments is apt: no one would finance a multifamily building if it were required by law to be broken up and sold as individual condominiums within seven years.
- Imposing that same logic on BTR doesn’t convert communities into homeownership; it makes BTR largely unbuildable and uninvestable, while also putting future BTR renters (most of whom are families) on a countdown clock for when they would be forced out of their homes. Renters are allowed to renew for up to 36 months after the 7-year forced-sale trigger.
- Some of these parcels of land may be built as for-sale housing instead, which may be the intent of the bill, but the bill will still have a net negative impact on new housing supply.
- We track approximately 500,000 units in our BTR database, including 160,000 coming soon. If a disposal requirement remains in the final bill for any product type, we would expect fewer to be built. We have already seen a significant pullback in BTR starts, and the 7-year disposal requirement would only accelerate this reduction in supply.
While the proposed bill loosens some of the restrictions expected under the January executive order, it introduces greater risk to the BTR sector. The administration’s stated goal is to increase affordability, and adding punitive regulations to the BTR industry will only increase the cost of housing. Developers will be less inclined to take on construction risk; supply will be limited; affordability will suffer, as will the families you are trying to help.
Rent Inflation Bill
The moral of the story is whenever Republicans get into bed with Democrats disaster ensues.
The bill will reduce supply. The key problem, as pointed out by Burns, is the act makes build-to-rent largely unbuildable and uninvestable.
Families living in BTR will be on countdown clock for when they would be forced out of their homes. Renters are allowed to renew for up to 36 months after the 7-year forced-sale trigger.
How in the hell does this spur investment in building homes.
Question of the Day
Q: Do Republicans no better?
A: It’s really hard to say, but given the 89-10 margin, it’s doubtful.
Perhaps some of them do.
But it’s easy to hop on a bandwagon against those evil landlords buying up 2 percent or whatever of supply.
As is frequently the case, the name of the bill, Road to Housing Act, is ass backward.
So now the bipartisan solution is to stop all build-to-rent so nobody will build anything.
In isolation, over the long haul, the bill will put upward pressure on rent.
The issue, as always, is simple. Congress would rather look like it’s doing something than actually do something that works.