I & I Editorial BoardAmerica has a housing problem, as in not enough of it. There’s not much policymakers can do that would help other than get out of the way and let free enterprise take over. And one would think that if Republicans got behind a bill in the House, it would do just that. But instead, every GOP member of the House voted for legislation that is being considered a landmark in lawmaking, but has a nasty provision.
According to Rep. Dan Meuser, the Pennsylvania Republican who is a cosponsor of the Housing for the 21st Century Act, the country “faces a housing shortage of well over 4 million homes while only 1½ million housing units are built each year.”
The bipartisan “bill addresses that shortfall,” said Meuser, “and as importantly, expands affordability in home ownership.”
The fact that the bill has bipartisan sponsorship — execrable Democratic Reps. Maxine Waters, Ayanna Pressley, Brad Sherman, and Al Green were among the cosponsors, for Pete’s sake — and was passed 396-13 is a clear sign that it’s flawed. While some of its terms are acceptable, one simply is not. Should the bill pass the Senate and get the president’s signature, it would prevent any “large institutional investor,” defined as those owning 350 or more houses, from “directly or indirectly” buying “any single-family home.”
It might feel like the right thing to do. But it’s a mistake.
To make our point, we will borrow heavily from an informative Pacific Research Institute article rather than try to improve on a well-framed and rational argument.
First …
It is not a legitimate function of government to decide who can and cannot buy homes – or any other commodity. It’s not up to elected officials nor bureaucrats to choose sides, no matter how much they might believe that their conviction – no matter how deeply held – or popular opinion is on the side of angels. Government should never have that kind of power. Should it ever acquire it, it will eventually abuse it.
Second …
Contrary to the narrative, institutional investors are not playing a real-world game of Monopoly. Corporate ownership of multi-family housing is common, but institutional investors own only about 2% of single-family housing in the country. There are other, much higher figures out there, but they lump in small ‘mom and pop‘ investors, who own three to nine homes, and in many cases are just neighbors rather than heartless corporate barons.
Third …
Institutional investors are not making housing more expensive and putting it out of the reach of financially struggling buyers. A couple of Reason Foundation policy analysts have noted that ‘census data show that the homeownership rate in the U.S. increased by over 2% since 2015, even as investor ownership grew.’
Fourth …
Americans should be happy that institutional investors are buying homes. Many entered the market by ‘buying distressed properties that no one else would buy, … and in doing so put a floor on a market that was in need of one.
A large portion of these homes had fallen into disrepair, which affects neighbors’ home values. But due to their operational and financing advantages, … ‘institutional investors can repair these properties more quickly and efficiently than an owner-occupant generally can.’
As a result, the value of homes with within a quarter mile, roughly five blocks, of one bought by investors is 1.4% higher than it is for homes that are farther away from the house. The worse the neighborhood, the greater the effect.
And finally …
Institutional investors are not the villains portrayed in movies and on television, nor are they saints. They are, however, important cogs in the free-market machine. When public policy interferes with the moving parts there will be negative consequences – no matter who is pulling the levers.
— Written by the I&I Editorial Board
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Patrick Garry
If all the criminal invaders were removed there would be excessive housing.
A big boost would be to remove the Illegal Immigrants taking up the housing spaces. Right now there are 11 million plus illegals living in marketable housing units. This needs to be a priority. The housing material markets need to be corrected. We need to bring back the small suppliers and strip the large suppliers from hoarding the chain. Last but not least, the diesel fuel prices need to brought back to reality. Diesel fuel is the left over fuel after blending gasoline. The EPA rules for diesel fuel need to be stripped. The only added blend in diesel fuel should be to minimize fuel freezing. The remaining blend for some ones pipe dream of 40 miles per gallon need to be canned.
The above items are a must.
The purpose of that provision is to prevent a corporate entity from taking homes off the market by buying them at prices too high for individuals to buy, then offering them as rentals. A flurry of corporate offers in my area swamped the local market for local home owners to sell their homes to “individuals” who were buying them on behalf of a parent corporation–and the offers were 50% to more than 100% higher than appraised value. I personally received 3 offers to buy my home at highly-inflated prices from 3 different corporations, and they showed a state map showing the “individuals” who were buying houses in various regions, and it was about 20 people throughout my entire state–all working for a single corporation that was NOT a real estate company–nor were the individual buyers licensed realtors. Three different corporations with the exact same marketing strategy were all doing this. None offered houses for sale; they were buying only.
The corporations’ purpose is to force everyone to rent once they have cornered the real estate market. The homes they buy will never be available for individuals to buy in the future–ever.
Sure there’s a way… deport the illegals. Violá! Millions of vacant homes!
Sure there’s a way. Claw back all the money “gifted” to illegals since at least the Obama admin. That would be more than enough to house every homeless person.
Housing shortages fix themselves when Govt gets out of the way.
An unintended consequence of this policy will be the reduced availability of mortgage lenders, as they will end up holding in receivership homes whose owners have defaulted on their payments. These “institutional investors” have no desire to own properties – their business is to loan money – not be landlords. Lenders will be understandably reticent to provide loans under these terms, and be caught in the jaws of both non-performing loans and laws prohibiting them from holding properties abandoned by defaulting borrowers. They’re truly victims of circumstance if this legislation goes into effect. The trickle-down effect will punish everyone downstream, except the trial-lawyers.
Twenty million illegal aliens have to live some place. Removing them would free up more than enough housing to meet our needs. No legislation needed.