On June 22 the U.S. Senate passed the 21st Century ROAD to Housing Act by a vote of 85 to 5, with several absences due to a weather-related airport closure. The House is expected to take it up within days, and the White House—after reportedly objecting to the Senate text in private—has signaled the President will sign. It is being marketed as the most significant federal housing legislation in a generation. On the structural drivers of the American housing crisis, it will accomplish very little, in part due to limited federal ability to act on housing itself.
The bill is the product of nearly a year of negotiation between Senate Banking Chair Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA). Its marquee provision, “Homes Are For People, Not Corporations,” bars institutional investors that own 350 or more single-family homes from acquiring additional ones. An earlier Senate provision that would have forced large build-to-rent owners to divest within seven years was (wisely) dropped to secure House and White House support.
The numbers don’t support the posturing. According to BofA Global Research, institutional investors owning more than 1,000 homes hold roughly 0.34% of U.S. housing stock and about 3% of single-family rentals. John Burns Real Estate Consulting estimates the 350-home threshold captures owners of approximately 0.7% of the country’s 92 million single-family homes. The Urban Institute and Freddie Mac have separately concluded that institutional investor activity is at most a marginal factor in setting prices, dwarfed by the underlying housing shortage.
What may be the bill’s most consequential reform has barely been discussed in the media: the elimination of the federal permanent chassis mandate for manufactured housing, the first modernization of HUD’s manufactured-housing code since the 1970s. Factory-built housing is structurally cheaper per square foot than site-built, and the chassis requirement has been a binding regulatory constraint for fifty years. Streamlining of NEPA reviews and an increase in banks’ Public Welfare Investment cap from 15% to 20%—freeing capacity for Low-Income Housing Tax Credit deals—are likewise non-trivial. None of these were the provisions sold to the public.