(WASHINGTON) – Today, Congresswoman Nikema Williams (GA-05) co-led the introduction of the bicameral End Hedge Fund Control of American Homes Act of 2023, legislation that responds directly and forcefully to a persistent and growing problem — What Happens When Wall Street Buys Most of the Homes on Your Block? The purchasing of single-family homes by hedge funds, especially in the current housing market, has made it more difficult for middle-class Americans to become homeowners and is contributing to America’s twin crises of housing unaffordability and wealth inequality

Representatives Linda Sánchez (CA-38) and Adam Smith (WA-09) joined Congresswoman Williams in leading the introduction of the End Hedge Fund Control of American Homes Act, teamed up to introduce. Similar legislation was introduced in the Senate by Senators Jeff Merkley (D-OR) and Tina Smith (D-MN).

Congresswoman Nikema Williams, a member of the Exclusive House Committee on Financial Services said: 

“When people buy homes, doors open to opportunity. When hedge funds buy homes, those doors shut. This is painfully true in Atlanta, where my constituents are priced out of homeownership while investors purchase homes 10 or more at a time. Homeownership is one of the most powerful tools to close the racial wealth gap, and that power is diminished when hedge funds dominate the housing market. I am introducing the End Hedge Fund Control of American Homes Act so that people can buy homes and enjoy the opportunity homeownership provides —no matter your ZIP Code, no matter your bank account.” 

“In 1971, my father was able to buy the house I grew up in for $15,000 on the salary he earned as a baggage handler at SeaTac Airport. That same house would cost nearly $500,000 today yet wages for workers like my father have not kept up. Too many families in the Puget Sound region and across the country are struggling to afford to rent or buy a home. This crisis has been exacerbated in recent years by an increasing number of large investors purchasing a significant percentage of single-family homes, squeezing out prospective buyers,” said Rep. Adam Smith. “Congress must take action to crack down on corporate greed and get hedge funds out of the single-family home market. The bill I’m introducing today with my colleagues would ban these problematic hedge funds from the single-family housing market and claw back some of the homes they already own so that more American families have a fair shot at becoming homeowners.” 

“Working families should be able to rent or buy a home, no matter where they live. Unfortunately, greedy corporations all too often buy up residential properties for their own financial benefit – especially in neighborhoods like mine in Southern California – which takes affordable options away from potential buyers and drives up home and rent prices across the board,” said Rep. Linda Sánchez. “That’s why I’m proud to cosponsor this legislation that will bring down housing prices, giving more families the opportunity to purchase a home and set their families up for a bright future.”

“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street. Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” said Senator Merkley. “It’s time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford.”

“Without access to housing, nothing else in your life works. Not your job, your health, your education or your family,” said Senator Smith. “The housing crisis is devastating communities all across the country, and corporate executives are exploiting it to put more money in their pockets. We shouldn’t allow private equity firms to buy up vast quantities of American homes and create a generation of lifelong renters.  Congress needs to act fast and help promote access to safe, affordable housing and homeownership for American families, not Wall Street.”

Following the 2008 housing crisis, large private equity firms and hedge funds bought substantial portfolios of foreclosed homes as an investment opportunity. The federal government enabled this growth through bulk sales of federally-backed mortgages and foreclosed properties. This decision excluded ordinary families and mission driven non-profits from buying these homes and returning them to families in need of stable housing.

In 2011, no single entity owned over 1,000 single-family rental units. As of June 2022, the Urban Institute estimates that large hedge funds and other institutional investors owned roughly 574,000 single-family homes. To meet investors’ return expectations, hedge funds and other investors maximize profits by imposing high rent increases, inflating fees, and delaying home maintenance and improvements, which diminishes the quality of housing over time.

• The End Hedge Fund Control of American Homes Act seeks to put an end to this harmful practice of hedge funds buying up single-family homes by banning hedge funds from owning these types of homes and requiring them to sell at least 10% of the total number of single-family homes they currently own to families per year over a 10-year period. After a 10-year full phase-out, all hedge funds will be completely banned from owning any single-family homes. 

The End Hedge Fund Control of American Homes Act is endorsed by the National Consumer Law Center (on behalf of its low-income clients), Consumer Action, National Housing Law Project, Public Citizen, Private Equity Stakeholder Project, Center for Popular Democracy, National Housing Resource Center, and the Washington Low-Income Housing Alliance.

“The National Consumer Law Center, 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. 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,” said Alys Cohen, Senior Attorney, National Consumer Law Center, on behalf of its low-income clients.

“Very large private equity companies are buying up thousands of affordable houses that traditionally are the homes for first-time-homebuyers, and converting them to long term and high priced rentals. Homeownership is one of the best ways to build wealth in the United States and these private equity investment companies are shutting that out for too many of our families.  The National Housing Resource Center supports strong legislation that can keep homeownership affordable for first-time-homebuyers and stops large national investment companies from outbidding the average homebuyer,” said Bruce Dorpalen, Executive Director, National Housing Resource Center.

“Large corporate investors are gutting the U.S. housing market and making in nearly impossible for the average person to purchase a single family home. This is destroying the American dream,” said Ruth Susswein, Consumer Action’s Director of Consumer Protection, CONSUMER ACTION. “The End Hedge Fund Control of American Homes Act creates the sorely needed incentive to curb corporate homeownership and reinvest in underserved communities by imposing a hefty 50% tax on hedge funds that insist on gorging on single family homes.”

CONTACT: PressGA05@mail.house.gov 

Congresswoman Nikema Williams proudly serves Georgia’s Fifth Congressional District on the exclusive Financial Services Committee. She is a champion of voting rights and builds on the Fifth District’s legacy as the cradle of the civil rights movement as co-chair of the Congressional Voting Rights Caucus. Congresswoman Williams is committed to closing the racial wealth gap and ensuring the promise of America for all–regardless of your ZIP code or bank account.

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