Congress is finally moving on housing. President Trump is pushing for the 21st Century ROAD to Housing Act, the Senate passed its version 89-10, and the House recently released an amended version in May that tries to smooth out some of the bill’s rougher edges.
Housing affordability is a major economic problem facing American families. Mortgage rates are above 6 percent (and rising), existing-home prices remain above $400,000, and America is short more than 4 million homes. Young families feel locked out. Renters feel squeezed. Parents wonder whether their kids will ever own a home.
So, yes, Congress should act. But it should act in ways that increase supply, strengthen property rights, and remove barriers. It should not pretend Washington can fix housing by deciding who is allowed to buy what.
That is the problem with the bill’s treatment of institutional investors. The Senate version included a stricter ban on large institutional investors buying single-family homes, along with provisions that raised concerns for build-to-rent projects. The House version softened the approach by preserving exemptions for build-to-rent and renovate-to-rent models. That is an improvement, because build-to-rent can add supply and provide needed rental options.
But the better question is why Congress is targeting lawful buyers at all.
In a free market, a homeowner should be able to sell to the buyer offering the best combination of price, certainty, timing, and terms. That buyer may be a young family. It may be a local landlord. It may be a builder. It may be an investor willing to renovate a neglected property or finance the construction of new rental homes.
The government should not interfere with private property rights because politicians want to look tough on Wall Street. That is not how free-market capitalism works. It is not how America’s version of capitalism should work either.
The common concern is understandable. Nobody wants families priced out by politically connected firms with cheap capital. Nobody wants neighborhoods hollowed out by absentee owners who neglect properties or abuse tenants. Fraud, collusion, deceptive fees, and poor management should be addressed directly. But broad restrictions on ownership are a top-down response to a supply problem.
And the facts do not support blaming investors for the national crisis. A GAO report found institutional investors owned only 1 percent to 3 percent of single-family homes in six studied metro areas by 2024. Other research finds institutional investors own less than 1 percent of single-family homes nationally. They may matter in certain local markets, but they did not create a nationwide shortage of millions of homes. The government did.
Zoning restrictions, minimum lot sizes, parking mandates, permitting delays, impact fees, environmental reviews, and local veto points have made housing too hard, too slow, and too expensive to build. Then, politicians blame investors for responding to the scarcity that the government created.
When demand rises and supply is restricted, prices go up. If lawmakers want lower prices, they must let supply respond.
That is why the best parts of the ROAD to Housing Act are the supply-side pieces. The House Financial Services Committee says the amended bill cuts barriers to construction, modernizes HUD programs, and allows banks to deploy more capital into communities. Other highlights include manufactured housing, rural housing, financing, and regulatory streamlining.
The investor restrictions move in the opposite direction. Even softened, they rest on the wrong premise: that Washington should decide which buyers are acceptable. Once the government claims that power, it will not stop with “large institutional investors.” The same logic can easily spread to other disfavored buyers, financing models, or rental arrangements.
That should alarm anyone who cares about property rights.
Housing affordability will not be restored by banning buyers. It will be restored by allowing builders to build, owners to sell, renters to choose, and markets to work.
Congress should fix the ROAD to Housing Act by keeping the supply-side reforms and stripping out the anti-market central planning. The goal should not be to punish ownership. The goal should be housing abundance.
