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Vice President Kamala Harris unveiled plans to tackle the rise in Wall Street homeownership as part of a slate of economic proposals announced Friday.
The Democratic presidential nominee is targeting investors that buy up and mark up homes in bulk, a growing trend that’s making the housing and rental market more expensive for Americans, the Harris campaign said.
Within her first 100 days in office, Harris said she would call on Congress to pass the “Stop Predatory Investing Act,” a bill introduced in July 2023 by Ohio Sen. Sherrod Brown that removes tax benefits for large investors that acquire swaths of single-family rental homes.
“Some corporate landlords buy dozens, if not hundreds of houses and apartments, then they turn around and rent them out at extremely high prices,” Harris said at a campaign rally in Raleigh, North Carolina Friday. “And it can make it impossible then for regular people to be able to buy or even rent a home.”
Investors bought one-quarter of single-family homes sold by the end of 2022. While high interest rates and low supply have helped to slow some of this activity, Wall Street has remained in the space. That’s especially true when it comes to lower-cost housing: Real estate investors bought 26% of the most affordable homes sold in the fourth quarter of 2023, according to Redfin (RDFN) data.
If these trends continue, MetLife Investment Management (MET) estimates that institutional investors could control 40% of U.S. single-family rental homes by 2030.
For years, lawmakers have sought to curtail Wall Street’s reach within the housing market. A group of congressional lawmakers, led by California Democrat Rep. Ro Khanna, co-authored Stop Wall Street Landlords Act of 2022 to deter institutional investment in real estate. Khanna said the legislation, which would impose a tax on existing and future acquisitions of single-family units, “will help level the playing field and put a stop to rent gouging in America.”
“The financialization of the housing market by Wall Street exacerbates corporate profiteering and anti-competitive practices that makes it harder for Americans to afford housing or access homeownership,” he said.
The housing market has become increasingly unaffordable, particularly for first-time homebuyers. The median sale price of a home in June rose 4% from a year ago to $442,451, according to the latest data from Redfin. Meanwhile, the national average 30-year fixed mortgage rate was 6.9%. Renters don’t have it much easier, with median rent for all property types coming in at $2,120, down $25 from last year but still well above pre-pandemic levels.
Invitation Homes (INVH) and AMH (AMH) are two of the largest, publicly held real estate investors in the country. Invitation Homes, originally founded by private equity giant Blackstone Group (BX), owns over 80,000 homes; AMH has a portfolio of more than 53,000 single-family homes across 22 states. Blackstone, which backs a number of other private real estate investors, owns approximately 63,000 single-family units in the U.S.
Kurt Carlton, president and co-founder of real estate investment marketplace New Western, said “it is unlikely that the Stop Predatory Investing Act would have any noticeable positive impact on homeowners if passed.”
“While there have been brief periods where Wall Street investors acquired a significant percentage of homes, these were primarily short-term trends,” Carlton said. He added that “the vast majority of these purchases are made by small, local investors who typically own fewer than five homes and generally make an outsized positive impact on homeownership and affordability.”
The role of small, local real estate investors is often misunderstood, and would help address some of the problems Harris is proposing to tackle, according to Carlton.
“Most local real estate investors focus on identifying vacant, unwanted properties and rehabilitating them into livable housing units,” he said. “By doing so, they play a critical role in addressing housing shortages and improving communities.”
Opponents argue, however, that these investors are exacerbating the U.S. housing shortage, which has grown to between 4 and 7 million homes. And new constructions aren’t keeping pace with demand: Total U.S. housing starts fell by 6.8% from a year earlier to a rate of 1.2 million in July — the biggest drop since April 2020, at the onset of COVID lockdowns, according to Census Bureau data published Friday. This was led by a 14.% year-over-year decline in single-family starts and a 21.8%. decrease in multifamily starts.
This slowdown “will crimp new supply for a market already struggling with low inventory,” said Jeffrey Roach, chief economist for Charlotte-based LPL Financial (LPLA).
Harris plans to order the construction of 3 million new housing units to help ease the supply shortage over the course of four years, her campaign said Friday. As part of these efforts, Harris would introduce a tax incentive for homebuilders who build starter homes sold to first-time homebuyers, expand existing tax incentives for rental home builders, and propose a new $40 billion innovation fund to spur homebuilding.
On Tuesday, the Department of Housing and Urban Development announced $100 million in funding to reduce barriers to affordable housing construction, as part of its Pathways to Removing Obstacles to Housing program.
As part of her first 100-day platform, Harris also proposed introduce a $25,000 in down-payment support for first-time homebuyers who have paid their rent on time for two years, with “more generous support” for first-generation homeowners.
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