The Week Ahead: Finding Balance Within Housing Inventory

On Tuesday, June 28, the House Committee on Financial Services will host a Virtual Hearing “Where Have All the Houses Gone? Private Equity, Single-Family Rentals, and America’s Neighborhoods,” beginning at noon ET.

Presented by the Subcommittee on Oversight & Investigations, the hearing will examine the nation’s current lack of inventory, as buyers are beginning to compete with institutional investors on the limited supply of homes available.

U.S. Senators Elizabeth Warren and Jack Reed, along with members of the Senate Committee on Banking, Housing, and Urban Affairs, recently sent a letter to U.S. Department of Housing & Urban Development (HUD) Secretary Marcia L. Fudge calling on HUD to preserve homeownership affordability for American families as Wall Street firms expand their activity in the housing market.

Lawmakers recently called upon government to curb the flow of single-family homes to institutional investors, and answer a series of questions about federal efforts to level the playing field between families and large investors.

According to Roofstock, following the 2008 financial crisis and subsequent home foreclosure crisis, corporate ownership of single-family rental (SFR) homes rose significantly, growing 3% annually since 2010, with Q3 of 2021 posting the fastest year-over-year increase in 16 years.

Research from Brett Christophers from the Institute for Housing and Urban Research found that, before the financial crisis began in 2008, investors owned nearly 10 million SFR homes, and the market was dominated by smaller investors who owned 10 or fewer homes. As late as 2011, no single investor in the U.S. owned more than 1,000 homes.

Witnesses scheduled to present at the hearing include:

• Jim Baker, Executive Director, Private Equity Shareholder Project
• Shad Bogany, Agent, Better Homes and Gardens
• Sofia Lopez, Deputy Campaign Director of Housing, Action Center on Race and the Economy
• Elora Lee Raymond, Assistant Professor, Georgia Institute of Technology
• Jenny Schuetz, Senior Fellow, Brookings Institute

As NAR President Leslie Rouda Smith recently stated, “Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties–placing additional financial strain on prospective first-time homebuyers."

Smith, also a Realtor from Plano, Texas, and Broker Associate at Dave Perry-Miller Real Estate in Dallas, added, "To counter this trend, policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers."

Click here to view the hearing memorandum, and click here for more information on how to view the virtual hearing.

Here's what else is happening in The Week Ahead:

• NAR May Pending Home Sales Index (Monday)
• U.S. House Committee on Financial Services Virtual Hearing “Boom and Bust: Inequality, Homeownership, and the Long-Term Impacts of the Hot Housing Market” (Wednesday)
• MBA Weekly Applications Survey (Wednesday)
• Realtor.com Weekly Housing Market Recap (Wednesday)
• Freddie Mac Primary Mortgage Market Survey (Thursday)
• U.S. Department of Labor's Unemployment Insurance Weekly Claims Report (Thursday)