The Affordable Housing and Homeownership Protection Act Would Tackle Housing Crisis by Creating Millions More Homes and Helping Main Street Compete with Wall Street

WASHINGTON, DC – As the nation’s housing shortage pushes home prices and rents to historic levels, a new Senate bill would provide tens of billions of dollars to help create millions of new homes for low-income Americans.

U.S. Senators Tina Smith (D-MN), Jack Reed (D-RI)and Tammy Baldwin (D-WI) are teaming up with several colleagues to introduce the Affordable Housing and Homeownership Protection Act (S. 3673).  This bill would generate up to $50 billion over ten years to help build and preserve approximately 3 million affordable housing units nationwide.  The bill would be fully paid for through a transfer tax on large investors who profit by purchasing sixteen single-family homes or more.

Driven by a shortage of as many as 6.8 million homes nationwide, homes prices have surged 39% and rents 31% over the last four years, according to the National Association of Realtors and Zillow. Higher rents and fewer opportunities for homeownership are devastating for millions of families.  As housing costs skyrocket, more households are priced out of homeownership, while renters have less to spend on food, clothing, and other everyday necessities.

Low-income Americans are particularly strained – the National Low Income Housing Coalition estimates 73% of extremely low-income households spend more than half their income on housing. Unsurprisingly, homelessness has risen in line with housing prices and is up 15% since 2019.

Unfortunately, federal investments in low-income housing are insufficient to solve this affordability crisis. Indeed, researchers at Harvard University found that the three largest federal housing programs serve nearly 300,000 fewer households today than they did 20 years ago, while approximately 25% more households are eligible but can’t get aid.

At the same time, investors are buying a greater share of single-family homes sold each year – many of which they hold as rentals – preventing more families from reaching homeownership and often driving up rents. Most households cannot compete with the largest investors, usually private equity and other institutional investors, who can use their financial might to make all-cash offers, waive contingencies, and provide other concessions individuals are unable to match. Through November, more than one out of every four single-family homes sold in 2023 were bought by investors, not hardworking households – a 69% increase from investors’ pre-pandemic share of home purchases.

Institutional investors already have a built-in advantage when it comes to home buying because of their financial might, giving them a competitive advantage over average working families on home listings with multiple offers.

The Affordable Housing and Homeownership Protection Act would help level the playing field for families by taxing investors who purchase and hold more than 15 single-family homes, with the largest investors paying higher rates.

Nonprofits, states, and localities would be excluded from the tax.  The funds from these taxes would be split 65/35 between the Housing Trust Fund and Capital Magnet Fund and could build or rehabilitate over 300,000 housing units for extremely low-income Americans and help finance 2.7 million units of housing for low-income households.

“Without a safe, decent and affordable place to live, it becomes nearly impossible to hold a job, go to school, or stay healthy,” said Senator Smith. “Our country is facing a housing shortage crisis, with annual supply falling dramatically behind demand. This bill would hold the corporate investors accountable who take advantage of our country’s housing shortage at the expense of working families, and create millions of desperately needed new, affordable homes in the process.”

“This bill would ease one of our nation’s biggest challenges – our housing shortage.  It would invest directly in the production of new housing and help individual homebuyers afford to buy a place to live, put down roots, and strengthen communities.  And it would ensure that institutional investors who snap up 16 homes or more pay their fair share of taxes and contribute toward increasing the supply of housing opportunities across the country,” said Senator Reed.  “A home is more than a commodity or a profit center, it’s a place to live.  But many families have seen housing costs artificially inflated due to institutional investors treating housing stock like an investment vehicle.  Under this bill, Wall Street investors can still buy all the properties they want, but commonsense guardrails would ensure they pay their fair share and it plows that money directly into creating more housing units.”

“Wealthy, out-of-state investors are buying up housing stock in Wisconsin – driving up rent and putting home ownership out of reach for too many in the state. It’s wrong and we need to both crack down on these Wall Street investors and also do more to preserve and expand access to affordable housing for the Wisconsinites who live, work, and raise families in our communities,” said Senator Baldwin. “Our bill will get at both ends of this problem – disincentivizing any wealthy investor from gobbling up Wisconsin’s housing and, if someone does, then making sure they are part of the solution to create more opportunities for safe affordable housing.”

In addition to Reed, Smith, and Baldwin, the bill is cosponsored by Senators Kirsten Gillibrand (D-NY), Richard Blumenthal (D-CT), Amy Klobuchar (D-MN), and John Fetterman (D-PA).

The Affordable Housing and Homeownership Protection Act has been endorsed by several leading organizations, including: the National Low Income Housing Coalition; National Housing Law Project; National Consumer Law Center (on behalf of its low-income clients); Consumer Action; Americans for Financial Reform; and National Housing Resource Center.

“Across the nation, millions of America’s lowest-income and most marginalized households struggle to pay rent and make ends meet. In some markets, private equity firms and institutional investors are taking advantage of our nation’s housing crisis by purchasing rental properties and dramatically raising rents, imposing junk fees, and engaging in predatory behavior without regard to the impact on tenants with low incomes. I applaud Senator Reed for introducing legislation to discourage the role of private equity firms and institutional investors and championing proven solutions, like the national Housing Trust Fund, to address America’s housing and homelessness crisis,” stated NLIHC president and CEO Diane Yentel.

“As rents rise and home prices continue to soar, our growing homelessness and housing affordability crisis requires us to use every tool in the toolbox to support housing affordability for people before profits for large investors and private equity firms. The Affordable Housing and Homeownership Protection Act will ensure that big housing investors pay their fair share to meet our massive affordable housing deficit,” said Caroline Nagy, Senior Policy Counsel at Americans for Financial Reform Education Fund.

“The Affordable Housing and Homeownership Protection Act is the kind of legislation that can make a meaningful difference in people’s lives,” said Ruth Susswein, Consumer Action’s Director of Consumer Protection.  “It requires private investors–who drain the housing market of affordable homes–to bear responsibility for providing some of the funds needed to make housing a reality for some of our neediest neighbors.”

“America needs the Affordable Housing and Homeownership Protection Act.  Housing counselors across the country are reporting that first time homebuyers cannot find affordable houses to buy and renters are devoting so much of their incomes to making the monthly rent that they sacrifice other basics.  We need to provide safe and affordable housing for America’s families to thrive and this Act is a bold, practical solution to address the affordable housing shortage,” said Bruce Dorpalen, Executive Director, National Housing Resource Center.