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Congress is trying to restrict large institutional landlords from buying up too many single-family homes. The 21st Century ROAD to Housing Act passed in the Senate with overwhelming bipartisan support. Its aim is to make housing more affordable. Our colleagues at The Indicator from Planet Money, Darian Woods and Wailin Wong, dig into whether it will actually help.
DARIAN WOODS, BYLINE: So let's start with the history.
WAILIN WONG, BYLINE: Stephen Billings is a professor of real estate at the University of Colorado Boulder. Stephen starts the story during the 2008 Great Recession, when homes all around the country were going into foreclosure.
STEPHEN BILLINGS: We saw a lot of investors see an opportunity to buy things really cheap.
WOODS: These investors soon realized that having these regular rent payments coming in was actually more lucrative than selling the homes, flipping them.
WONG: Finance people would take a whole lot of properties with these regular cash flows and sell it as an investment product.
BILLINGS: This became a real boon for this whole industry 'cause it led to tons of money.
WOODS: When house prices in general started to rise a lot in the early 2020s, politicians from Democratic Senator Elizabeth Warren to Republican Vice President JD Vance would blame institutional investors.
WONG: Stephen says there's a grain of truth here.
BILLINGS: In general, the large presence of institutional investors will drive up housing prices a little bit.
WONG: But just a grain of truth because these companies make up such a small share of home purchases nationally - less than 1%. The much bigger drivers of housing prices are low construction and low interest rates.
WOODS: Also Stephen says corporate landlords actually tend to reduce rental prices by bringing in more rental homes into the market. They also build a fair share of new home construction. About 7% of houses are built specifically to rent them.
WONG: Laurie Goodman runs the Housing Finance Policy Center at the Urban Institute, a think tank. She's also involved in the housing industry as a consultant.
WOODS: Laurie worries the Senate bill could actually backfire and make housing more costly because inside that Senate housing bill, large institutional investors will have to sell these newly built homes within seven years.
LAURIE GOODMAN: Build-to-rent activity would stop. These are homes that probably would not otherwise be built. I mean, this is a bill designed to increase supply, and you're actually cutting off the activity that is designed to do exactly that.
WONG: Adrianne Todman agrees. She's the CEO of the National Rental Home Council. That's an industry body that represents a lot of institutional homeowners.
ADRIANNE TODMAN: It has a real unintended consequence of really chilling - have a chilling effect to build these units from the get-go. I've been doing this business for a long time. That is never anything anyone has said to anyone who builds apartment-style units. But unfortunately, that's the concept that's being introduced now for build-to-rent communities.
WONG: Balancing all of this, Stephen agrees that the 21st Century ROAD to Housing Act goes too far.
BILLINGS: It's shocking. I will say this. I think I agree with some of the conservatives on this view of let's allow more building of housing.
WONG: Overall, the evidence doesn't show that institutional investors are a major driver of housing costs, but cracking down on companies building new homes has a good chance of making housing affordability worse.
WOODS: Darian Woods.
WONG: Wailin Wong, NPR News.
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