Movement on the 21st Century ROAD to Housing Act has come to a screeching halt, with legislators in the House of Representatives and the Senate butting heads over the regulation of institutional investors and build-to-rent communities. President Trump has put his power behind Senate lawmakers, who said institutional investors should be required to sell their stock after seven years.
“Senators Bernie Moreno and Tim Scott have worked to ensure my call becomes a reality, and have a Bill which has passed the Senate with nearly 90 votes,” the president wrote on Truth Social. “I am asking Congress to pass that Bill, the 21st Century ROAD to Housing Act, which would ensure that homes are for people, not Corporations.”
Several housing groups have also called Congress to make a move, with David M. Dworkin, president and CEO of the National Housing Conference (NHC), saying the Act — specifically the section regulating institutional investors — reflects the desperate need to resolve the affordability crisis.
“Housing remains a major driver of discontent among Americans,” he said in a statement on Tuesday. “The Senate’s proposal to ban institutional investors from purchasing single-family homes reflects not only the President’s priorities, but the growing urgency of preserving homeownership opportunities for first-time buyers who are increasingly being priced out of the market.”
Mike Miedler | Credit: C21
Century 21 CEO Mike Miedler has been vocal about the Act, attending the Housing Policy Conference in March alongside other residential leaders who provided insights on what the bill does — and doesn’t — do well.
Miedler said there was room to improve provisions regarding Federal Housing Administration loan limits and investor activity; however, he thought the Act was a net positive, as it signaled a long-awaited dedication to solving affordability.
“What we need is more supply in the marketplace. And we need it desperately,” he said.
The following conversation took place on March 26. It has been edited for length and clarity.
Inman: Let’s dive into it. The 21st Century ROAD to Housing Act has 38 sections, but what many people have zeroed in on are provisions regarding Federal Housing Administration loan limits and institutional investors. And there are concerns that the bill’s structure could inadvertently lead to negative outcomes for homebuyers.
Do you agree with that assessment? If so, how would you change the legislation?
Miedler: First — I’m not a lobbyist, a politician or a law drafter. I will say I believe this is, honestly, the most momentum we’ve had around supply in decades, and there’s bipartisan support. [The Act] does a lot of great things, which you already know about, but I think the two sticking points for me are what you mentioned.
FHA loans help folks who don’t have a large down payment get into the housing market, and the limits have kind of crept up very, very slowly. Just last year, I think they yanked them up to the mid-500s, and that’s on a single-family unit.
So my thing with FHA loans is making sure we don’t just try to broad-brush a loan limit.
It matters whether it’s a one-, two-, three-, or multifamily-unit property. It matters what market a homebuyer is in. Oklahoma is different than New Jersey. California is different than Florida. We’ve got to make sure there are no regional mismatches with these limits and that we understand the nuances of local costs and median home prices so that we can get it right.
So, in my time reporting on housing policy, there’s been this dance around how involved the federal government should become in housing policy because market dynamics are so local. What conversations are housing leaders having about balancing federal, state and local policies, and whether there’s room to build in a flexibility that allows these policies to be applied in a market-specific way?
If you look at some of the other components around the bill, the ones that I’m most excited by are streamlining permitting and environmental review processes. And I think it makes sense that the federal government is stepping in and saying that we’ve got to do this as a country. And with that, they’re also incentivizing modular and manufactured homes.
But to your point, depending on the market you’re in, the costs of permitting and following the government rules and regs vary widely. It’s generally a lot cheaper in the South, where you live, than it is in the Northeast corridor, where I live. And when you look at the West Coast, costs could be double-digit percentage points higher than in other regions, and it doesn’t lead to better building materials. It doesn’t lead to a better home. It’s just the cost that the government has baked in.
Because of those market differences, I think obviously the state and local governments should be able to monitor how these federal laws are applied. But there does have to be that push to say, ‘We’ve got to be better guys. We’ve got to move faster. And we’ve got to start taking some of the red tape off.’ And I think this Act provides that push.
I get the nuance of what you’re talking about, but I’m just excited that we’re having the conversation and realizing that we’re not going to solve affordability on the demand side. We’ve got to solve it on the supply side.
That’s a good segue into my next question. In addition to increasing new residential construction, the Act seeks to reclaim existing inventory by requiring institutional investors to sell after a set period. However, there seems to be real trepidation about these investors finding loopholes that would stifle meaningful inventory growth.
What do you think? Is it an effective — and worthwhile — solution, given they currently own roughly 1 percent of inventory?
No. I think the reason that this is such a flashpoint in the discussion is that it puts the government right in the middle of a free market. And I don’t think that the government should get involved in free markets at all. However, there is a balancing point where there are people, there are families who want to be in these rental communities. This is a lifestyle that they prefer and or can better afford.
So, it’s how do you balance the need for rental options with the need for for-sale options, the latter of which allows families to build wealth?
Let’s be honest, like you said, institutional investors across the U.S. probably own less than 1 percent of the total inventory. It’s higher in different pockets across the country, but even in the markets with the most institutional activity, it probably accounts for only 5 percent.
Ultimately, it’s about who you want to incentivize. I believe you want to incentivize builders, developers, and even local mom-and-pop contractors to build affordable homes for the average household, rather than these sweeping communities built to rent. That’s my gut instinct.
When I talk to our people out on the front lines every single day, the thing that keeps me up at night is the individual families who are trying to navigate this stream of homeownership. That’s what helps me put these things into perspective. What we need is more supply in the marketplace. And we need it desperately.