The 21st Century ROAD to Housing Act has become law, marking a major bipartisan effort to address housing affordability by expanding supply, lowering barriers to construction and limiting the role of large investors in the single-family housing market.
U.S. Sen. Martin Heinrich of New Mexico said one of the law's most significant provisions is aimed at private equity firms and hedge funds that have increasingly competed with individual buyers for homes.
"We really cut private equity and hedge funds out of the housing market," Heinrich said. "If you’re a hedge fund or you’re a private equity firm, if you already own 350 houses, no more houses."
Heinrich said the measure is intended to help ordinary buyers compete in a market where cash offers from institutional investors have made it harder for families to purchase homes.
The law also includes broader housing reforms, including measures tied to homeownership, housing production, consumer protections and federal housing programs. Heinrich said this package includes support for rural rental housing, new disclosure requirements tied to veterans' mortgage options and permitting changes intended to speed up some housing development.
Heinrich said veterans provisions are especially important because some borrowers may qualify for lower-cost VA loans but do not always receive that information early in the mortgage process.
"There’s some really good language in here around veterans because oftentimes, veterans will apply for a mortgage with a bank or other lender, and they could actually be getting a much lower rate through a VA loan," Heinrich said.
He said the law could begin affecting housing markets quickly, particularly by changing competition in single-family home sales and encouraging more supply.
Still, Heinrich said federal action alone will not solve the housing shortage. He said local governments also need to consider zoning and land-use changes, including reforms that make it easier to build more housing.
"That’s the entire point of this law," he said. "And I’m glad it’s a law, not just a proposal anymore."
The bill won broad bipartisan support in Congress. It became law without the president's signature.