President Trump is expected to use his State of the Union speech tonight to tout what he sees as the major accomplishments of his first year back in the White House, defend his tariff policies, pressure Democrats to end the Department of Homeland Security shutdown and blame former President Joe Biden for the ongoing affordability worries plaguing so many Americans.
He’s also expected to promote some new policy initiatives, including a plan to make home ownership more affordable in part by barring large institutional investors from buying single-family homes.
As both Republicans and Democrats try to appeal to voters by emphasizing efforts to bring down costs, a group of Senate Democrats led by Sens. Elizabeth Warren and Jeff Merkley announced their own proposal Tuesday to limit the ability of investors to buy up homes.
“Private equity and Wall Street landlords are exacerbating the housing crisis by snapping up large numbers of houses and subjecting Americans to massive rent hikes, unfair fees, and needless evictions – all to pad their bottom line,” Democrats said in a document outlining their plan. “Today, Wall Street firms own nearly 450,000 single-family homes, more than 2.2 million apartments, and are the biggest landlords of mobile homes in America.”
The Democratic legislation, titled The American Homeownership Act and co-sponsored by 16 other senators, aims to end tax breaks and other housing benefits for “Wall Street landlords” and other corporate homebuyers and use the money that would be saved to increase housing supply, among other steps.
The bill would block private equity firms, hedge funds, and other large investors, including companies that buy more than 50 single-family homes to rent out, from getting tax breaks that they typically take for depreciation and mortgage interest payments. The bill would also block those businesses from getting federally backed mortgages or buying foreclosed homes sold by Fannie Mae, Freddie Mac and federal agencies.
The plan would preserve some tax breaks, including those for entities that build and own new multifamily housing or fix up broken-down properties. Builders who construct new single-family homes will be allowed to keep their tax benefits for five years.
Trump has proposed prohibiting institutional investors who own more than 100 single-family homes from buying up more. The Trump plan also includes some exceptions for builders.
The dueling new housing proposals come after both the House and Senate have passed bipartisan bills to promote affordable housing. Lawmakers still need to combine those packages into a single plan.
The bottom line: Housing affordability is an area where Trump and Democrats could potentially work together, and Warren told Politico that the president could help push through a crackdown on private equity’s role in the sector. “The person who could make the big difference is Donald Trump,” she said.