If affordability is the goal, the primary focus of housing policy should be expanding the supply of places to live. Some elements of a bill that passed the Senate this month would help at the margins, but others would set back the cause of bringing down prices. One of them now threatens to blow up the biggest federal housing legislation in three decades.
Sen. Elizabeth Warren (D-Massachusetts) inserted a provision that would require any build-to-rent homes to be sold within seven years of construction. This is a way many families can afford somewhere to live who otherwise couldn’t afford a down payment, but the seven-year cap means the builders won’t necessarily have enough time to recoup their investments, which will discourage them from starting construction in the first place.
Pro-housing groups from across the country and the political spectrum have warned that it would restrict supply. Even if build-to-rent homes do still get built, the families living in them who couldn’t afford to buy would effectively be evicted by an arbitrary deadline from the federal government.
Sen. Brian Schatz (D-Hawaii) said the measure demonizes people who want to build rental housing. He initially assumed the build-to-rent provision was such bad policy that it must have been “a drafting error,” only for Warren to clarify that it was actually “quite deliberate.”
The dumbfounding part of this quite deliberate provision is that it effectively treats renters as second-class citizens. Warren said that investors can build other forms of housing for rent as much as they want, but “homes should be for families, not giant corporations.” The American families who live in apartments, condos, duplexes or single-family rentals would probably dispute Warren’s assertion that they don’t have homes.
The cap was included as a way to placate a shared desire by Warren and President Donald Trump to ban institutional investors from owning single-family homes. That wrongheaded goal would do nothing for affordability while reducing the options available to American families.
The bill cleared the Senate 89 to 10, with Schatz and nine Republicans opposed. The first vote took place the same day the draft text was released. That means no one who wasn’t directly involved in the negotiations got a chance to study its 300-plus pages in advance.
Here’s where the story gets wild. The House previously passed its own bipartisan version of the bill, but Warren and Sen. Tim Scott (R-South Carolina) are reportedly refusing to negotiate with their congressional colleagues on how to meld the best ideas from both chambers. Instead, their posture is that the House must accept the Senate bill as is or get nothing at all.
Warren has discouraged housing advocacy groups from publicly calling for a conference committee. She’s apparently afraid some of the liberal ideas she coaxed Scott to include will get stripped out. House conservatives don’t need to stomach that, even if Trump wants them to. Republicans control both chambers and the White House. Why would they let themselves be rolled by Elizabeth Warren?
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