Congress could get hedge funds disinvited from the neighborhood block party

Trimmin’ the hedge funds… Congressional Dems introduced two bills this month that could upend the US housing market. One would bar hedge funds from owning single-family homes, forcing them to sell off their huge portfolios within a decade. The other would place an annual fee of $10K/home on owners of 75+ single-family properties. If passed, the bills could help rein in prices by putting thousands of fund-owned homes on the market. FYI: most Americans believe that now is the worst time ever to buy a house.

• Knock-knock: Deep-pocketed hedge funds have been busy scooping up more of the block, buying a quarter of the single-family homes that sold in June. Last year, investors bought 21% of Atlanta’s homes in all-cash deals. Buying is often done in majority Black and Latino neighborhoods, where properties are converted into rentals.

• Pick your poison: Supporters say financial firms are driving up prices, boxing out ordinary folks. Critics say the bills would hurt home supply because they’d halt large investor-funded development projects.

• Housewarming: Since 2019, median US home prices have popped 38% to $431K. Meanwhile, this fall, mortgage rates hit 8% — the highest in two decades.

Meet your new neighbor… Blackstone. The world’s largest alt-asset manager owns thousands of houses around the US, but corporate homeownership is still fairly new. In 2011, there weren’t any entities that owned more than 1K single-family homes. As of last summer, hedge funds owned 574K (MetLife estimates the # reached 700K in late 2022). At that pace, institutional investors could control 40% of the market by 2030. If the bills become law (unlikely atm with a divided Congress), it could throw a wrecking ball into firms’ sizable housing portfolios.