Norbert J. Michel and Christian Kruse
House Financial Services Chairman French Hill (R‑AR), Ranking Member Maxine Waters (D‑CA), and other members of the House leadership team deserve enormous credit for stripping out some of the worst provisions in the Senate’s 21st Century ROAD to Housing Act. In March, the Senate amended an earlier version of the housing bill to “ban” large institutional investors from purchasing single-family homes, a Trump White House priority. The Senate ban also included a provision requiring large institutional investors (those with 350 or more homes) in “build to rent” homes to sell their properties after seven years.
The House’s amendment (which was just passed by the House) rolls back some of the most damaging Senate provisions by stripping the seven-year sell mandate, broadening exemptions for build-to-rent developments, and dropping the permanent reauthorization of Community Development Block Grant Disaster Recovery (CDBG-DR). The amendment also improves the bill by adding provisions to reduce regulatory burdens on small banks.
Most troubling, though, is that the underlying institutional investor “ban” survives in modified form. Banning large institutional investors from owning single-family homes sets a dangerous precedent and will fail to achieve the stated goal of lowering home prices. Separately, most of the remaining features in the legislation do little more than maintain federal housing policies that have already failed for decades to make housing more affordable.
Where the House Got It Right
Chairman Hill’s amendment cuts several provisions that would have expanded federal reach into housing markets. First, it strips the seven-year seal mandate, which the Senate added to the bill to align with President Trump’s executive order. That requirement would be disastrous, forcing developers to sell their homes and possibly evict their tenants. In fact, even the threat of this legislation has already chilled investment in new housing. While cutting the seven-year sell requirement is a big improvement, it remains unclear whether it will survive a House-Senate conference.
Second, the House amendment stripped a provision that would have permanently authorized the CDBG-DR program, as championed by Senator Elizabeth Warren (D‑MA). Supporters of permanent authorization argue that federal disaster recovery funding should not depend on the ad hoc, supplemental-appropriations model. Yet the ad hoc model preserves what permanent authorization would surrender: congressional case-by-case oversight and scrutiny of every disaster package. In fact, a Government Accountability Office (GAO) report found that the Department of Housing and Urban Development (HUD) lacks the data infrastructure to monitor fraud risk in CDBG-DR—a gap that permanent authorization would entrench.
Next, while the House amendment did not remove it, the amendment does sunset Section 208’s Innovation Fund. At best, this $200 million annual grant program would be redundant. It specifically authorizes grant recipients (mainly large city governments) to carry out any of the activities described in section 105 of the Housing and Community Development Act of 1974, a list that is essentially the broad eligible activity list for community development block grants (CDBGs). Even if the bill did include new funding for the Innovation Fund (it does not), it would be difficult to argue that slightly increasing funding for the same activities CDBGs have funded for nearly 50 years would do much to improve current problems in local housing markets.
Finally, the House added a community-banking title the Senate had stripped, which promotes new community bank formation and streamlines examinations for smaller institutions. Smaller institutions held 57 percent of one-to-four family residential construction loans in 2024. Easing the regulatory burden on the lenders financing most small-builder housing would be a positive step.
Where the Bill Still Misses
The biggest miss with the 21st Century ROAD to Housing Act is that the bill bars institutional investors who own 350 or more single-family homes from purchasing additional properties. While this is intended to increase the number of single-family homes available for purchase, it does not increase the total supply of housing, and it may even reduce the supply. Among other problems, the ban seems to be based on the horribly mistaken idea that investing in and building homes isn’t a beneficial social activity. It also appears to be based on the idea that large institutional investors have some sort of dangerous monopoly in the market of single-family homes, but nothing can be further from the truth. In reality, large institutional investors own fewer than one percent of America’s single-family homes.
If it weren’t for the large institutional investor ban, this bill would be rather benign in terms of changing America’s housing markets. For the most part, its provisions just extend or duplicate programs already on the books. Of course, that doesn’t mean these policies are anything to celebrate.
For instance, the bill authorizes a five-year, $30 million HUD pilot program that awards grants (to states, localities, tribes, nonprofits, and similar entities) to conduct home repairs, an activity that other programs (including CDBGs and multiple HUD programs) already fund. A sunsetting pilot program that duplicates existing programs is, at best, redundant; at worst, it continues subsidizing activity that harms markets and builds a constituency for permanent authorization against the sunset.
The same pattern repeats with multiple provisions in the bill. For instance, Section 204 adds affordable housing construction as an eligible activity under HUD’s CDBG program. That might sound like a huge improvement, but the HOME Investment Partnerships Program (a ~$1.5 billion per-year program described by HUD as “the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households”) already finances affordable housing construction for both owner-occupied and rental housing. Ignoring other problems, layering this authority onto CDBGs creates a parallel funding pipeline that is unnecessary.
Separately, supporters have championed that the bill cuts red tape for costly environmental regulatory reviews that slow construction. Streamlining this process is welcome in principle, but the bill’s environmental relief applies only to developers for HUD-assisted housing projects—leaving untouched the much larger share of private housing development that may have to suffer through a four and a half year review.
The ROAD Forward
The House amendment is an improvement over the Senate’s 21st Century ROAD to Housing Act. The seven-year sell mandate is gone, the innovation fund will sunset, and the CDBG-DR permanent reauthorization has been struck. House leaders, particularly Financial Services Chairman French Hill, deserve credit for squeezing out these improvements in a difficult political environment.
But the bill that remains still rests on a flawed premise. The institutional investor cap targets less than one percent of the market and sets the precedent that Congress reserves the right to keep any investor they choose out of the market, for any reason, and at any time.
If Congress wants more affordable housing, it should let the private market compete to supply it without being burdened by harmful restrictions and subsidies. If it wants to shorten permitting timelines, it should extend regulatory relief to all private developers, not just to those undertaking HUD-assisted projects. More broadly, if Congress wants to continue so many federal programs already on the books, it should explain why these programs have failed to make housing affordable for the past several decades.
