Last week Congress passed what many people regard as the most significant housing legislation in decades. The 21st Century Road to Housing Act is expected to have a long term rather than immediate effect on inventory and affordability through 45 provisions that involved extensive bipartisan debate. The most widely publicized element in the bill has been the new restriction on institutional purchasing in the housing market, specifically limiting single home purchases by corporate acquirers. This provision has widespread popularity, with Americans overwhelmingly supporting constraints on large institutions buying single-family housing.
What does this new law mean for our real estate market? In the short term, we do not expect major noticeable changes. Because our market and clientele transact primarily in luxury price points and all cash, we tend not to see an immediate influence from affordability policy. Over time, however, this bill is expected to address the nationwide shortfall in housing, currently estimated at 4 million homes. Stimulating housing starts would generate revenue for builders and ancillary trades, creating economic activity in many communities. Moreover, expanding housing affordability for entry level buyers and the middle class is expected to refresh avenues for wealth building and the generational transfer of wealth through long term equity gains.
