{"id":171351,"date":"2024-05-01T09:26:34","date_gmt":"2024-05-01T15:26:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=171351"},"modified":"2024-05-27T02:20:50","modified_gmt":"2024-05-27T08:20:50","slug":"what-lawmakers-can-do-to-spur-housing-growth-and-help-investors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/what-lawmakers-can-do-to-spur-housing-growth-and-help-investors","title":{"rendered":"Solving the Housing Crisis: What Lawmakers Must Do to Support Investors and Boost Housing Supply"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC3414558706\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">There\u2019s a critical lack of affordable housing. This housing shortage began following the 2008 financial crisis and worsened during the pandemic, and now, not enough homes have&nbsp;<\/span><span data-preserver-spaces=\"true\">been built<\/span><span data-preserver-spaces=\"true\">&nbsp;to meet current demand. Inventory is slowly rising in Q2, which is helpful, but more inventory alone doesn\u2019t solve the problem.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The government has plans to help create more affordable housing inventory and keep large-scale investors from taking homes away from middle-income Americans. The White House released a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.whitehouse.gov\/briefing-room\/statements-releases\/2024\/03\/11\/fact-sheet-the-presidents-budget-cuts-housing-costs-boosts-supply-and-expands-access-to-affordable-housing\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">budget in March<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;that included plans to support Biden\u2019s Housing Supply Action Plan. Items like significant tax credits for first-time homebuyers and&nbsp;<\/span><span data-preserver-spaces=\"true\">for<\/span><span data-preserver-spaces=\"true\">&nbsp;homeowners who sell their starter homes&nbsp;<\/span><span data-preserver-spaces=\"true\">were created<\/span><span data-preserver-spaces=\"true\">&nbsp;to directly reward and incentivize consumers to move.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Incentives like local grants, the Low-Income Housing Tax Credit, and the proposed New Neighborhood Homes Tax Credit&nbsp;<\/span><span data-preserver-spaces=\"true\">could<\/span><span data-preserver-spaces=\"true\">&nbsp;offer financial breaks to developers and investors who&nbsp;<\/span><span data-preserver-spaces=\"true\">are able to<\/span><span data-preserver-spaces=\"true\">&nbsp;navigate these government programs and procure funding for their projects.<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Lawmakers are making it clear that&nbsp;<\/span><span data-preserver-spaces=\"true\">extremely<\/span><span data-preserver-spaces=\"true\">&nbsp;low-income and affordable rental housing are&nbsp;<\/span><span data-preserver-spaces=\"true\">major<\/span><span data-preserver-spaces=\"true\">&nbsp;priorities for funding and legislation.&nbsp;<\/span><span data-preserver-spaces=\"true\">Again, if they get off the ground, these could be helpful initiatives to increase a specific category of housing inventory, but what else&nbsp;<\/span><span data-preserver-spaces=\"true\">is missing<\/span><span data-preserver-spaces=\"true\">?<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Somewhere between the institutional investor that owns 1,000+ properties and the nonprofits trying to support low-income communities with government programs is the independent investor. These local mom-and-pop solopreneurs and small business owners actively rehab homes in their local neighborhoods\u2014often taking on the vacant, abandoned, and distressed inventory that won\u2019t qualify for traditional financing and projects that are likely beyond the scope of possibility for an average homebuyer who may want to take on a fixer-upper.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This independent investor plays the role of a housing provider. But do lawmakers know they exist? Or what impact do single-family investors make by bringing affordable inventory back to the market for the average middle-income homebuyer?&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Affordable housing legislation will need votes&nbsp;<\/span><span data-preserver-spaces=\"true\">to pass<\/span><span data-preserver-spaces=\"true\">, and the upcoming presidential election will divert and splinter attention. But the independent investor will keep moving.&nbsp;<\/span><span data-preserver-spaces=\"true\">Keep rehabbing\u2014flipping and renting could&nbsp;<\/span><span data-preserver-spaces=\"true\">make an exponential impact on<\/span><span data-preserver-spaces=\"true\">&nbsp;housing inventory with a&nbsp;<\/span><span data-preserver-spaces=\"true\">little<\/span><span data-preserver-spaces=\"true\">&nbsp;help.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Legislative Factors Influencing Independent Investors<\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Lawmakers don\u2019t acknowledge the role of the independent investor<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">In the current housing landscape, the prevalent narrative that paints independent investors as&nbsp;<\/span><span data-preserver-spaces=\"true\">major<\/span><span data-preserver-spaces=\"true\">&nbsp;contributors to the hoarding of housing and the consequential surge in prices is a gross oversimplification, and a more in-depth understanding reveals a nuanced story.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Large investors and private equity firms&nbsp;<\/span><span data-preserver-spaces=\"true\">who<\/span><span data-preserver-spaces=\"true\">&nbsp;own more than 1,000 single-family residences represent a small percentage of overall ownership. In fact, most institutional investors have been on the sidelines because of high financing costs and have shifted strategies.&nbsp;<\/span><span data-preserver-spaces=\"true\">SFR players who own approximately 3% of SFRs&nbsp;<\/span><span data-preserver-spaces=\"true\">are&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/finance.yahoo.com\/news\/sfr-fix-flip-investors-expect-183159975.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">buying<\/span><span data-preserver-spaces=\"true\">&nbsp;existing portfolios<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;from smaller investors and&nbsp;<\/span><span data-preserver-spaces=\"true\">focusing<\/span><span data-preserver-spaces=\"true\">&nbsp;more on the&nbsp;<\/span><span data-preserver-spaces=\"true\">build to rent<\/span><span data-preserver-spaces=\"true\">&nbsp;space.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Yet bills like the most recent&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/how-the-affordable-housing-and-homeownership-protection-act-will-impact-investors\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Affordable Housing and Homeownership Protection Act&nbsp;<\/span><\/a><span data-preserver-spaces=\"true\">are aiming<\/span><span data-preserver-spaces=\"true\">&nbsp;to tax real estate investors on every SFR purchase. The&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.congress.gov\/bill\/118th-congress\/senate-bill\/3673\/text?s=1&amp;r=8\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">bill defines<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;large investors as those who own between 25 and 100 homes, and \u201cgiant\u201d investors&nbsp;<\/span><span data-preserver-spaces=\"true\">are<\/span><span data-preserver-spaces=\"true\">&nbsp;those who own 100+ SFRs. These investors would pay a tax of 3-5% of the purchase price on each individual property<\/span><span data-preserver-spaces=\"true\">,&nbsp;<\/span><span data-preserver-spaces=\"true\">every tax year.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><span data-preserver-spaces=\"true\">A 1% tax would be leveraged<\/span><span data-preserver-spaces=\"true\">&nbsp;on \u201cmedium\u201d investors with 15 properties.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\">&nbsp;is just one very recent example that shows that policymakers&nbsp;<\/span><span data-preserver-spaces=\"true\">have not met<\/span><span data-preserver-spaces=\"true\">&nbsp;or&nbsp;<\/span><span data-preserver-spaces=\"true\">understood<\/span><span data-preserver-spaces=\"true\">&nbsp;the role of the independent investor as a housing provider.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><span data-preserver-spaces=\"true\">Investors who rehab and own rental property are accustomed to navigating existing and proposed legislation&nbsp;<\/span><span data-preserver-spaces=\"true\">around<\/span><span data-preserver-spaces=\"true\"> tenant bills, squatter&#8217;s rights, and landlord laws.&nbsp;<\/span><span data-preserver-spaces=\"true\">Large-scale institutional investors will&nbsp;<\/span><span data-preserver-spaces=\"true\">just<\/span><span data-preserver-spaces=\"true\">&nbsp;shift&nbsp;<\/span><span data-preserver-spaces=\"true\">around <\/span><span data-preserver-spaces=\"true\">priorities until the rental market makes sense&nbsp;<\/span><span data-preserver-spaces=\"true\">for them financially<\/span><span data-preserver-spaces=\"true\">&nbsp;to reenter.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And yet, the independent investor gets somewhat tossed into the mix, included in headlines and negative conversations about Wall Street taking over Main Street.&nbsp;<\/span><span data-preserver-spaces=\"true\">They are criticized for not only competing with the average homebuyer and driving the market in the wrong direction but are also never seen in a positive light&nbsp;<\/span><span data-preserver-spaces=\"true\">for&nbsp;<\/span><span data-preserver-spaces=\"true\">the good<\/span><span data-preserver-spaces=\"true\">&nbsp;work that they do<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\">&nbsp;A spotlight would be nice, even though they aren\u2019t asking for one.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">State and local government roadblocks<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">When it comes to<\/span><span data-preserver-spaces=\"true\">&nbsp;zoning, land use, and building requirements, not all states are the same, and neither are the numerous individual counties and cities. The federal government is encouraging local governments to reevaluate outdated zoning and building restrictions to open up opportunities for new construction and rehabbing properties.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There are often limits on square footage and density or allowing manufactured homes and accessory dwelling units in local communities. Legislative focus specifically targeted to help single-family investors could impact these investors\u2019 ability to rehab, add additional units, and create more housing.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Incentives and grants from local governments designed for the single-family investor could bolster inventory quickly, with&nbsp;<\/span><span data-preserver-spaces=\"true\">the potential for independent investors to overhaul<\/span><span data-preserver-spaces=\"true\">&nbsp;entire streets of uninhabitable homes.<\/span><span data-preserver-spaces=\"true\">&nbsp;New construction timelines can be 18 months for a single property, and the sale of existing inventory is just an exchange of a&nbsp;<\/span><span data-preserver-spaces=\"true\">home<\/span><span data-preserver-spaces=\"true\">, not an addition.&nbsp;&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For now, the independent investor must stay on top of local legislation and&nbsp;<\/span><span data-preserver-spaces=\"true\">either<\/span><span data-preserver-spaces=\"true\">&nbsp;seize opportunities with zoning, land use, and building restrictions or avoid the pitfalls.&nbsp;<\/span><span data-preserver-spaces=\"true\">Either way, there are nearly 15 million vacant homes in the U.S.<\/span><span data-preserver-spaces=\"true\">, as well as<\/span><span data-preserver-spaces=\"true\">&nbsp;a vast inventory of aging homes owned by boomers that will require&nbsp;<\/span><span data-preserver-spaces=\"true\">major<\/span><span data-preserver-spaces=\"true\">&nbsp;renovations to become livable for a new buyer.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><span data-preserver-spaces=\"true\">These are prime projects for&nbsp;<\/span><span data-preserver-spaces=\"true\">the<\/span><span data-preserver-spaces=\"true\">&nbsp;independent&nbsp;<\/span><span data-preserver-spaces=\"true\">investor who can bring these properties back<\/span><span data-preserver-spaces=\"true\">&nbsp;to market.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Mortgage Rate Problem<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Mortgage rates will&nbsp;<\/span><span data-preserver-spaces=\"true\">obviously continue to be a factor that impacts<\/span><span data-preserver-spaces=\"true\">&nbsp;the entire housing market in 2024 and beyond\u2014no surprise there. The fact is that headlines about mortgage rates&nbsp;<\/span><span data-preserver-spaces=\"true\">do<\/span><span data-preserver-spaces=\"true\">&nbsp;impact homebuyers and sellers and cause them to act or not act, often because of fear.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Predictions at the beginning of the year had the Federal Reserve lowering the federal funds rate at least once or twice during 2024, and as of now, it appears those plans have&nbsp;<\/span><span data-preserver-spaces=\"true\">been pushed out<\/span><span data-preserver-spaces=\"true\">.&nbsp;<\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\">&nbsp;means homebuyers and sellers who need to move are embracing mortgage rates, sales prices are up, and inventory is still tight.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For investors, the mortgage rate story is the same from last year to this year, and they plan to keep rehabbing homes and adding to their rental portfolios.&nbsp;<\/span><span data-preserver-spaces=\"true\">Because they have access to alternative capital or equity from other properties, the actual mortgage rate&nbsp;<\/span><span data-preserver-spaces=\"true\">does not prevent<\/span><span data-preserver-spaces=\"true\">&nbsp;investors&nbsp;<\/span><span data-preserver-spaces=\"true\">from doing<\/span><span data-preserver-spaces=\"true\">&nbsp;their jobs.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><span data-preserver-spaces=\"true\">Although it may hinder some, they continue to add to housing inventory alongside new construction&nbsp;<\/span><span data-preserver-spaces=\"true\">without much<\/span><span data-preserver-spaces=\"true\">&nbsp;attention.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">At New Western, we serve over 200,000 investors who buy rehab properties through our marketplace. These are the local, independent investors who could benefit from access to financing and help with navigating complex regulations.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">A November 2023 survey of nearly 1,300 New Western investors reveals a positive outlook for 2024 and the potential for impact on affordable housing inventory. Here are some highlights:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Growth is expected:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Over half of investors surveyed have a strong&nbsp;sense of&nbsp;optimism for their business growth in 2024. And they anticipate a 25% increase in their rehab business over the next year.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Acquisition plans:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;About 80% of investors have concrete plans to acquire properties, aiming to purchase between one and five properties in 2024.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Focus on vacant or uninhabitable properties:&nbsp;<\/span><\/strong><span data-preserver-spaces=\"true\">Most investors are concentrating on properties that are either vacant or uninhabitable.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Pricing trends:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Despite targeting properties that require considerable investment and renovation, a significant 64% of investors report being able to sell their properties at or above the asking price and are in line with the middle-income buyer\u2019s budget.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">While independent investors will continue to grow their businesses in 2024 and rehab uninhabitable properties, innovative policy measures could help support and expand their impact, especially in creating affordable housing options.<\/span><\/p>\n\n\n\n<div class=\"wp-block-group border border-gray-200 p-6 rounded-md has-slate-50-background-color has-background\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n    \n  <div \n    id=\"segemnt-view-event-block_624f52525847f\" \n    class=\"  \"\n    x-intersect:enter.once=\"\n      analytics.track('DoorLoop Blog Sponsor View', {\n        referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-lawmakers-can-do-to-spur-housing-growth-and-help-investors',\n              })\n    \">\n    \n  <\/div>\n  \n\n\n<h3 class=\"wp-block-heading has-text-align-left mt-0\"><strong>This article is presented by New Western<\/strong><\/h3>\n\n\n\n<figure class=\"wp-block-image size-large is-resized is-style-default\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/04\/NW_Assets_Trademarked_Vertical_Gold-1024x430.png\" alt=\"\" class=\"wp-image-149628\" style=\"width:519px;height:183px\" width=\"519\" height=\"183\" title=\"\"><\/figure>\n\n\n\n<p>New Western makes it easy to buy an investment property.<\/p>\n\n\n\n<p>As the largest private source of investment properties in the nation, New Western buys a home every 13 minutes for our marketplace of more than 150,000 investors looking to rehab houses. Investors have access to a large volume of inventory and to our licensed agents who are local experts in over 50 markets across the country.<\/p>\n\n\n\n<p>Join our marketplace for free.<\/p>\n\n\n\n<div id=button-custom-event-block_63c9a33918e17 class='button-custom-event'>\n      <a href=\"https:\/\/www.newwestern.com\/?utm_medium=content&#038;utm_source=bp&#038;utm_campaign=aprilsponsorship\" x-on:click=\"window.analytics.track(&#039;Sponsored Blog CTA Click&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/what-lawmakers-can-do-to-spur-housing-growth-and-help-investors&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Learn More About New Western<\/a>\n  <\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\"><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>There\u2019s a critical lack of affordable housing. This housing shortage began following the 2008 financial crisis and worsened during the pandemic, and now, not enough homes have&nbsp;been built&nbsp;to meet current [&hellip;]<\/p>\n","protected":false},"author":613660,"featured_media":160565,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7384,7119],"tags":[],"class_list":["post-171351","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics-policy","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/171351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613660"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=171351"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/171351\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/160565"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=171351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=171351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=171351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}