Senate Passes Major Bipartisan Housing Bill to Address Affordability Crisis

The Senate has passed the largest housing bill in decades — bipartisan legislation designed to improve housing affordability and availability through deregulation, expanding old programs and banning institutional investors from buying single-family homes, with few exceptions.

"It's Democrats. It's Republicans. It's pieces they built out together," said Sen. Elizabeth Warren, D-Mass., a co-sponsor of the bill. "That is the strength of this bill."

"It's not a Republican issue or a Democrat Issue," said Sen. Tim Scott, R-S.C., the bill's other sponsor. "It's an issue about helping moms like the one who raised me, the amazing woman that she was, become homeowners."

Many of the bill's provisions are meant to boost the United States' housing supply. The typical home sold in the U.S. — priced around $400,000 — is well above what the median family can afford. The housing shortage is responsible for much of that cost, since limited supply increases prices. One estimate from Realtor.com puts the shortfall between available units and demand at 4 million.

"If we want to bring down the cost of housing, we've got to build a lot more," said Warren. "And what I love about this bill is that it has more than 40 different provisions in it, all of which aim in the same direction, which is to give a push toward building more housing."

Much of the bill mirrors one passed by the House last month, with 84% of the provisions from the latter making their way into the Senate version.

The major difference between the two bills is the Senate's introduction of a ban that would prevent any investor that owns at least 350 homes from buying more.

"We put this bill together with the deep-seated belief that it is families who should live in homes and that's what homes are for," said Warren. "They're not there simply as investment vehicles for Wall Street private equity."

Research is mixed on the impact that these large investors have on housing prices: A report from the Urban Institute research group found that large investors — those with a presence in at least three markets and with at least 1,000 homes — own just 3% of single-family rentals nationwide. Freddie Mac found that institutional investors may play a small role in price increases but found that they are much less significant than primary drivers like limited building and migration to high-cost cities.

There are some exceptions to the bill's limits on institutional owners, such as allowing investors to buy homes needing serious renovation in order to bring them up to code, and allowing investors to own new homes constructed for renting, known as build-to-rent. But investors would be required to sell those homes after seven years, with the renter having first dibs to purchase.

Build-to-rent, once a niche corner of the housing market, now makes up about 7% of new single-family house construction. Supporters of the trend say it makes housing affordable for everyone, arguing that building new housing reduces costs for both owners and renters by increasing the overall supply.

In an open letter, 79 industry groups representing property managers like the Institute of Real Estate Management, as well as advocacy organizations pushing for more local housing construction, said they support new housing legislation but believe the Senate version should remove the sale requirement on build-to-rent homes. The letter warns that the provision "would effectively eliminate the production of Build-to-Rent (BTR) housing."

When President Trump signed an executive order in January to limit large investors from buying homes, he gave a pass to build-to-rent homes.

"The president's Executive Order included an exception for built for rent housing," Ken Wingert, the National Association of Home Builders' chief advocacy officer, said. "Any housing bill that makes it to his desk should do the same."

Not all industry groups oppose the provision. The National Association of Realtors supports the bill and in November began pushing for large investors to sell off more of their rentals to homebuyers.

"We share the goal of ensuring there are enough places for people to live and expanding access to homeownership," Shannon McGahn, the association's chief advocacy officer, said.

Another section of the bill aims to boost the construction of factory-built homes, in large part by getting rid of the requirement that they have a permanent chassis. A steel frame allows such housing to be transported, but many manufactured homes are placed on permanent foundations and never moved again.

Creating manufactured housing is faster than building on-site and is about half the cost per square foot. At least nine states have relaxed their zoning restrictions on manufactured housing, to help address the housing shortage and high prices.

"Starter homes that were built in the '50s and '60s just aren't made today," said Rachel Siegel of Pew Charitable Trusts, a research and policy nonprofit. "Manufactured housing really can fill that gap very well, without subsidy."

Housing policy experts say ending the chassis requirement could save builders roughly $5,000 to $10,000 in construction costs. It would also allow more flexible design, making it easier to add a second story or basement, for example. Many locales also restrict where factory-built homes can go if they have a permanent chassis.

Last year's One Big Beautiful Bill Act overhauled the low-income housing tax credit. The program provides tax credits to developers that set aside a certain number of affordable units for low-income families. The tax and spending law bumped up how many credits states could allocate for these programs.

Banks often take advantage of this program to invest in affordable-housing construction but are limited by the public welfare investment (PWI) cap. Under the old rules, banks could invest only 15% of their risk-adjusted capital in these types of projects. The new bill would increase that to 20%, allowing banks to invest more in housing while tapping into the expanded low-income housing tax credit program.

"We view the PWI increase as the most impactful part of this bill when it comes to housing supply," said Sarah Brundage, president and CEO of the National Association of Affordable Housing Lenders. "Lifting this cap would open up billions of dollars in additional investment capacity."

Other aspects of the bill are about speeding up homebuilding, including through deregulation.

One provision would streamline environmental reviews when building homes located between existing buildings. Another would create a grant program for communities to develop "pattern books" of preapproved housing designs, reducing the number of approvals needed to ensure they are up to code. A similar program is already underway in Vermont.

Many of these programs are either new block grants — such as a fund to support innovative construction projects — or expansions of existing block grants, like the HOME Investment Partnerships Program, that will provide funding for making abandoned buildings livable.

Some groups, like the Cato Institute, a libertarian think tank, argue that these federal incentives have been Washington's go-to solution for housing issues for decades and failed to prevent the current crisis. The main beneficiaries of these grants, critics argue, are the senators who get to show off the federal dollars they brought back to their communities.

"Anybody who doesn't like where we are in housing policy right now shouldn't really like this [bill], because it's just a continuation of all the crap they've been doing," said Norbert Michel, vice president and director of the Cato Institute's Center for Monetary and Financial Alternatives. The Wall Street Journal's editorial board described the bill as "pork-filled" and "a blueprint for a bigger Washington."

To Warren, though, the bill's expansive nature is what helped it gain bipartisan support.

"Think of this bill like a meatball," Warren said. "It's got a lot of different ingredients in it, but it's the fact that it's all there together is what makes it so delicious."

Politico reported that House Speaker Mike Johnson, R-La., said during a closed-door Republican meeting that the Senate bill would likely need to go to conference to be negotiated between the two chambers.

In addition to how both chambers address the role of institutional investors in the housing market, lawmakers in the House and Senate are also split over language that would prohibit the Federal Reserve from issuing a digital currency. The Senate bill calls for a temporary ban, but members of the ultraconservative House Freedom Caucus have pushed back and called for the ban to be permanent.

Even if both chambers can agree, the bill could run into trouble when it reaches Trump's desk. He has said he won't sign any legislation until Congress passes the SAVE America Act, which would require eligible voters to provide documents proving their U.S. citizenship before they are allowed to cast a ballot.

However, a bill passed by both chambers can still become law if the president takes no action and 10 days pass with Congress in session.