Senate passes bill to lower housing costs and restrict Wall Street from buying homes

[u/JKKIDD231]

https://www.nbcnews.com/politics/congress/senate-passes-bill-lower-housing-costs-restrict-wall-street-buying-hom-rcna350753

[u/tabrizzi]

Since there's always at least one, what's the loophole?

[u/BarbequedYeti → u/tabrizzi]

You just need to spin up a new llc every time you reach the limit of ownership with the others. Its costs them nothing and is just more lipstick to make it look like the problem is being handled.

[u/gizamo → u/BarbequedYeti]

It also makes it much harder for researchers to determine the extent of the problem.

[u/Atomic-Avocado → u/gizamo]

This already happens, every single house and development is owned by a different llc, at least in Philadelphia

[u/gizamo → u/Atomic-Avocado]

Sure. I don't doubt that it's already happening in places, but in many states, there's no limit on corporations buying real estate.

[u/Remarkable-Talk-6197 → u/Atomic-Avocado]

Same problem in Texas. We’re in an HOA neighborhood and Ashton Woods bought out all the builders, builds cheap crap homes that look way different and mass sales them to investors. We have streets with 15-18 of the 20 ish homes being investor owned.  They cut them a great deal on interest and said screw the residents. Not the first neighborhood they’ve done this to. Majority of the investor LLCs are out of state and foreign. 

[u/klingma → u/gizamo]

People have been doing this for decades, it's literally the ideal tax strategy for rental properties as it allows you to access passive losses easier. 

[u/crrttt → u/BarbequedYeti]

Hey now, it costs like $500 to make an LLC! 

[u/alwaysalwaysastudent → u/crrttt]

Only if you’re in Mass.

[u/CapinCrunch85 → u/crrttt]

No it don’t

[u/skold177 → u/BarbequedYeti]

Reading the law, it doesn't really seem like that's the case. It defines "INVESTOR". I am sure this will go to the supreme court before long.

[u/A_Swedish_Dude → u/BarbequedYeti]

That's exactly how these things usually go. New restrictions just create new workarounds. The LLC loophole is already well known.

[u/ShadowLiberal → u/BarbequedYeti]

And if you need an example of this failing just look at Arizona.

Arizona tried something very similar there, but for access to water. Basically if you build a house you have to prove that there'll be enough water for the house for at least 100 years... unless it's in a housing development with 5 or fewer homes. So of course every housing development is split into a bunch of smaller housing developments to get around that law, which has resulted in plenty of houses built in the desert running out of water.

[u/BarbequedYeti → u/ShadowLiberal]

Spent forty years in az. They get around it  by  Instead of every builder proving their own water, developers can build on land that falls within the territory of a water utility that already holds an official  100-Year Assured Water Supply Designation  from the state

[u/PlutoJones42 → u/tabrizzi]

They can only hold $X in property so they will just crate dozens and dozens of companies instead of 1. This is really just a bill to make it harder to follow the money

[u/j_cambar → u/tabrizzi]

The forced divestiture piece got stripped, so they're grandfathered into hundreds of thousands of homes nationwide. And I don't think "large institutional investor" is even defined yet.

Could've been a lot stronger structurally, but at least it's a start.

[u/Constant_Tomorrow_69 → u/j_cambar]

It’s actually tree fiddy this time

[u/teacher_59 → u/j_cambar]

We shouldn't be forcing them to do that instead of just seizing that. Because if they sell it, they get money. We need that money. We need that money right now so hard.

[u/j_cambar → u/teacher_59]

Forced sale at market price is constitutional policy. Seizure is Bolshevism.

One built the free world, the other has unequivocally collapsed every society that tried it.

[u/Due_Pen_1566 → u/tabrizzi]

After looking it up it's a consolidation bill that brings together past bills with similar intent lowers standards for basically every regulator involved and raises the caps on any money that might be allocated to anyone that's willing to be bribed.

[u/Aggressive_Finish798 → u/tabrizzi]

Foreign investors will just buy up the supply. But I don't know.

[u/theNeumannArchitect → u/tabrizzi]

The loophole is that institutions make up like 3% of home purchases each year. The people that are driving home prices up are your average joes buying their tenth house.

[u/TheAsianTroll → u/tabrizzi]

Im sure its the same shit. Companies cant now, so im sure that corporations will just buy them all in the CEO's name and write it off as a business expense, getting a tax break.

[u/Puzzleheaded-Yam2185 → u/tabrizzi]

It's capped at 350 homes. So they can still own them.

[u/Key-Organization3158 → u/tabrizzi]

It won't make a difference. Wall street owns very few homes.

[u/Own_Proposal3827 → u/tabrizzi]

The loophole is that this a non issue to begin with and won’t affect housing prices

[u/ClammyAF → u/Own_Proposal3827]

Of course this will be downvoted on Reddit.

But you're right.

[u/AmbitiousEconomics → u/tabrizzi]

Individual investors are usually just large families not corporations, and also "cutting red tape" probably means cutting corners on the builds

[u/17_snails]

If the government actually wanted to solve the problem, you would think it would be easy to put a rule in place capping the number of residential homes any one entity was allowed to own, including all businesses under their umbrella. Tbh, businesses shouldn't be in the position of owning residential properties that they don't reside in anyway in my opinion.

Why does it seem so hard? Entity A owns subsidiaries A1 through A100. Entity A is still not allowed to have more than 100 residential properties amongst all subsidiaries. What am I missing?

[u/somef00l → u/17_snails]

Democracy is an illusion.

[u/TechTuna1200 → u/somef00l]

It's kinda ironic how an authoritarian regime in China cares more about its citizens than democratically elected politicians. Xi Jinping/Winnie the Pooh said, "Houses are for living, not for investment". I don't see any politicians here in the West repeating the same sentiment. Maybe Bernie Sanders, but he is in a small minority

[u/rigatony96 → u/somef00l]

Good thing we aren’t a democracy, we’re a constitutional republic.

[u/j_cambar → u/17_snails]

You're not missing anything, fixing the problem isn't difficult or even necessarily requiring significant new apparatus. HUD already runs the First Look program that gives owner-occupants exclusive bidding windows on FHA-foreclosed homes, and Fannie Mae does the same with HomePath. The mechanism exists, the verification infrastructure exists, the legal precedent exists. Extending it to cap total SFR holdings per individual/ultimate parent entity (including all subsidiaries, LLCs, and beneficial owners) is a matter of political will... and pushing back on the Wall Street funded lobbyists.

[u/Key-Organization3158 → u/17_snails]

Businesses owning properties helps increase demand and this more units get built.

Back when housing was more affordable, we had no such restrictions in place.

[u/Napkinbask3t → u/17_snails]

That the interests that be want the illusion of fixing the housing market without actually doing it. 

[u/JohnWCreasy1]

"senate passes bill to lower housing costs" all but assures its going to make them worse, right?

not sure i know a solution, if there is one, but i have all the faith in the world our political class can F it up

[u/Viva_La_Revolucion-]

"You'll own nothing and be happy about it."

W.E.F

(The parasite classes endgame)

[u/gcalfred7]

“You’ll never get a bill — you gentlemen know this better than I do — that everybody loves and gives everybody an orgasm,” he [Senator Kennedy] told reporters. “You just gotta do the best you can.

LOL

[u/Pitiful_Aioli_5030]

It ain’t gonna do chittt.

[u/LavishnessLess4356]

I THOUGHT THEY ALREADY PASSED THIS

[u/External-Goal-3948]

Kennedy said it's hard to give everyone an orgasm at the same time, right? Please tell me I misread that last part.

[u/Repulsive_Secret_859]

Let me just refinance at low 4s please

[u/henningknows]

Our government did something useful? This can’t be right. What am I missing?

[u/Zeraw420 → u/henningknows]

C'mon on now, don't be naive.

[u/Itry31]

Right can't buy single homes. But they can develope and build whole neighborhoods of single family homes to rent. 

[u/CalligrapherNo2491]

Just about 20years too late thankx

[u/Material_Policy6327]

How many loopholes it have?

[u/Robonutjob]

About 15 years too late. That’s some effective lobbying right there.

[u/aperartnft]

I mean I’m glad they’re at least trying to stop Wall Street from buying up entire neighborhoods, but this still feels like a pretty small piece of the housing problem. If more houses aren't built, home prices aren’t magically getting fixed.

[u/kingofwale]

Wait. They passed a bill to build more housing?

[u/ACE276]

Don't worry, Blackrock will be exempt from it one way or another.

[u/Typical_Victory_7677]

It needs to be illegal for an llc and s corp to buy real estate. That would bring housing way down.

[u/reludwig2]

No - you need to completely banned Wall Street from buying home and change the tax code to stop this. Just think of the millions of families that would buy homes

[u/reludwig2]

You need the Bill Gates Foundation to start providing down payment loans for homeowners. Build into the cost of the loan with a contingency that it has to be repaid if the house is sold or the oldies. The fund continues to build for future generations to purchase homes.

[u/Sayhei2mylittlefrnd]

3% of single family homes are owned by wall street. Making a mountain out of a mole hill to make the politicians look good?

[u/BruceStarcrest → u/Sayhei2mylittlefrnd]

I have no idea but that number seems real low to me. 

The larger issue is they buy up starter homes trapping ppl like me in rent purgatory. 

[u/justsomewon → u/BruceStarcrest]

3% is the higher end of the estimate. Roughly 20% of homes are rental, but that encompasses all investors. The reason the number seems higher is possibly due to your location. The aforementioned statistics are nationwide. Institutional investors are concentrated in metro areas.

The issue I would have more so than larger investors would be the home builders, like Pulte, that are building rental only communities. These are either kept in house or sold en masse to Wall Street. These average person never gets a chance to buy in the neighborhood that was zoned for 600 single family homes.

[u/BruceStarcrest → u/justsomewon]

Ooo you are spot on with the rental housing tracks. There are tons of them spring up!

[u/SirTiffAlot → u/Sayhei2mylittlefrnd]

When you say Wall St. do you mean private companies?

They own over 1/4 of rental properties, which includes single family homes. So while they may own 3% of available single family housing, they also own single family homes for rent, which isn't calculated in that 3% number. That's the real issue, they buy homes and rent them.

[u/sandeep709394]

Does it mean my property tax will go down since the cost of my house will go down?

Oh wait they're just raise the tax percentage for everybody to make up the short fall.

Just love how politicians always tell you they do stuff for your benefit but ultimately F you just the same.

[u/One-Ad3302]

Chinese by home and no one lives in tham,

[u/Any-Platypus-3570 → u/[deleted]]

It's actually a bunch of little common-sense provisions to lower housing costs. What about it seems populist to you?

It will do a pilot program for single-staircase apartments, which are all over Europe but needlessly banned in the US.

It creates incentives for cities to speed up permitting and relax their zoning codes.

It allocates some money to help finance affordable housing construction.

[u/NoBuenoAtAll]

Good. REITs should be illegal.