HUD Lines Up With Build-to-Rent Industry Against Senate Bill

Housing and Urban Development Secretary Scott Turner recently toured a build-to-rent community, smiling for photos with the complex’s developer and operator and industry representatives.

To me, that’s a clear signal that the Trump administration opposes a Senate housing bill’s contradictory provision to deter build-to-rent development. The Senate passed the bill — which was very pro-development, except for that one section — in a bipartisan vote.

Fortunately, the House’s version of the housing bill lacks a BTR crackdown. And now it’s clear that HUD also favors build-to-rent housing.

Political craziness rarely surprises me anymore, but I was shocked that build-to-rent was targeted for destruction by almost the entire U.S. Senate.

After all, BTR investors are not gobbling up homes that would otherwise be sold to individuals. They are building new homes that wouldn’t otherwise exist. That is precisely the goal of the entire rest of the legislation!

Let’s consider build-to-rent from a supply-and-demand perspective.

Some BTR homes are being rented by people who, absent that choice, would have bid on houses for sale. All other BTR homes are being rented by Americans who would otherwise have competed for existing rental units.

Conclusion: BTR homes absorb demand from homebuyers and renters. This tamps down price growth for all dwellings.

Assuming the Senate backs down on build-to-rent, that would leave the larger controversy of whether hedge funds are driving up the price of housing. Sen. Elizabeth Warren, who along with Sen. Tim Scott was behind the Senate’s attack on build-to-rent, has been on the wrong side of the hedge fund issue, as have President Donald Trump and Gov. Kathy Hochul.

Should you encounter someone at a cocktail party parroting their untrue claims, I compiled some helpful talking points. Please use them politely! Studies have shown that countering a false argument with facts typically causes the misinformed person to double down rather than change his mind.

Here they are:

1. Investors own a tiny percentage of single-family homes. Various analyses have shown it’s 2 percent or 3 percent at most, and a lot of those are fix-and-flips in progress by small contractors and mom-and-pops. Large investors — the boogeymen you often hear about — own something like 0.3 percent of single-family homes.

2. When investors buy homes to rent them out, it does shrink the supply of ownership units, but it increases the supply of rental units by the same number. Even if the enhanced competition to buy homes left more would-be owners stuck in rentals, it would not increase their rents because the supply-demand balance would be unchanged.

3. The shortage of single-family homes for rent is greater than most people think. Just try to rent a house in the suburbs. Not so easy! The supply-demand imbalance for rental houses is probably even higher than it is for houses for purchase. This is why build-to-rent is a growing industry: It is filling a need, not taking choices away. Many Americans want to live in single-family neighborhoods but are not ready or able to buy.

4. Investors typically don’t get into bidding wars for homes. They try to buy low. They are not driving up prices the way that traditional homebuyers did during the Covid buying frenzy of 2021.

5. When demand craters and there’s a glut of homes for sale, as in 2009 to 2012 after the bubble burst and it was hard for individuals to get a mortgage, investors step in and buy more homes. This serves an important role. It stabilizes a crashing market. In a tight market, investors sell, which eases the shortage of available homes. In recent years, investors have been selling more homes than they’ve been buying.