By Bryan Crabtree
For years, Americans have watched as homeownership has become increasingly difficult to achieve. Rising home prices, elevated mortgage rates, soaring insurance costs, and years of underbuilding have created one of the most challenging housing affordability environments in modern history.
At the same time, many families have grown frustrated watching large institutional investors compete directly against them for single-family homes.
That's why the bipartisan housing proposal advanced by Senator Tim Scott and Senator Elizabeth Warren represents an important and encouraging step in the right direction.
The legislation seeks to limit the ability of large institutional investors to continue acquiring existing single-family homes. While the details are still evolving, the bill recognizes a simple truth: homes should first and foremost be places for families to live, not merely financial assets to be accumulated by Wall Street.
I applaud Senators Scott and Warren for recognizing the problem.
But I believe Congress should go even further.
The Bill Should Encourage Institutional Investors to Sell Homes Back to Families
Rather than simply preventing large investors from purchasing additional homes, lawmakers should create a voluntary incentive program encouraging institutional owners to gradually return existing housing inventory to the owner-occupied market.
Here's how it could work.
Institutional investors owning more than a certain number of single-family homes—perhaps 500 or 1,000—could elect to participate in a federally approved disposition program.
Under the program, investors would receive favorable capital gains tax treatment, or potentially a temporary capital gains exemption, when selling homes directly to owner-occupants.
There would be conditions.
The homes could not simply be sold to another investment fund, hedge fund, or large landlord. The buyer would need to certify occupancy as a primary residence for a specified period.
Most importantly, Congress should limit how many homes may be sold by any single institution each year.
Avoid Flooding the Market
A sudden liquidation of institutional housing portfolios would create significant risks.
If tens or even hundreds of thousands of homes were placed on the market simultaneously, prices in certain markets could decline sharply, harming homeowners, local governments, and communities.
That would benefit no one.
Instead, policymakers should establish annual disposition limits based on market size.
For example:
An institutional owner could be permitted to sell no more than 10% to 15% of its portfolio annually.
Regional sales caps could prevent excessive concentration in individual markets.
The program could be phased in over five to ten years.
This would allow the housing market to absorb inventory in an orderly fashion while steadily increasing homeownership opportunities.
A Win for Families, Investors, and Communities
An incentive-based approach offers several advantages.
Families gain access to more homes.
Institutional investors can unwind positions gradually while protecting shareholder value.
Communities benefit from increased owner occupancy, which has historically been associated with stronger neighborhood stability, civic engagement, and long-term property maintenance.
Perhaps most importantly, such a program would rely on incentives rather than mandates.
America has traditionally achieved many of its policy objectives by aligning economic incentives with public goals. Housing should be no different.
Housing Supply Still Matters
None of this should distract from the larger issue.
America still suffers from a significant housing shortage. Most economists agree that the nation needs millions of additional housing units to restore long-term affordability.
Restricting institutional ownership alone will not solve the housing crisis.
We must also:
Reform restrictive zoning policies.
Encourage new housing construction.
Streamline permitting.
Expand workforce and starter housing opportunities.
Invest in infrastructure that supports responsible growth.
Still, reducing competition between Wall Street and working families for existing homes is a worthy objective.
The Scott-Warren proposal is a strong beginning.
Now Congress should take the next logical step: create a path that encourages large institutional owners to gradually sell homes back to American families.
Homeownership has long been one of the foundational building blocks of the American Dream.
Public policy should do everything possible to preserve it.
Bryan Crabtree is a Luxury Real Estate Advisor with IndigoOak Christie's International Real Estate serving Charleston, Mount Pleasant, and the South Carolina Lowcountry. He writes regularly on housing policy, market trends, and real estate issues affecting consumers and homeowners.
