Supporters say large investors drive up prices, while critics warn of market disruption

Organ Mountain News report

WASHINGTON - U.S. Sen. Martin Heinrich has cosponsored federal legislation that would penalize hedge funds and large investors for buying single-family homes, a practice supporters say prices families out of the market.

“My message to hedge funds: Get out of the housing market,” Heinrich said in a statement. “The American dream of homeownership should be in the hands of New Mexico families, not billionaire investors.”

The bill, called the Humans Over Private Equity for Homeownership Act, would create new tax penalties for large investors who continue buying single-family homes and would require them to gradually sell off homes they already own.

Supporters argue that investor ownership has grown rapidly in the past decade. In 2011, no single entity owned more than 1,000 single-family rental homes nationwide. By 2022, large institutional investors owned about 700,000 such homes, and some analysts project they could control as much as 40% of the single-family rental market by 2030.

Under the proposal, hedge funds and similar investors would face:

• A tax penalty of 15% of the sale price or $10,000 if greater when buying additional single-family homes
• Loss of depreciation and mortgage interest tax breaks
• A $5,000 per-home annual tax penalty if they fail to sell off existing single-family homes over a 10-year period

The bill is led by Sen. Jeff Merkley of Oregon. Other cosponsors include Sens. Ruben Gallego and Mark Kelly of Arizona, Angus King of Maine, Chris Van Hollen of Maryland and Bernie Sanders of Vermont. A companion bill has been introduced in the House by Reps. Linda Sánchez of California and Adam Smith of Washington.

Housing and consumer advocacy groups have endorsed the bill, including Americans for Financial Reform, the National Housing Law Project and the National Consumer Law Center.

Supporters say the measure would make more homes available to families and help ease price pressure. Critics of similar proposals in the past have argued that restricting investors could reduce rental supply and disrupt housing markets, especially in fast-growing areas.

Heinrich has supported other housing-related legislation in recent years, including bills aimed at first-time homebuyers and educator down payment assistance. He said the hedge fund proposal is meant to address what he sees as a structural problem in the market.

“Every New Mexican deserves an affordable place to call home,” Heinrich said.