Today’s edition sponsored by: JPI, Authentic, Foxen, TeleCloud and Robora.
Another Twist in the Long Road for the ROAD to Housing Act
We had just finished up this week’s podcast production (which is all about the ROAD to Housing Act, featuring special guest Congressman Josh Harder) when I got text message: President Trump just canceled the planned bill signing ceremony.
Here we go again. It’s yet another unexpected twist in the long-winding road for the ROAD to Housing Act.
So we recorded an update (releasing tomorrow wherever you get your podcasts) and here we are, once again in “wait and see” mode.
Here are screenshots of the President’s posts, which reversed the White House’s prior support of the bill.
These posts come just one day after his press secretary just yesterday called it “one of the most significant pieces of housing affordability legislation in American history.” But he’s now calling it “of minor importance” compared to other priorities.
What happens next? A few possibilities:
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If the President doesn’t sign or veto the bill within the next two weeks, it becomes law, as The Wall Street Journal reported, citing the U.S. Constitution. The WSJ also reported that “Congress could also delay sending the bill to the White House indefinitely,” which presumably would delay the start of that 2-week clock.
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If the President vetoes the bill, it goes back to Congress. While Congress passed ROAD with enough votes to override a veto, there’s no guarantee they’d muster enough votes to actually do it. Some Republicans may change their votes in support of the President’s position.
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If the bill does NOT get enacted, we’re at risk of basically starting over. For SFR and BTR investors, that’s a problem because it indefinitely extends the cloud of uncertainty over the SFR and BTR markets — likely freezing up a lot of capital.
What’s in the ROAD to Housing Act? It’s NOT the ban many are reporting.
Let’s talk about one part of the bill itself: Section 1001, entitled “Homes are for People, Not Corporations.” (I hate that phrasing, which implies renters are not people.)
Many reporters and politicians are hailing ROAD as a ban on institutional investors buying houses. But in reality: There’s no “ban” in the final version that just passed in the Senate and the House. Read the bill. There’s no ban. (Of course, standard disclaimer: Consult an attorney to see what the bill actually means for you.)
In practice, it appears that large investors can still buy existing single-family homes if they do two things that many of them already do:
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Provide rent reporting to the credit bureaus so renters can get credit for paying rent.
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Provide renters the opportunity to buy their rental house before it’s sold to someone else.
There’s a lot more saber rattling and window dressing in the legislation – including several other exemptions allowing large investors to buy homes, the most important of which is the exemption on new build-to-rent construction. There’s also exemptions for rent-to-own and renovate-to-own, among other things, but they come with red tape and the risk of overeager regulators calling foul over ambiguous rules.
So, aside from new construction, the simplest, most frictionless path for investors to buy existing homes is simply to offer those two benefits outlined in Section 1001 (2)(E) on pages 362-363. However, I should note there’s a third bullet point in that section that such programs also “may entail the meaningful financial support from the large institutional investor, including price concessions, for the purchase of a single-family home by the renter (whether it is the home the renter occupies or another home).”
So the word “may” there implies some optionality that could be interpreted differently by regulators downstream. (BTW: This is how I read it, but consult your attorney for better advice.)
Either way, in effect, the entire section on single-family rental investors might have been written in far fewer words as a mere requirement that SFR investors help renters build credit scores and get first dibs on the house should the investor sell. That would have saved a lot of time and headaches (because many investors have been doing these things for years), while preventing the BTR development freeze that stalled ~10k units this year.
Speaking of build-to-rent construction: The final version of the legislation allows investors to build single-family rental homes without the forced sale requirements from the Senate’s original bill. And they can sell those homes to other large investors without impediments, thereby maintaining the liquidity needed for the build-to-rent construction market to remain active. That should unlock BTR development capital again.
All that is very good. As are the many pro-supply provisions of the broader legislation. There are 40+ different provisions in here that help streamline, incentivize or boost housing construction. Real wins.
There are other issues with ROAD, most notably the massive new regulatory arm it creates (without funding) over the SFR market. That isn’t getting enough attention. But that’s a topic for another day.
We’ll do a deeper dive on ROAD if and when it finally becomes law.
In the meantime, and for details, check out the new episode of The Rent Roll podcast dropping tomorrow with special guest Congressman Josh Harder, who helped block the Senate’s efforts to effectively nuke build-to-rent construction.
— My Latest Posts on LinkedIn —
Here are some recent posts if you missed them:
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If your city makes rent payment essentially optional, don’t be surprised when collections drop off even for non-profit affordable housing.
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Wage growth topped rent growth for 41 straight months and counting, bringing rent-to-income ratios back to pre-pandemic levels.
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We have a deal: The Senate and House come to terms on the ROAD to Housing Act. Here’s what it means for SFR and BTR.
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If your city’s policies embrace housing developers yet demonize housing operators, you’re pushing a bait-and-switch strategy that development capital will see through … and you won’t build the housing you claim to support.
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Spring leasing numbers show signs of momentum.
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A new research paper from the Minneapolis Fed shows rent control has been a disaster for St. Paul, shifting a larger share of the tax burden onto homeowners.
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A newly published hit piece on LIHTC affordable housing reads like an unchecked airing of grievances, and misses the mark on an important topic.
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What are the common denominators for apartment projects still breaking ground? Here are the big six.
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Apartment debt originations in Q1’26 came in as the second-largest Q1 on record.
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Even The New York Times editorial board is coming out against rent control.
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While apartment ownership remains as fragmented as ever, the management business is becoming more consolidated.
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New “research” on the role of private equity grossly underestimates the role of private equity, and grossly overstates the implications.
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AvalonBay and Equity Residential are merging. That’s big news, but it also means it’s an uneasy time to be working at AVB or EQR.
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The New York Times tell us that rent is “swallowing up” income, but the reality is a lot more nuanced.
— Now Spinning on The Rent Roll Podcast —
For 2025, The Rent Roll with Jay Parsons podcast ranked in Spotify’s top 2% of podcasts for minutes played and in the top 1% for most shared shows. Additionally, The Rent Roll continues to frequently rank on Apple’s charts for investing-themed podcasts, and was recently ranked as the third-best podcast in all commercial real estate (and #1 in housing) by the readers of CRE Daily!
Thank you to everyone who’s made The Rent Roll part of your weekly routine! New episodes are released every Thursday morning.
Find us on YouTube, Spotify, Apple and Amazon. Recent episodes:
DROPPING TOMORROW Episode 90: Inside the ROAD to Housing Act with U.S. Congressman Josh Harder
Episode 89: Inside UDR Apartment REIT with UDR’s Dave Bragg
Episode 88: The “Other” Berkshire with Berkshire’s Alan King
Episode 87: Preferred Equity, Debt & Anything But Common Equity with Marble Capital’s David Oelfke
Episode 86: In-House vs. Third-Party Management with Lantower Residential’s Emily Watson
Episode 85: What Still Pencils Out to Build? + The Art of Placemaking with Kane Realty’s Rob Reid
Episode 84: 4 Takeaways from Q1’26 SFR REITs Earnings Calls with Zelman’s Jesse Lederman
Episode 83: 6 Takeaways from Q1’26 Apartment REITs Earnings Calls with Piper Sandler’s Alexander Goldfarb
