Washington's latest attempt to address the housing affordability crisis is a study in misplaced priorities. The 21st Century ROAD to Housing Act, recently amended in the House, still clings to a flawed narrative that blames institutional investors for the nation's housing shortage—while doing next to nothing to clear the path for private builders to actually construct new homes.
House Financial Services Chairman French Hill (R-Ark.) and Ranking Member Maxine Waters (D-Calif.) did manage to strip some of the Senate's most economically damaging provisions. Notably, they killed a seven-year mandate that would have forced large investors in build-to-rent communities to sell off their properties. That mandate, had it survived, would have chilled new rental construction at a time when supply is desperately needed.
The House also blocked a push to permanently authorize the Community Development Block Grant Disaster Recovery program, which would have ceded congressional oversight to a Department of Housing and Urban Development that watchdogs say still lacks the data infrastructure to prevent fraud.
But the core of the bill remains intact: a ban on institutional investors that own 350 or more single-family homes from buying additional properties. This provision is rooted in a popular but inaccurate narrative that Wall Street landlords are gobbling up entire neighborhoods. In reality, large institutional investors own fewer than 1 percent of single-family homes in the United States—a drop in the bucket.
Banning these investors won't increase the total housing supply. In fact, by restricting capital, it could reduce it. Investing in and building homes is beneficial whether done by a local builder or a large firm. Singling out institutional investors sets a dangerous precedent, signaling that Congress can arbitrarily lock certain buyers out of the market when it's politically convenient.
The rest of the bill doubles down on failed federal strategies. It creates a new $30 million HUD pilot program for home repairs—work already funded by existing grants. It layers affordable housing construction authority onto traditional community development grants, creating redundant funding streams. When the bill does try something positive, like cutting red tape for environmental reviews, it restricts that relief exclusively to HUD-assisted projects. Private developers, who build the vast majority of American housing, remain stuck in review processes that average more than four years.
If Congress wants to lower housing costs, the path is clear: stop artificially boosting demand through repetitive federal programs and remove federal barriers to supply. Extend regulatory and permitting relief to all private developers, not just government-backed ones. As HUD shifts its homeless policy from Housing First to a recovery-focused approach, the private sector remains the key to unlocking new construction.
The House amendment may have saved the bill from being a self-inflicted disaster, but it's still a swing and a miss. Decades of federal intervention have failed to make housing more affordable. True affordability will only come when the private market is allowed to compete, invest, and build without arbitrary political roadblocks.
Norbert J. Michel, vice president and director of the Center for Monetary and Financial Alternatives at the Cato Institute, argues that Congress needs to stop hunting for scapegoats and start clearing the way for builders. That means letting the private market do what it does best—build homes.
