Editor’s Note: The RISMedia series, Legislative Round-Up looks at pending and passed federal and state-level legislation that impacts real estate professionals.
Kamala Harris centers down payment assistance as headline housing policy
The Democratic National Convention (DNC) wrapped up this past week, with Vice President Kamala Harris as the party’s nominee for the 2024 presidential election on November 5, 2024.
Harris’ announced plans on housing are largely in continuity with President Joe Biden’s plans for financial assistance to homebuyers. For instance, Harris has proposed a $25,000 down payment assistance and $10,000 mortgage assistance for first-time homebuyers and plans to bring down the inventory crisis with increased construction. At the moment, there is not specific legislation to enact these plans.
Another of Biden’s proposed plans, carried on by Harris, would be capping rental price growth. Under this rule, corporate landlords who raise rents over 5% a year would lose certain tax benefits. The National Association of REALTORS® (NAR) released the following statement:
“NAR opposes misguided attempts to cap or control rental rates. Price controls may seem appealing, but they have backfired on local governments and harmed the people we need to help the most. Developers are reluctant to build in areas where the government imposes rent controls on new buildings, and these policies actually decrease the supply of low- to mid-range housing units. We can protect the most vulnerable by supporting targeted assistance to renters and housing providers when there is a gap between rising wages and rising rent. But the long-term solution remains increasing supply. We need more than 328,000 new apartment units each year just to keep up with demand – that’s 4.3 million units by 2035.”
The Biden/Harris rental plan goes back to a larger trend of investment in the single-family home market:
Lawmakers pushing regulations on investment firms buying single-family homes
After the 2008 financial crisis, investment firms took advantage of the vacant inventory surplus to buy up single-family homes and repurpose them as rental units. Recent mortgage rates have resulted in corporate landlords no longer expanding, but consolidating.
Some, including REALTORS®, have claimed that these large firms make the playing field of buying a home too uneven; what first-time buyer can compete with the cash on hand of a hedge fund? Lawmakers around the country are joining this chorus and proposing regulations on these firms. Proposed ideas include directly banning financial firms from buying more than a set number of single-family homes, levying taxes on firms to make holding rental units unaffordable, or having the FTC treat the buy-and-sale of these homes as an antitrust issue.
Real estate professionals have voiced mixed reactions to these proposals to RISMedia, particularly when it comes to concerns over private property rights.
Senators push for reform to land contract purchase sales
Back in February 2024, Senators Tina Smith (D-MN) and Cynthia Lummis (R-WY) introduced the bipartisan Preserving Pathways to Homeownership Act. The bill would establish new protections for land contract buyers.
For one, these contracts would have to be recorded with local governments, giving both buyers and sellers recourse. The bill also establishes foreclosure protection for land contract buyers.
A Pew Research Center analysis found that the bill, if enacted, would be a net benefit for consumers. Only 21 states currently have laws addressing land contract purchases with varying enforcements; the Smith/Lummis bill would increase protections in 46 states. However, the analysis does note a carve-out in the legislation (an exemption for homes a seller used as a primary residence within the last two years, i.e., about half the market) that could impede its effectiveness. The Pew researchers suggest that state and local laws still have to fill some gaps on consumer protections here.
While the Preserving Pathways to Homeownership Act has not passed at this time, the Consumer Financial Protection Bureau (CFPB) has taken notice. On August 13, 2024, the CFPB released an advisory opinion that federal mortgage protections must also apply to land deeds.
“The CFPB has found that investors are targeting people of faith with predatory mortgage products that set the borrower up to fail,” said CFPB Director Rohit Chopra. “The government is taking action to ensure that these products do not turn the dream of homeownership into a nightmare.”
Illinois REALTORS® collaborate with local government on agent license reform
Illinois governor J.B. Pritzker has signed into law Senate Bill 3740, taking effect on January 1, 2025. The law revises the Illinois Real Estate License Act of 2000 and was designed in partnership with the Illinois REALTORS® association, Illinois Department of Financial and Professional Regulation (IDFPR) and state legislators, according to Illinois REALTORS®.
Major provisions included in SB 3740 include:
- All real estate licensees will be required to use written brokerage agreements when they act as agents for all types of real estate brokerage business, including with buyers in residential sales transactions, as required by the NAR settlement.
- Brokers seeking to upgrade their licenses will only be required to take Illinois-specific exams to obtain their managing broker licenses.
- Mandatory Core Continuing Education Hours will increase from four to six hours, including two hours of mandatory Fair Housing-related courses.
- Added language to emphasize and support independent contractor relationships for licensees conducting brokerage business when that is the nature of the agreements between the sponsoring brokers and the licensees.
Ohio senator pushes to increase housing supply
Senator Sherrod Brown (D-OH), chairman of the Committee on Banking, Housing and Urban Affairs, highlighted housing unaffordability during the latest hearing with Federal Reserve Chair Jerome Powell. Brown used his opening remarks and later questioning of Powell to paint this unaffordability as part of a larger trend of a “David and Goliath economy.” As a remedy, he called for an increase in construction and inventory, including multifamily units.
Brown previously (in March 2024) introduced bills that would put his rhetoric from the hearing into action. The Housing Supply Fund Act of 2024 establishes a housing fund within the existing Community Development Financial Institutions Fund and a framework for developers to procure those funds. The Affordable Housing Preservation and Protection Act of 2024 would increase the Secretary of Housing and Urban Development’s ability to help maintain multifamily housing units.
