What 21st Century ROAD to Housing Act means for homebuyers and sellers

Bipartisan legislation aimed at increasing housing supply and improving affordability in the United States has now become law; But experts say home buyers and sellers shouldn’t expect quick relief.

THE ROAD TO A 21ST CENTURY HOUSING CODE It automatically became law on Saturday after President Donald Trump failed to sign or veto the legislation within a certain period of time. The legislation combines dozens of housing measures aimed at encouraging homebuilding, expanding access to finance and restricting purchases by large institutional investors.

Bill Owens, president of the National Association of Home Builders, said in a statement after the measure was approved by Congress on June 23 that the legislation “will help expand the nation’s housing supply by reducing regulatory hurdles and encouraging local governments to reform zoning and land use policies that limit residential construction.”

The new law comes as housing affordability remains strained. Home prices are near record lows and 30-year fixed mortgage rates continue to fall Hover over 6.5%.

The median price of an existing home in the US reached $440,600, up 49.2% from June 2020. based on According to data from the National Association of Realtors. There is also an estimated housing supply gap of 4 million homes. According to realtor.com.

“This bill directly targets some of the biggest drivers of housing costs: land use restrictions, allowable delays, financing constraints and regulatory hurdles,” said Selma Hepp, chief economist at Cotality, a real estate data company.

“Unfortunately, homebuyers should not expect immediate relief,” Hepp said, adding that “housing development takes time and most of the benefits will likely occur gradually rather than overnight.”

Among the new law’s many technical and policy changes, there are likely to be some provisions that are most important to consumers.

One of the key provisions would prohibit large institutional investors who own at least 350 single-family homes from purchasing additional single-family homes, with various exceptions. These exceptions include certain build-to-rent and renovation-to-rent projects, as well as programs that help renters build credit and eventually purchase homes.

Supporters say the measure could help limit competition from large institutional buyers in some housing markets, especially in Sun Belt areas where institutional investors have been blamed for contributing to high home prices. However, economists believe that the purchasing activity of institutional investors even in most of these markets it remains relatively light.

Specifically, the bill expands the federal definition of “manufactured home” to include homes built without a permanent steel chassis, a manufactured metal frame, and mobile homes that allow for easy towing. But, moved a few houses Once located, according to the Lincoln Land Policy Institute.

Among other benefits, the chassis requirement could reduce the cost of a manufactured home by $5,000 to $10,000, enabling more families to become homeowners. According to the Niskanen CenterA non-partisan think tank.

The legislation also creates a four-year pilot program to expand the availability of small mortgages (those under $100,000), which some lenders have avoided due to compliance costs. Supporters say improving access to smaller loans could help buyers in lower-cost markets and buyers buying cheaper homes.

The pilot program involves paying lenders a subsidy for originating these junior mortgages and providing borrowers with grants for down payments and closing costs.

John Walkup, co-founder of UrbanDigs, a New York City real estate pricing intelligence platform, said legislation overall could help housing supply “at a greater margin, and certainly not overnight.”

Walkup said housing supply is ultimately a local issue.

“Determining how much housing is built is a complex calculation that pulls strings on construction costs, labor availability, land prices, infrastructure restrictions, local zoning rules and community opposition,” he said. “Legislation can help create incentives and remove barriers, but it alone cannot solve the housing shortage that has been building for years.”

There was Trump He canceled a June 24 signing ceremony for the bipartisan bill hours before the event and said he would not sign it until Congress passed the SAVE America Act, a Republican-backed ballot measure that requires proof of U.S. citizenship to register to vote. This move caught lawmakers in both parties off guard and delayed the law’s entry into force.