Condominiums under construction in Bend in January. 

While we are generally in support of Governor Tina Kotek’s housing bill, and applaud efforts by the Bend City Council to promote the building of more homes, neither the governor nor city officials are addressing one of the major causes of the crisis.

“By last March (the most recent data available), hedge funds accounted for 27 percent of all single-family home purchases in the United States,” according to former Labor Secretary Robert Reich. Hedge funds are estimated to own nearly 575,000 housing units across the nation. Institutional investors edge out potential home buyers with large cash offers that are beyond the means of many families. These homes are used predominantly as rental units, removing properties from the market for individuals and families to buy. This has significantly contributed to the housing shortage, driving up the price of homes that are on the market. The hedge funds have also consistently jacked up rental prices, increasing housing insecurity for a countless number of Americans across the country. Hedge fund home ownership adds nothing of value to the market. It exists solely to return profits to their shareholders. They generally have no connection with a local market, or care about the impact these purchases have on its tenants or those trying to buy a home.

Oregon Senator Jeff Merkley and Washington Representative Adam Smith have introduced a bill to deal with this issue. Called the End Hedge Funds Control of American Housing act, the bill would require institutional investors to sell off a portion of their inventory over a 10-year period. After that, they would be banned from acquiring single family residences. The legislation would impose stiff tax penalties on those who violate the restrictions. Those funds would then go towards down payment assistance programs for those needing help in buying a home. Given the current state of Congress, the chances of the bill becoming law are slim. The Oregon legislature should attempt concurrently to pass a similar bill on the state level. Without addressing how Wall Street has skewed the market in its favor, we can’t create affordable homes on the scale necessary to deal with the housing crisis we face.

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