A Nebraska lawmaker whose north Omaha district has struggled for years with a housing shortage is pushing a bill that, if passed, could make Nebraska the first in the country to forbid out-of-state hedge funds and other corporate entities from buying up single-family properties.
Sen. Justin Wayne’s bill echoes legislative efforts in other states and in Congress to curtail corporate amassing of single-family homes, which critics say has helped cause the price of homes, rent and real estate taxes to soar in recent years. Wayne said that has been the case in his district, where an Ohio corporation has bought more than 150 single-family homes in recent years — often pushing out individual homebuyers with all-cash offers. The company then rents out the homes.
Experts say the scarcity of homes for purchase can be blamed on a multitude of factors, including sky-high mortgage interest rates and years of underbuilding modest homes.
Wayne’s bill offers few specifics. It consists of a single sentence that says a corporation, hedge fund or other business may not buy purchase single-family housing in Nebraska unless it’s located in and its principal members live in Nebraska.
“The aim of this is to preserve Nebraska’s limited existing housing stock for Nebraskans,” Wayne said this week at a committee hearing where he presented the bill. “If we did this, we would be the first state in the country to take this issue seriously and address the problem.”
A 14-page bill dubbed the End Hedge Fund Control of American Homes Act has been introduced in both chambers of Congress and would impose a 10-year deadline for hedge funds to sell off the single-family homes they own and, until they do, would saddle those investment trusts with hefty taxes. In turn, those tax penalties would be used to help people put down payments on the divested homes.
Democratic lawmakers in a number of other states have introduced similar bills, including in Minnesota, Indiana, North Carolina and Texas, but those bills have either stalled or failed.
The housing squeeze coming from out-of-state corporate interests isn’t just an Omaha problem, said Wayne Mortensen, director of a Lincoln-based affordable housing developer called NeighborWorks Lincoln.
Mortensen said the recession of 2008 and, more recently, the economic downturn driven by the COVID-19 pandemic made single-family housing a more attractive corporate investment than bond markets.
“When that became the case, housing was commoditized and became just like trading any stock,” he said. “Those outside investors are solely interested in how much value they can extract from the Lincoln housing market.”
Those corporations often invest no upkeep in the homes, he said.
“And as a result of that, we’re seeing incredible dilapidation and housing decline in many of our neighborhoods because of these absentee landlords that have no accountability to the local communities,” Mortensen said.
Currently, about 13% of single-family homes in Lincoln are owned by out-of-state corporate firms, he said.
As in other states, Wayne’s bill likely faces an uphill slog in the deep red state of Nebraska. At Monday’s hearing before the Banking, Insurance and Commerce Committee, several Republican lawmakers acknowledged a statewide housing shortage, but they cast doubt on Wayne’s solution.
“You know, you can set up shell companies, you set up different layers of ownership. You can move your domicile base. There’s just a ton of workarounds here,” Omaha Sen. Brad von Gillern said. “I also — as just as a pure capitalist — fundamentally oppose the idea.”