Bipartisan bill protects key Arizona housing sector

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(The Center Square) - A bipartisan housing bill waiting to be signed by President Donald Trump preserves one of Arizona’s biggest housing industries, according to a land-use attorney.

This week, Congress passed the 21st Century ROAD to Housing Act, which limits institutional investors' ability to buy certain homes, streamlines aspects of the regulatory process, modernizes federal housing programs, expands housing financing options and supports the expansion of manufactured housing.

The bill was sponsored by U.S. Sens. Tim Scott, R-South Carolina, and Elizabeth Warren, D-Massachusetts, in the Senate and U.S. Reps. French Hill, R-Arkansas, and Maxine Waters, D-California, in the House.

“This bicameral product reflects meaningful House equities – including community banking provisions, protections against institutional investors crowding families out of the housing market,” Hill said.

According to Waters, “housing is the gateway to opportunity, stability and economic prosperity.”

“If we want to build a stronger nation where working families can succeed, it starts with taking our housing crisis head-on by expanding affordability, increasing access, boosting supply and creating pathways to homeownership,” she said.

Meanwhile, Trump said he would not sign it into law until Congress passed the SAVE America Act, which requires proof of citizenship before registering to vote in federal elections and restricts mail-in voting.

Once Trump receives the bill, he will have 10 days to act on it. If he does not take any action, the bill automatically becomes law.

Adam Baugh, a partner of the Phoenix law firm Withey Morris Baugh PLC, told The Center Square on Thursday that Arizona’s build-to-rent industry is protected in the bill.

When the bill was first being discussed, it included limits on the build-to-rent industry, Baugh said, adding that he was worried it would eliminate “the one asset class that was capable of solving Arizona’s housing shortage.”

Build-to-rent communities feature cottage-like housing intended for long-term rental rather than ownership.

A previous version of the bill would have required owners of build-to-rent communities to sell their rentals within seven years if they owned more than 350 units.  

However, as the bill got tweaked and the build-to-rent restrictions were removed, Baugh said the bill now maintains a “viable and long-term strategy in Arizona” for housing.

“Housing affordability will not be solved by taking options off the table,” he said.

If the build-to-rent industry regulations had been in place, they would have put a stop to one of the most successful asset classes in Arizona over the last decade, according to Baugh.

The removal of the restrictions allows people in this industry in Arizona to proceed with “confidence” in the product going forward, the land-use attorney noted.

Baugh said these investors will wait until Trump signs the bill.

He explained Arizona’s build-to-rent industry will remain the status quo, noting the bill will not bring “new interest in [the] asset class.”

Regarding the bill as a whole, the land-use attorney said it has the potential to “reduce house prices as more inventory is able to come back on the market” and also “reduce rents.”

“For Arizona, this is a win for housing choice and a win for economic growth and ultimately a win for families who are looking for a place to call home,” he said.

According to Baugh, the ban on institutional investors will not have a major impact on Arizona’s housing industry.

He noted many of these investors have been selling off their homes in recent years.

“They have not been on a buying spree,” he said.