Trump ban on investor homebuying may sacrifice bigger real estate deal

Affordability has gone from being a dry financial term to an all-purpose hot button. Groceries, health care, child care, cars, gas — you name it, and affordability is attached to it these days. And then there’s housing, one of the stickiest issues in America’s affordability discussions. 

On March 12, the U.S. Senate passed a massive housing bill addressing affordability and supply, mostly of single-family homes. The 21st Century ROAD to Housing Act, chock-full of more than 40 provisions, garnered rare — by today’s rancorous political standards — bipartisan support, tallying a 89-10 vote. The bill features a slew of financing, permitting, zoning and environmental reforms aimed at lowering housing costs and speeding up new home construction.  

The House passed an equally bipartisan, if pared-down version in February. The Senate bill, which adopted many of House provisions, now moves back to the lower chamber for consideration, where it’s facing an uphill battle, primarily over the contentious issue of whether large institutional investors should continue buying and renting homes, a practice decried by both progressive stalwart Sen. Elizabeth Warren, D-Mass. — a co-sponsor of the ROAD Act — and President Donald Trump, who issued an executive order in January calling for an end to the practice. 

Ironically, that so-called “build-to-rent” portion of the housing market is relatively small compared to another one — factory-built manufactured homes — which received a huge boost from the ROAD Act and is far more consequential toward the overarching goal of building more homes. 

The bill allows manufactured homes to be assembled without a permanent chassis, increases federal loan limits for buyers and relaxes zoning regulations on where they can be sited. Those changes go a long way toward removing the stigma hanging over low-priced “mobile homes.” 

“That is the challenge we’ve had,” said Dr. Lesli Gooch, CEO of the Manufactured Housing Institute, the industry’s trade association. “The stigma comes from what our houses look like and the elevations we’re able to offer. We will 1774893605 be allowed under our federal building code to build more housing types,” she said. “We were constrained for 50 years that every house we built had to be on a permanent chassis.” 

By allowing for removable chassis, the bill will enable manufactured homes builders to innovate designs, said Bill Boor, CEO of Cavco Industries, one of the industry’s largest companies, in an email statement. “While we’ll still make permanent-chassis homes, the ability to also make removable chassis homes will continue to break down zoning barriers and increase the supply of lower-cost, high-quality homes,” he wrote.

In anticipation of the legislative changes, Boor says Cavco has invested heavily in retooling its existing plants to increase capacity and change its production processes where possible….