By John A. Tures, Professor of Political Science, LaGrange College

Earlier this year, the Cobb County Courier researched the power of private equity in business and politics. This also includes what to do to counteract such moves. Now, the political world is seeking to claw back some power, with a bill that could restrict the ability of private equity in the housing marker, thanks to a provision by U.S. Senator Raphael Warnock, a Georgia Democrat.

Like many of you readers, I get a call every few weeks from some outfit that wants to buy my home. I’ve heard of some who sold their house, and then couldn’t find another house, to buy or rent, as prices go up. They wound up having to move to another town.

Is private equity to blame for all these purchases, and the lack of affordable housing? Senators believe so, especially Georgia’s Senator.

“U.S. Senator Reverend Raphael Warnock (D-GA) secured a bipartisan provision to ban institutional investors from mass purchasing single-family homes in the ROAD to Housing Act, a comprehensive housing package.”

Warnock’s office noted that 30 percent of Atlanta’s single-family rental market is now under the ownership of institutional investors. “In Atlanta, private equity’s greed is squeezing first-time homebuyers out of the market and pushing the American Dream further out of reach,” said Senator Reverend Warnock, in a press release sent by John Parker and Elena Radding. “It’s time Congress did something about it. That’s why I’m proud to have helped lead the bipartisan effort to ban private equity from mass-purchasing homes. This legislation is bipartisan and common sense: let’s get it done.”

Not all agree with this provision. Norbert Michel with the Cato Institute issued a stinging critique of the ROAD to Housing Act, on March 4. “[T]he Senate bill contains a new provision that would make it more difficult for large institutional investors to buy single-family homes, a longtime progressive bogeyman that the Trump administration has been promoting. This provision is harmful because it reduces investment for political gain and sets a dangerous precedent by giving federal officials authority to direct people’s investment choices. Overall, it is difficult to see how the policies in this new bill will improve housing markets.”

Michel believes that Congress will be giving the Executive Branch unprecedented authority to pick winners and losers in what is supposed to be a free market. “If a corporation invests in single-family homes, that investment will turn out poorly unless people are willing and able to buy or rent them. The same goes for any corporate investor, even if that company consists of a single individual who formed it to start a rental or renovation business. It would make no sense for “corporations” to buy homes for themselves or for their own advantage. Nor would it make sense for the people running corporations to buy these homes to the detriment of other people.”

But Warnock’s measure has strong support from both parties. Conservative South Carolina Republican Senator Tim Scott and liberal Massachusetts Democratic Senator Elizabeth Warren are co-sponsoring this legislation. And President Donald Trump has thrown his support behind it.

“The provision would ban institutional investors from purchasing single-family homes if they own more than 350 such homes,” Warnock’s team added. “For context, 25% of Atlanta’s single-family rental market is owned by institutional investors who own more than 1,000 homes. This legislation would impose a fine of either $1 million or three-times the purchase price on institutional investors who purchase single-family homes. Any fines collected under this legislation will be used for new housing construction and financial assistance for first-time homebuyers.”

Whatever happens, it’s clear that America has a home affordability problem, and Warnock’s measure is intended to prevent wealthy investors from possibly acting like ticket scalpers when they purchase all the seats to jack up the prices. But Michel’s concerns should be noted, and the provision may possibly need to be amended somewhat to ensure that the Executive Branch does not have too much power over the housing market.

John A. Tures is a professor of political science at LaGrange College in LaGrange, Georgia. His views are his own. He can be reached at jtures@lagrange.edu or on “X” at @johntures2. His first book “Branded” a thriller novel, has been published by the Huntsville Independent Press (https://www.huntsvilleindependent.com/product-page/branded).