How Institutions Became the Enemy

Looming legislation could hurt the very people it claims to help. 

“If this legislation passes, there won’t be a build-for-rent conference next year,” he said.

As I approached the gate for my flight back to Charleston from Nashville, I ran into an acquaintance who works for an emerging build-for-rent developer. Like me, he just attended the IMN Build-to-Rent conference in Nashville, TN. 

For 22 years, I have been attending residential real estate conferences to learn, network and take the temperature of the residential real estate industry. The shadow hanging over the past couple of days in Nashville was unique. 

It’s all wrong, was the overwhelming opinion of industry experts discussing the 21st Century ROAD to Housing Act provision around the unconstitutional nature of a forced seven-year sale. This compounded frustration around a BFR car/veout which had evaporated over the past 60 days. 

Claims of “It can’t possibly be passed” were met with citations of unprecedented punitive tariffs.

These are uncertain times. 

However, attendees were certain about their thoughts on the 21st Century ROAD to Housing Act.

Opinions were unanimous around the unintended consequences of legislation that could harm everyone from tenants to homeowners to corporations and communities. 

Just as senate politicians have universally supported an easily endorsable headline, residential real estate professionals have united in their campaigning against certain bills in the act which could simultaneously hurt both supply and affordability. 

The irony is the villain in this drama is nothing more than an evolved residential asset class: build-for-rent communities, which have filled a market gap for those who can’t or chose not to own single family homes. 

Ownership of single family homes is unquestionably one of the best generational wealth creators. However, home ownership is not always the best option and this has long been the case in many unaffordable markets. 

Residential rental properties have always been and are now, with build-for-rent still emerging, overwhelmingly supplied by small individual investors whose couple of home inventories comprise the majority of rental dwellings most Americans live in. 

But we are in a new world of residential renting where the renter profile and their dwellings have changed. When you go to a car dealership, you do not know which cars will be purchased and which ones will be leased. This is the new opportunity we have with housing in America today. 

New stock of rental homes have created experiences very similar to home ownership. Purpose built and experience-designed rental communities provide an attainable living option that didn’t previously exist. 

Auben strategic partner, Ryan Smidt, Chief Executive of Clay Residential, a Houston builder of single-family rental communities in Texas recently told the New York Times: “It is as if the bill views renters as being not deserving of a single-family lifestyle.”  

A nascent housing solution is slated to be handicapped just as it is gaining momentum.

So how did we get here? It all started on the heels of the Great Financial Collapse.  

Check back for more discussion next week and the launch of our podcast