Congress has officially passed H.R. 6644, the 21st Century ROAD to Housing Act, one of the most significant federal housing packages we’ve seen in years. The bill became law despite not being signed by President Trump, as Trump didn’t veto it, and under the Constitution, a bill that has passed both houses of Congress automatically becomes law if the president doesn’t sign or veto it within 10 days.
The stated goal is simple: increase housing supply, improve affordability, and remove some of the roadblocks that have made housing more expensive and difficult to build.
As someone who has been involved in real estate and mortgage lending government affairs for decades, my opinion is that there are some very positive components in this legislation, but let’s be realistic. This bill is more political than functional. It’s a great for both parties in Congress, and the National Association of Realtors to tout the passing, however, whether it truly moves the needle in places like California and Los Angeles remains to be seen because housing issues are primarily driven by local regulations, local politics, and local land-use policies.
What’s in the Bill?
Incentives to Build More Housing
The ROAD Act includes several provisions designed to increase housing production:
- Establishing pre-approved home designs to help streamline the building process. (Smart. LA has already passed some ADU and SFR designs)
- Encouraging local governments to reform zoning regulations. (Good luck. California has already been overriding city regs)
- Streamlining certain environmental reviews to reduce delays. (California has been recently scaling back on California Environmental Quality Act (CEQA), well intended, but has eliminated a lot of hosing development)
- Providing additional federal support for factory built and manufactured housing. (Smart, as pre-fab housing is cheaper, and quicker… but is still at the mercy of local regs)
- Creating pilot programs to convert vacant commercial properties into housing. (Already legal in Los Angeles, but generally doesn’t make economic sense when developers have to meet residential building regs).
- Providing grants to communities that have demonstrated success in increasing housing supply. (We’ll see how that works. There’s already a lot of money out there.)
One of the interesting provision is the creation of the Innovation Fund, which could provide $200 million annually for five years to local governments that have a proven track record of adding housing inventory. Los Angeles may have an issue meeting the criteria…
The bill also removes an outdated federal requirement that manufactured homes be built on a permanent steel chassis, potentially opening the door for more affordable construction methods. Smart. Plus separately FHA, Freddie and Fannie are working on easing underwriting guidelines for manufactured home loans.
The Institutional Investor Cap
One provision receiving a lot of attention would limit institutional investors to owning no more than 350 single family homes nationwide. The intent is understandable. During and after the 2007-2008 housing crash, large investment firms and private equity companies had their arms twisted by the gov’t and purchased thousands of foreclosed homes across the country. While their purchases helped absorb excess inventory and stabilize the market during the crisis, many Americans now believe that institutional investors have contributed to today’s affordability challenges by competing directly with owner occupant buyers.
The new law attempts to limit that concentration of ownership.
However, there are some practical realities:
- Existing investors above the 350 home cap are not required to sell any properties.
- There are questions about enforcement.
- Large investors could potentially structure ownership through multiple entities to work around the limit.
In my opinion, this provision may have more symbolic value than actual market impact, particularly in high cost states like California where inventory shortages stem from much deeper issues.
An element removed from the final bill was the requirement that developers/investors a seven year forced sale mandate for build-to-rent (BTR) projects. That would have been another unprofitable element to rental housing development.
The California and Los Angeles Reality
Here’s where I think the conversation becomes more complicated. Housing affordability problems in California/Los Angeles are not simply a federal issue. They are largely a local issue.
California/Los Angeles has some of the most restrictive housing regulations in the country:
- Lengthy permitting processes (Some local development took over 20 years to start construction)
- Complex environmental review requirements
- Local opposition to development
- Super high taxes development fees
- Expensive labor and construction costs
- Infrastructure limitations
- Insurance challenges
- Rent control and regulatory uncertainties that can discourage investment
In Los Angeles specifically, it can take years (decades) for certain projects to navigate approvals. Even when developers want to build, the process is often slow, expensive, and unpredictable. I know of several developers that moved to other states as they were much easier to work with.
No federal law can instantly change those realities. The ROAD Act may create incentives and remove some barriers, but meaningful improvement in affordability will ultimately depend on whether states and local governments are willing to address their own regulatory obstacles.
Will This Help?
I believe the answer is yes—but gradually. None of the bill will be implemented immediately. Anything that encourages more housing production, more innovation, and more flexibility in construction methods is a positive step. Housing shortages have been decades in the making, and they won’t be solved overnight. Increasing supply takes time. Projects have to be approved, financed, built, and brought to market. Even under the most optimistic scenario, the benefits of this legislation are likely years away.
My Take
The 21st Century ROAD to Housing Act is a meaningful attempt by the Feds to address America’s housing shortage, and there are several provisions that deserve praise. However, if we’re serious about improving affordability, especially here in California, we also need to have an honest conversation about local regulations, permitting, environmental requirements, and the cost of building housing.
Washington can provide incentives and set policy direction. But housing is ultimately built one city, one county, and one local decision at a time. Until California and Los Angeles tackle the barriers that exist in our own backyard, affordability will continue to be one of the biggest challenges facing homebuyers. From the Fed side passing the bill doubling the Capital Gain Exemption (basically the 1997 amount with inflation) would unlock a lot of inventory, and be more viable than this bill.
If you interested in a private showing or in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Chairman – OutWest Marketing Meeting (Real Estate Education)
DRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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