How America’s new housing law will reshape real estate

With no presidential signature and minimal fanfare, the bipartisan 21st Century ROAD to Housing Act became law on Saturday. Here’s what’s worth knowing.

A big investor crackdown

The law caps large investors at 350 single-family homes—which could tip the odds in the bidding war back toward the little guys. “For everyone below that threshold, this law is a gift: It handcuffs the deepest-pocketed bidder,” says Marcus Williams, a personal finance writer at BanksMobile. “A bill rarely picks winners this clearly. Small investors won, mega-landlords lost.”

Although institutional investors own just 0.34% of homes nationwide, their presence tops 20% in some cities, like Jacksonville, FL. That means the law’s impact will vary by area; mom-and-pops should expect a fresh edge on entry-level single-family homes in the Sun Belt and other institution-heavy metros. Justin Mitchell at Real Estate Bees in Maryland often battled hedge-fund buyers. But now that they’ve been reined in, he says, “I’m expecting a little more room to bid.”

Less red tape for new builds

The legislation’s objective? Get more homes built fast by streamlining the approval process. This prospect excites Mitch Coluzzi, an investor at SoldFast in Des Moines, IA, whose recent proposal to build 31 units on 6.5 empty acres hit snags during community review.

“We were shot down without a real conversation: They publicly claim the city has a housing crisis and ask for housing, but not here,” he recalls. “When a project meets every code aspect and still dies at the council—that’s the bottleneck this law is built to squeeze.”

A manufactured housing boom

Manufactured homes (built in factories and shipped to the lot) just got easier to build now that ROAD scrapped a slew of requirements, like the need for a steel chassis underneath. “Eliminating the chassis is projected to cut $5,000 to $10,000 off the costs,” says Leo Young at Cornell Communities. “Combined with higher FHA loan limits for this type of housing, that’s better margins on the buy side and more qualified buyers on the demand side.”

Manufactured homes also cost about half as much as site-built homes, putting starter homes back within reach. “Site-built homes made cheap starter homes disappear,” says Ryan Smith at Cinch Home Buyers. “Manufactured homes are one lever that can put a new home under $250,000 again.”

Despite plenty of enthusiasm, experts still caution that not every market will fall in line immediately.

“I’ve been through enough cycles to know that real estate is decided city by city,” says Rod Khleif at Lifetime Cashflow Academy. “I would pay close attention to where it’s actually being implemented well. Which markets are removing barriers and speeding up approvals? Those are the markets where the law may translate into real opportunity.”

Here’s more on what the newly passed ROAD Act means for buyers and sellers.