NASHVILLE, Tenn. (WKRN) — Two Democratic lawmakers are taking aim at deep-pocketed real estate investors they say are buying up properties in Tennessee, taking a bite out of the housing inventory and causing skyrocketing rental and home prices.
The “Homes Not Hedge Funds Act,” sponsored by Sen. Charlane Oliver (D-Nashville) and Rep. Aftyn Behn (R-Nashville), would block real estate investors from buying homes to rent in counties with more than 150,000 people if they already own 100 or more rental homes in similarly-sized counties.
“It’s not retroactive, but it’s trying to look towards the future and stabilize the market and hold those accountable that have led to this housing crisis in Nashville and Tennessee,” Behn said.
The bill would also establish an up to $50,000 fine for real estate investing companies who break the rules and allow prospective homeowners to sue those companies.
According to the CBRE’s 2024 Investor Intentions Survey, commercial real estate investors ranked Nashville #4 in the nation for U.S. metro investment targets. In addition, a 2024 study by the Tennessee Housing Development Agency found 7% of Davidson County home sales from 2018 to 2022 were investor purchases; the number spiked to 20% in 2020.
Behn told News 2 big investors are making it more difficult for individuals to become homeowners in the Volunteer State.
“I hear from constituents all the time that living is simply unaffordable. The dream of American home ownership is unattainable in Nashville and Tennessee,” Behn said. “It really is a testament to the unbridled access that these companies and corporations have over our housing market.”
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Not only do large real estate investors have plenty of cash to spend, Rutherford County’s property assessor, Rob Mitchell, said they also use technology that automatically makes offers on properties the second they hit the market.
“They have algorithms out there that institute computerized buy. If something comes onto the market through the MLS listing, and if it meets their specific criteria, they have a program out there that will make a bid on it—a cash offer—before the average person ever has the opportunity,” Mitchell said.
Rutherford County has 5,000 to 8,000 investor-owned rental homes at any given time, according to Mitchell. Despite that, the county has managed to keep its population at around 60% homeowners and 40% renters, which Mitchell said is critical for communities to maintain.
“There is generally less crime and less social cost to a community that has higher single-family home ownership as opposed to the other way,” Mitchell said. “The danger to the community actually comes into play when those numbers flip-flop. There is one county in Tennessee where that has happened, and that’s Shelby County.”
While Mitchell called the Homes, Not Hedge Funds Act “well intended,” he’d rather see the state give counties the authority to create a real estate investor licensing requirements so local governments can ensure investors’ rental homes are safe and that the number of investments doesn’t spiral out of control.
However, he added there is no one-size fits all approach.
Multiple states have introduced similar legislation targeting institutional ownership this year. While the majority have been spearheaded by Democratic officials, some Republicans have launched similar efforts, including Texas Gov. Greg Abbott.
Behn and Oliver’s bill is set to have its first debate in the Senate State and Local Government Committee Tuesday, March 18.
