Who should not be able to own a home? Hedge funds is an answer for Sen. Jeff Merkley.

“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street. Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” he said in a statement. “It’s time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford.”

Merkley, an Oregon Democrat, and Rep. Adam Smith, a Washington Democrat, introduced the End Hedge Fund Control of American Homes Act of 2023 late last year.

The bill basically bans hedge funds from owning single-family homes and requires them to sell them off to families over 10 years. There’s more nuance to the bill than that and you can read the bill’s text here: tinyurl.com/Merkleydehedge.

The problem as Merkley and others see it is that hedge funds are unfair competition for housing and they are impeding the ability of families to use a home to grow their wealth. The Urban Institute estimated hedge funds and other investor organizations owned more than 574,000 single-family homes across the country in 2022. “In 2021, investors bought 20% of homes sold in Oregon, a total of 16,781 homes,” Merkley’s office told us.

How much will that grow? Does it impact minorities disproportionately? Will hedge funds be virtuous stewards of needed housing?

Hedge funds raise those questions. As much as the idea of hedge fund-style investments go back at least to a tale by Aristotle of an investment in olive presses, and as much as hedge funds can channel investment into areas of need, the questions still come. Hedge funds are a concentration of wealth and therefore power and perhaps volatility. And their reputation is not helped because as Ben Bernanke, the former chair of the Federal Reserve System, said they are “opaque.”

Oregon needs a bewildering number of new homes every year to make up for its housing deficit. When Tina Kotek became governor, she said Oregon would need some 36,000 homes per year and to add 550,000 units of housing over the next 20 years. We would rather have families be able to purchase them than investors. But Merkley’s bill is the government restricting the ability of some investors to invest in things that others can invest in freely. And it may require hedge funds to lose money, because they are compelled to sell property on the government’s timeline and not their own.

We doubt there would be waves of public grief if hedge funds are banned from owning homes. In a divided Congress, though, we’d wager this bill has no chance of passing. Merkley’s bill does force us all to confront another issue in the country’s housing challenge.