WASHINGTON: The 21st Century Road to Housing Act, one of the most significant bipartisan housing reform packages in decades, officially became U.S. law on Saturday after President Donald Trump allowed it to take effect without his signature.

Although Trump had initially supported the legislation, he later refused to sign it, citing disagreements with Congress over unrelated voter identification legislation. Because the president neither signed nor vetoed the bill within the constitutional deadline, it automatically became law.

The new legislation is designed to address America's worsening housing affordability crisis, which has left many prospective homebuyers struggling with high mortgage rates, soaring home prices and limited housing inventory. Lawmakers from both parties have described the measure as the most comprehensive federal housing reform in more than 30 years.

Focus on expanding housing supply

The law includes 47 separate policy initiatives aimed at increasing the nation's housing supply, lowering development costs and expanding access to affordable homes.

Among its key provisions are measures to:

  • Encourage the construction of manufactured housing.
  • Support the conversion of vacant office buildings into residential apartments.
  • Provide grants and forgivable loans to repair aging homes.
  • Incentivize state and local governments to modernize zoning and land-use policies that often restrict new housing development.

Housing experts say the legislation addresses many long-term structural issues behind the housing shortage, although meaningful improvements are expected to take several years as new homes are planned, approved and built.

Local governments remain key

While the federal government is encouraging housing-friendly zoning reforms, the legislation does not require states or municipalities to change their land-use regulations.

Many experts believe restrictive zoning rules remain one of the biggest barriers to increasing housing construction. Local governments will ultimately decide whether to adopt the incentives offered under the new law.

If more communities approve higher-density housing projects, analysts believe millions of additional homes could be built over the next decade, helping ease supply shortages and moderate price growth.

New limits on large-scale investors

The legislation also introduces new restrictions on institutional investors purchasing single-family homes.

Under the new rules, companies or investors that already own more than 350 single-family homes will no longer be allowed to expand their portfolios by purchasing additional houses. The measure is intended to reduce competition between large investment firms and individual homebuyers.

However, the law does not require existing investors to sell properties they already own. Smaller landlords and individual property owners remain unaffected.

Market analysts note that many large investment firms had already begun reducing their purchases of single-family homes as higher interest rates and changing market conditions made large-scale acquisitions less attractive.

Long-term impact expected

Housing economists caution that the legislation is unlikely to produce immediate relief for buyers or renters. New housing developments require years of planning, financing and construction, while federal, state and local agencies will also need time to implement the law's various programs.

Even so, the legislation is widely viewed as a major step toward addressing long-standing housing shortages and improving affordability by encouraging greater residential construction across the United States.