Democratic lawmakers propose banning hedge funds from purchasing homes in Wisconsin.

A proposal put forth by Democratic legislators in Wisconsin aims to restrict hedge funds from purchasing single-family homes in the state as part of a broader effort to combat housing affordability. The lead bill sponsor, Sen. Sarah Keyeski, emphasized the urgent need to address the housing access and affordability crisis that is prevalent not just in Wisconsin but across the nation. The pooling of funds from affluent investors by hedge funds allows them significant financial power, enabling them to acquire properties at prices that often exceed the reach of ordinary buyers. This results in inflated housing costs, making it difficult for middle-class families to afford homes.

While the trend of investment groups buying properties in Wisconsin is not widespread, the increasing number of these purchases has raised concerns. Notably, VineBrook Homes, SFR3, and Highgrove Holdings collectively possessed about 1,500 homes in the Milwaukee area as of 2022. These companies predominantly followed a “buy-to-rent” business model, although some properties were flipped for profit. For instance, SFR3 acquired 23 properties for $2 million and sold them later for $4.2 million, showcasing substantial financial gains for the investors.

Despite the prevalence of investor transactions, Wisconsin witnessed a surge in these purchases in 2024, albeit at a reduced rate compared to pre-pandemic levels. Data from RedFin revealed that investor-backed groups secured 17% of American homes sold in the fourth quarter of 2024, indicating a continued interest in the real estate market. Still, the share of homes owned by large investment entities in the Milwaukee region stood at 14.9%, below the national average.

Sen. Keyeski views the proposed legislation as a preemptive measure to safeguard Wisconsin communities from escalating property prices. The bill forms part of a broader legislative agenda introduced by Democratic lawmakers to alleviate financial burdens on Wisconsin residents. Although the bill boasts 42 cosponsors, including one Republican, the support from across party lines signifies a broad acknowledgment of the issue at hand.

In contrast, Republican legislators have yet to propose any measures addressing housing costs, prompting questions about the potential reception of Sen. Keyeski’s bill within the legislature. Sen. Romaine Quinn, the chair of the Senate Committee on Insurance, Housing, Rural Issues, and Forestry, remained unavailable for comment on the bill’s prospects for a future hearing.

As legislators deliberate on the proposed ban on hedge funds acquiring Wisconsin homes, the disparity in approaches between Democrats and Republicans towards housing affordability remains evident. The fate of this legislation and its implications for housing accessibility in Wisconsin hinge on the cooperation and bipartisan engagement within the legislative landscape.