Democratic Proposal Seeks to ban Hedge Funds From Buying Wisconsin Houses

It’s part of a package of bills to address housing affordability, but so far most Republicans aren’t on board

By Jack Kelly
Wisconsin Watch

A Democratic bill seeks to bring down house prices in Wisconsin by blocking hedge funds from buying single-family homes in the state.

“We know that there’s an access and affordability crisis in housing right now,” lead bill sponsor Sen. Sarah Keyeski, D-Lodi, told Wisconsin Watch in an interview, calling it a nationwide problem. “And as a state legislator, I want to see if I can do something about that crisis locally.”

Hedge funds pool money, generally from wealthy investors, and invest it in a range of markets seeking to make a profit, according to the U.S. Securities and Exchange Commission. That sizable pool of cash “really gives them almost unlimited power to buy what they would like at prices that are often out of reach for a typical purchaser,” Keyeski said.

Hedge funds’ ability to outbid other prospective home buyers, especially individuals, increases housing costs and prices out middle class families, Keyeski argued.

While the Democratic lawmaker acknowledged the practice of investor-backed groups gobbling up houses isn’t widespread in Wisconsin, she noted that groups with deep pockets bought more than a thousand houses in the Milwaukee area beginning around 2018.

Three companies, VineBrook Homes, SFR3 and Highgrove Holdings, owned about 1,500 homes as of the end of 2022, according to a 2023 analysis from John Johnson, a research fellow at Marquette University’s Lubar Center for Public Policy Research and Civic Education.

VineBrook and SFR3 together owned almost 1,200 homes, deploying a “buy-to-rent” business model, Johnson said. However, in some instances, they were willing to flip their recently purchased homes. SFR3 paid about $2 million for 23 properties, Johnson found, later selling them for a total of $4.2 million.

Vinebrook now owns 703 properties, and SFR3 is down to 188, Johnson told Wisconsin Watch in an email.

There was an increase in investor-backed groups buying single-family homes in 2024, though still at a lower rate than before the COVID-19 pandemic, according to data from RedFin, a real estate brokerage and mortgage company. In the fourth quarter of 2024, for example, investor-backed groups bought 17% of the American homes sold in those three months.

The share of homes owned by large investment groups in the Milwaukee area was 14.9% in the last three months of last year, RedFin found, lower than the national average.

The increase in investor purchases was focused on single-family homes, RedFin found, as interest from deep-pocketed groups waned for townhouses, condos and multifamily properties.

Keyeski sees her bill as “a preemptive move” to protect other Wisconsin communities, she said.

The legislation also fits into a larger package of bills from Democratic lawmakers seeking to bring down costs for Wisconsin residents, Keyeski said.

The bill currently has 42 cosponsors — 41 Democrats and one Republican. But she said she has heard a positive response from both Democratic and Republican voters about the bill and is hopeful the legislation could get a hearing this session.

Legislative Republicans have so far not introduced any bills seeking to curb housing costs, according to a Wisconsin Watch review of legislative proposals. Sen. Romaine Quinn, R-Birchwood, who chairs the Senate Committee on Insurance, Housing, Rural Issues and Forestry, did not respond to questions about whether Keyeski’s legislation would get a hearing this session.

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