The biggest overhaul of federal housing policy in a generation is now the law of the land — and for homeowners across Washington, D.C., Maryland, and Virginia, a second wave of legislation targeting the capital gains tax on home sales could be an even bigger deal.
Here’s what happened, what’s pending in Congress, and what it actually means if you own — or want to own — a home in the DMV.
The 21st Century ROAD to Housing Act Is Now Law
Just after midnight on Saturday, July 11, the 21st Century ROAD to Housing Act officially became law. President Trump declined to sign the bill — citing an unrelated dispute over election legislation — but did not veto it, allowing it to take effect automatically under the Constitution’s 10-day rule.
Make no mistake about the scale here: the bill passed the Senate 85-5 and the House 358-32. In today’s Washington, those numbers are almost unheard of. Both parties wanted this on the books before the midterms, because housing affordability has become the number-one kitchen-table economic issue in the country.
The law packs more than 40 provisions into a single package. The headlines for our market:
A first-ever cap on institutional investors. Any investor that owns more than 350 single-family homes is now prohibited from buying more. It doesn’t force mega-investors to sell what they already own, but it draws a line that didn’t exist before. In competitive DMV submarkets where hedge-fund buyers have squeezed out families making offers with FHA and VA financing, that’s a meaningful shift at the margins.
Faster, cheaper building. The law trims federal red tape, slims down environmental reviews, and pushes states and localities toward zoning that actually allows homes to get built. It also boosts manufactured housing and office-to-residential conversions — a provision with obvious relevance in downtown D.C., where office vacancy remains one of the biggest redevelopment stories in the country.
Rehab money for aging housing stock. A new pilot program authorizes grants and forgivable loans to fix up older homes that have fallen into disrepair. Think of the rowhouse inventory in Baltimore, Northeast D.C., and older Prince George’s County neighborhoods — exactly the kind of housing this program was written for.
One honest caveat: this law contains no new spending on affordable housing and doesn’t touch mortgage rates, which remain around 6.5% for a 30-year fixed. Supply-side reform takes years to show up in prices. But it’s the first serious federal move on housing supply in three decades, and it passed with real bipartisan muscle.
The Next Fight: Killing the Capital Gains Tax on Home Sales
This is the one every longtime DMV homeowner should be watching.
Under current law — unchanged since 1997 — you can exclude up to $250,000 in profit on the sale of your primary residence if you’re single, or $500,000 if you’re married filing jointly. Anything above that gets taxed as a capital gain.
Here’s the problem: home prices have roughly tripled since those caps were set, and they’ve never been adjusted for inflation. The National Association of Realtors estimates that about 34% of American homeowners — roughly 29 million people — would already exceed the $250,000 exclusion if they sold today. In high-appreciation markets like ours, the share is far higher. If you bought in Bethesda, Arlington, Capitol Hill, or Howard County in the 1990s or 2000s, there’s a very good chance you’re sitting above the cap right now.
Two bills in Congress aim to fix it:
The No Tax on Home Sales Act (H.R. 4327) would eliminate the federal capital gains tax on primary residence sales entirely. President Trump has repeatedly signaled support for the concept, saying his administration is looking at “no tax” on home sale gains. You’d still need to have lived in the home two of the last five years as your primary residence.
The More Homes on the Market Act (H.R. 1340) takes the more moderate path: doubling the exclusions to $500,000 for single filers and $1 million for married couples, then indexing them to inflation going forward. It has bipartisan backing — 93 cosponsors, including 35 Republicans — and support from the National Association of Realtors.
Neither has passed yet. Analysts see the doubled-and-indexed version as the more likely landing spot, potentially attached to a larger tax vehicle after the November midterms.
Why this matters so much in the DMV: the capital gains cap creates what economists call a “lock-in effect.” Empty-nesters who’d love to downsize stay put because selling would trigger a five- or six-figure tax bill. That keeps family-sized homes off the market in exactly the neighborhoods where young buyers are hunting. If either bill passes, expect a wave of long-held DMV listings to finally hit the market — more inventory for buyers, and a genuine window of opportunity for sellers who’ve been waiting.
The Broader Trump Housing Program
Beyond the legislation, the administration has rolled out its own housing push over the past year:
- An executive order restricting large institutional investors from buying single-family homes — the policy Congress just codified in the ROAD to Housing Act.
- A directive for Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities, aimed at pushing mortgage rates lower.
- A March 2026 executive order cutting regulatory barriers to home construction, targeting stormwater and wetlands permitting, HUD program rules, and FHFA lending guidelines for manufactured housing.
The White House credits these moves — along with falling rates — with reducing the annual cost of a typical new mortgage by nearly $5,000 since early 2025. Whatever your politics, the direction of federal policy is unambiguous: more supply, fewer investors competing with families, and cheaper borrowing.
The Bottom Line for DMV Buyers and Sellers
The timing of all this is remarkable. The same week the housing law took effect, NAR reported the median existing-home price hit a record $440,600 nationally — and DMV medians run well above that.
If you’re a longtime homeowner: run the numbers on your potential capital gains exposure now, so you’re ready to move the moment Congress acts on the exemption. A change in the law could be worth tens of thousands of dollars on your sale — and could reshape the smartest timing for listing.
If you’re a buyer: the institutional investor cap and the supply-side reforms are slow-burn wins for you. The bigger near-term variable remains mortgage rates. Getting pre-approved and knowing your true buying power — down to the specific neighborhood — is how you win in this market.
If you’re just watching: this is the most active federal housing policy environment in 30 years, and the DMV — with its high home values, aging inventory, and office-conversion pipeline — sits at the center of nearly every provision.
I’ll be tracking the capital gains bills closely as they move through Ways and Means and will break down exactly what passage would mean for Washington, D.C., Maryland, and Virginia homeowners the day it happens.
Brian Coester is a licensed real estate broker serving Washington, D.C., Maryland, and Virginia. For a free home valuation, try the Vestimate AI valuation tool at rec.homes. Thinking about selling? Visit coester.com. For weekly DMV market updates, subscribe on YouTube.