Newsom vowed to take a tougher stance on institutional investors, such as hedge funds and private equity groups, who buy hundreds or thousands of homes to rent out.
“It is shameful that we allow private equity firms in Manhattan to become one of the largest landlords in many of our cities,” he said, adding that this practice is destroying the dream of homeownership and raising rents for Californians.
It is unclear exactly what form the crackdown will take.
“In the coming weeks, we will work with the Legislature to combat this monopolistic behavior, strengthen accountability, and level the playing field for working families,” he said. “That means more oversight and enforcement, and possibly changing state tax law to make this work.”
It’s a rare moment of political alignment between Newsom and President Trump, who promised a similar directive a message on social media announcing immediate steps to ban institutional investors from purchasing single-family homes.
The mail sent shock waves through the market, driving up the stock prices of corporate housing giants such as Invitation Homes and Blackstone Inc. be reduced, but no specific actions have been announced.
In California’s case, Newsom will have to work with the state legislature. The bill that is most in line with the initiative is AB1240that wants to prohibit investors who own at least 1,000 single-family homes from buying more homes to rent them out.
The bill, introduced by Assemblyman Alex Lee, passed the state Assembly last year but failed after strong opposition from real estate agents and the California Apartment Assn. A hearing in the Senate committee is awaited.
Institutional real estate investment became a focal point during the pandemic, as low interest rates roiled the housing market and first-time homebuyers competed with investors who viewed the home as an asset, not a home. During the second quarter of 2021, home sales in LA County accounted for 23% went to investors instead of someone wanting to live there.
But data shows that corporate ownership makes up a much smaller share of the market. Analysis of the California Bureau of Investigation showed that 2.8% of single-family homes in the Golden State are owned by companies that own at least ten properties.
The bulk of that seems to be smaller homeowners and not giant corporations. About 80,000 homes are owned by companies with more than 100 homes, while almost 235,000 homes are owned by companies with 10 to 49 homes.
Still, renters across the state have had problems with institutional investors. By 2024, Invitation Homes, the largest commercial landlord in California with more than 11,000 homes, agreed to pay $20 million to resolve allegations of unauthorized renovations. That same year the company agreed to pay $48 million to settle allegations of unfair eviction practices and withheld security deposits.
#Trumps #lead #Newsom #vows #crack #corporate #home #buying #California