A bill limiting the number of houses that a corporation can buy has passed the California State Assembly and is now in the state Senate. AB 2584, introduced by Democratic Rep. Alex Lee, would prevent businesses from buying more than 1,000 single-family home properties and renting them out, as enforced by the state’s Attorney General. This bill is a product of the democratic process, with Lee introducing it to address the concerns of everyday Californians who are being outbid by institutional investors. The vote passed the Democratic-controlled Assembly on Tuesday with 48 in favor and 11 against, with at least two Republicans showing support. This bipartisan support underscores the importance and urgency of the issue. California has some of the fastest-rising housing costs in the country. In April, the median home sale price surpassed $900,000 for the first time in history. Lee acknowledges that his bill alone will not solve that problem. “I would never say this is a silver bullet to the housing crisis,” Lee told USA TODAY in an interview Thursday. “This is really mitigating harm, because these corporations are housing-shortage profiteers.”
A few questions to ask yourself
- Is this California Bill symbolic rather than substantive since it will only affect 1% of home buyers?
- Why does the Government feel they have the right to control the value of someone else’s property?
- Will more buyers enter the market as investors knowing how many rent control initiatives have passed in California?
- Will this allow for more inventory in the market?
Corporate Homebuyer Ban Would Apply to 1% of Home Purchases.
Data from the California Bureau of Research shows three companies already own more than 1,000 single-family homes each, and a fourth more is shy at 977. Invitation Homes were once owned by private equity firm Blackstone and owned the most homes in the state, approximately 12,000 houses, as of December, according to the company’s filings. Lee said he chose the 1,000 cap based on another housing bill that moved to the state Senate in January. AB 1333 limits investors from buying new developments in bulk if the corporation already owns 1,000 units.
“We wanted to clarify that we’re not affecting Grandma here. Grandma got three houses; she rents them out down the street,” Lee said about the 1,000 limit. “We’re talking about Blackstone.” A bill analysis shows that businesses owning more than 1,000 homes made up less than 1% of California home purchases in 2023. But that’s not insignificant, Lee said. “Half of Californians own zero (percent), so four actors owning 1% is a significant amount,” Lee said.
Corporate Homeownership Limit Opposed by Realtor, Rental Associations
The Alliance for Californians for Community Empowerment supports the measure, saying it could “even the playing field and stop the corporate buy-out of single-family neighborhoods,” according to the Assembly Floor bill analysis. The California Association of Realtors opposes the bill and cannot reach out for comments. Still, in arguments submitted to the Legislature, it was said that the proposed law “lacks clarity.” The National Rental Home Council, which also opposes the bill, said in the analysis that the proposal targets a small group and that many corporate housing investors have been net sellers in the last few years.
“Institutional owners of housing can bring rental housing products to the market more rapidly than some other potential rental property owners,” the group said in a statement. “Our member companies bring choice to prospective renters who may wish to have a single-family home.” The California Chamber of Commerce and the California Building Industry Association suggested further amendments. The bill had its first reading in the Senate on Wednesday and has been passed to the Senate Rules Committee for assignment to a policy committee. If it passes the Senate, the bill would head to Democratic Gov. Gavin Newsom’s desk.