In his final year as governor, Gavin Newsom is turning his focus to big investors buying up California homes. This comes as former President Trump also voiced concerns about large landlords, creating an interesting moment in politics where both sides seem to share some common ground: the blame for rising housing costs.
During his upcoming State of the State address, Newsom plans to discuss potential regulations on institutional investors who buy multiple homes to rent them out. His goal is to make home ownership more accessible for Californians. A spokesperson for Newsom noted that when housing becomes an investment for corporations, it impacts regular people. Prices rise, rents increase, and many struggle to buy a home.
Trump echoed similar sentiments on social media, calling for a ban on large investors buying single-family homes. His comments caused stock prices of major residential firms to drop. While both leaders sound aligned, Newsom isn’t suggesting a complete ban like Trump but aims to “curb” investor purchases to help affordability.
There’s been growing anxiety around this issue. A recent report indicated that in post-fire Los Angeles, investors bought over 40% of burned vacant lots sold, highlighting the financial power of these companies. Newsom had previously signed an executive order to protect homeowners from unfair offers on their properties but acknowledged the overall market remains tough.
This pivot in Newsom’s strategy marks a significant change. For years, he concentrated on increasing housing construction, but now he seems to be seeking a populist approach, which may resonate with voters as he eyes a potential presidential bid in 2028. Many political figures from various backgrounds are criticizing investors, suggesting it’s become a widespread issue drawing bipartisan reactions. Even Republican Senator Bernie Moreno has expressed support for legislation against large investors.
But is it as big a problem as it seems? Some experts are skeptical. Caitlin Gorback, an economist from the University of Texas at Austin, thinks these investors are more of a symptom of the larger affordability crisis rather than its cause. She noted that while larger firms shift owner-occupied homes into rentals, they also provide options for renters who couldn’t otherwise afford a single-family home in desirable neighborhoods.
In California, less than 3% of single-family homes are owned by companies with large portfolios. This means that while the issue may be significant, it’s not as pervasive as it could appear. According to the California Research Bureau, just about 20,000 homes are owned by firms with 1,000 or more properties. The largest owner, Invitation Homes, has been under scrutiny for raising rents and was recently involved in a settlement regarding unfair practices.
The conversation around institutional buyers is not new. Lawmakers have struggled for years to address the rising concerns about these investors without effective solutions. Some previous bills aimed to limit such purchases have stalled in committee. Assemblymember Alex Lee, who has long criticized the role of big money in real estate, emphasizes the need for Democrats to adopt a strong stance against the rising influence of institutional investors, regardless of who else supports it.
As this topic gains traction, both citizens and lawmakers are paying close attention. With many challenges in California’s housing market, there’s a pressing need for clear policies that truly benefit residents rather than just shift blame to investors. This issue not only affects affordability but also has implications for community stability and access to housing for marginalized groups.
For more detailed insights into the impact of institutional investors on real estate, you can explore resources from the California Research Bureau. Understanding these dynamics is crucial for anyone interested in the housing market’s future in California.
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Donald Trump,Gavin Newsom,Housing Crisis
