CALIFORNIA — CA Assemblymember Alex Lee (D-Milpitas) introduced AB 2584, February 14, a bill that would prohibit a business entity owning more than 1,000 single-family residential properties from purchasing more and subsequently leasing them.
According to Lee, institutional investors are increasingly buying homes that would have been available for first-time homebuyers.
He says some firms like Invitation Homes, a real estate investment trust spun off from private equity firm Blackstone, own thousands in California alone, targeting areas prone to higher rent growth.
“First-time homebuyers are not able to compete with cash offers from these large corporate firms,” said Lee in a press release.
Lee goes on to say that by outbidding homebuyers and converting properties to rentals, these corporations are taking homeownership opportunities away from hard working Californians and exacerbating the scarcity of single-family homes.
Housing Affordability
According to a California Association of Realtors (CAR) report, fewer than one in five — 15%, home buyers could afford to purchase a median-priced, existing single-family home in California in third-quarter 2023.
Soaring home prices are due, in part, to an increase in investor purchases of homes that have priced out would-be homeowners.
“Further, they have been buying smaller, more modest homes — properties that would usually be purchased by first-time homebuyers,” said Lee.
Penalties
Under the proposed law, the Attorney General may bring a civil action that includes a $100,000 penalty for each violation. The corporation would also have to sell the property to an independent third party.
To read the full bill visit https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240AB2584
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