Protecting Homeownership By Stopping Wall Street Landlords

Corporate landlords backed by Wall Street are buying entire neighborhoods of single-family homes, denying everyday people the chance to own a home. As deep-pocketed private equity firms continue to outbid working families, Assemblymember Alex Lee is at the forefront of stopping mega corporations from stripping away people’s homeownership opportunities. 

AB 1240, authored by Assemblymember Lee, protects California’s limited supply of single-family homes. The bill, which already passed the Assembly, prohibits institutional investors that own more than 1,000 single-family homes from purchasing additional properties and converting them into rentals. 

Homeownership is increasingly out of reach for too many Americans, and lawmakers nationwide have vowed to crack down on corporate investors’ home-buying spree. In Congress, the Senate recently passed a ban on institutional investors from buying single-family homes. The President has signed an executive order to take on Wall Street landlords. During his State of the State address, California’s Governor also called for curbing corporate home-buying activities. 

“As the nation struggles to build enough homes and housing prices skyrocket, a new kind of landlord is emerging: private equity firms taking over neighborhoods,” said Assemblymember Lee. “These corporations make profits for their investors by turning for-sale homes into for-rent homes. Everyday people can’t compete with the all-cash offers of wealthy corporate landlords. AB 1240 will stop Wall Street from pricing working families out of homeownership and exploiting the housing crisis. We must give people a real chance to achieve their dream of owning a home.” 

Metro regions that were previously more affordable for first-time homebuyers are now the targets of wealthy Wall Street firms seeking to take advantage of chronic housing shortages. These investors are buying smaller and lower cost homes that would traditionally be available for first-time homebuyers. In California, one real estate firm alone, known as Invitation Homes, owns thousands of homes concentrated in metros like Sacramento, Stockton, the Inland Empire, and the San Fernando and San Gabriel valleys. 

In the wake of the 2007-2009 financial crisis, institutional investors began amassing their portfolios of single-family homes and converting them into rentals. During the pandemic, they continued to expand their portfolios amid low interest rates and growing real estate prices. By buying properties with all-cash offers, corporations are outbidding working families for the limited number of single-family homes available on the market. 

As part of his efforts to make homeownership more attainable, Assemblymember Lee has also co-authored AB 1611 introduced by Assemblymember Matt Haney. The bill closes a tax break for corporate landlords to curb their incentives of buying up homes meant for working families.