One California proposal, Assembly Bill 2584, recently introduced by San Jose Democrat Alex Lee, would establish a quota system, banning “institutional investors that own more than 1,000 single-family homes from purchasing additional properties and converting them into rentals.” A second proposal, Senate Bill 1212, introduced by Berkeley Democrat Nancy Skinner, would prevent hedge funds and “other corporate investment entities” from buying single-family homes in California, starting next year.
Both lawmakers claim that deep-pocketed institutional investors, such as private-equity firms, hedge funds and real-estate investment trusts, buy so many single-family homes that first-time and low-income home buyers are priced out of the market. This claim shows how little these California lawmakers understand about the role most institutional investors play in the housing market.
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Despite their relatively small scale, however, corporate landlords are valuable niche participants in housing markets because they often purchase neglected properties and make them livable again. As Urban Institute researchers have noted, institutional investors can buy distressed homes in bulk, upgrade them and rent them out. Their lower investment costs and specialized expertise allow corporate landlords to make necessary repairs efficiently and economically—realizing economies of scale—expanding the supply of urgently needed move-in-ready rental homes.
The restrictions championed by Mr. Lee and Ms. Skinner would exclude these investors, exacerbating the shortage of affordable, single-family rental houses. Redfin reports that investors spend more than $100 billion nationally each year to buy and rehabilitate single-family homes. The solution to the housing shortage is more investment, not less.
Also writing about California policies that reduce the supply of housing is Steven Greenhut.
The 9th Circuit has, in effect, created a subsidy for being homeless, which often is the outcome of multiple choices. And if homeless people lack, as some of their advocates seem to say, volition in controlling their behavior, they lack the capacity to care for themselves, and could be involuntarily committed to institutions.
Homelessness involves political choices that courts are ill-suited to make. And it is a subject concerning which public health institutions can further ruin the reputations they damaged during the pandemic.
The meddlesome Centers for Disease Control and Prevention, which recommends social distancing in homeless shelters, warns that clearing encampments of the homeless will “break connections with service providers” and should not occur unless “individual housing units” are provided. The CDC is the 9th Circuit of public health institutions. But, then, the 9th Circuit seems to fancy itself a public health policymaker, sweepingly removing choices from local governments.
GMU Econ alum Paul Mueller warns of “ESG puppeteers.”
Arnold Kling ponders conservative (and progressive) divisions.
Sen. Rand Paul (R-KY) is not impressed with the move to censor TikTok.
