Newsom plans crackdown on corporate homebuying in California

By Andrew Oxford, Eliyahu Kamisher and John Gittelsohn | Bloomberg

Gov. Gavin Newsom will call for a crackdown on institutional investors buying up homes in the state during a speech Thursday, Jan. 8, following a similar announcement by President Donald Trump.

Newsom plans on saying he will work with local legislators to target private equity and hedge fund investors buying homes in California, particularly corporate entities buying at scale, the governor’s office said in an email.

“The fact is that large investors are purchasing homes faster than families can buy them,” the governor’s office said. “The governor believes that working families shouldn’t be competing with large, well-capitalized investors.”

Newsom’s announcement follows a similar measure floated on Wednesday by Trump, marking a rare convergence for the two political rivals. The president said he would ban institutional investors from buying single-family homes in an effort to address housing affordability.

Trump and Newsom have clashed on issues issues ranging from education to immigration, with the California governor emerging as one of the president’s top antagonists. Their nearly simultaneous rebukes of corporate homebuying show how institutional landlords have quickly risen to be a favored political punching bag for both Democrats and Republicans.

While California was the birthplace of several institutional buyers of single-family rental homes following the 2008 financial crisis, the biggest landlords focused more on Sun Belt states, such as Georgia, Florida, Arizona and Nevada, where homes were even less expensive.

Around 3% of California’s single-family homes are owned by large landlords, with publicly traded Invitation Homes being the largest owner, according to a 2024 study by the California Research Bureau, a nonpartisan research office. Large institutional landlords own less than 1% of total US single family housing inventory, according to a note from JPMorgan Chase & Co. analysts Wednesday.

Trump’s announcement initially knocked down shares of single-family landlords by as much as 10%. Still, the JPMorgan analysts led by Anthony Paolone wrote, “At the risk of whistling past the graveyard, we could argue that the dip in the stocks presents a buying opportunity.”

While Trump’s plan may face hurdles in Congress, Newsom’s announcement is likely to be welcomed by progressives in the state legislature, where Democrats hold a supermajority.

The state assembly had already approved a bill last year that sought to ban large single-family residential property owners from buying and leasing more homes. But the measure stalled in the state Senate, facing opposition from real estate agents and the California Apartment Association.

“Having the governor’s backing and support is going to be crucial and very helpful,” said Assemblymember Alex Lee, who authored the bill and said he would pursue it again this year. Newsom has not endorsed a specific proposal.

State Senator Scott Wiener said he supported legislation that targets corporate landlords but is wary of policies that may stymie housing production.

“There’s been a desire to do something about the gobbling up of single family homes by institutional investors for a long time,” he said. “It is an issue that we need to deal with.”

Newsom, who is entering his final term-limited year as governor, is also considering a run for president. He has struggled to pitch himself as a standard-bearer on affordability issues as California home prices have risen well above $800,000. The governor has more recently approved an aggressive deregulation of the state’s housing market to spur housing production.