Sacramento, CA: Acquiring a home for the first time is growing more unattainable. For instance, in San Francisco, the minimum annual salary required to finance a starter home last year was $251,190, as per one analysis.
A San Jose senator is targeting firms that he believes are exacerbating the housing issue and benefitting from it, in addition to the shortage of homes contributing to rising costs.
Assemblymember Alex Lee recently proposed a bill, AB 2584, which aims to prohibit companies that hold over 1,000 single-family homes in California from acquiring more properties for rental purposes.
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Lee stated that first-time homebuyers are unable to rival cash offers from major business enterprises. These corporations are depriving diligent Californians of homeownership prospects and worsening the shortage of single-family homes.
The law, as it stands, would empower the state attorney general to pursue offenders in court. If convicted, the business organization would be required to pay a fine of $100,000 for each offense and might have to sell the property to an impartial third party within one year of the court ruling.
The 1,000 house threshold was probably selected to avoid unjustly excluding small-scale investors, as stated by Ryan Lundquist, a qualified residential appraiser in Sacramento. Lundquist utilized tax billing data to illustrate how a single company came to possess over 10,000 properties in California.
Invitation Homes is the largest owner of single-family homes in the Bay Area. The Dallas-based corporation recently agreed to pay $3.72 million in civil penalties and refunds to settle claims of unlawfully increasing rents on several residences.
During the 2008 subprime mortgage crisis, the trend of “Wall Street” transitioning into landlords emerged as a result of numerous house foreclosures, as noted by Lundquist.
Lundquist praised Invitation Homes for being very astute. They invested in the real estate market at its lowest point, focused on neighborhoods appealing to new homebuyers, purchased single-family homes at extremely low prices, and benefited from a significant increase in rental prices.
An investigation conducted by the State Library’s California Research Bureau identified four additional company entities, apart from Invitation Homes, that possess over 1,000 single-family homes.
Lundquist stated that he understands people’s opposition to limiting who can purchase certain items. Investors are often free to purchase shares of Apple stock, but we do not reside in the stock market. These are residences, and for many individuals, residential property is a key method for creating intergenerational wealth.
Another bill he wrote last year, AB 1490, aimed to simplify the process of converting existing structures into residences and was approved as law. On Thursday, he introduced a measure to establish a “social housing” development organization in California, referencing Singapore and Austria as examples.
Social housing is a form of public housing that involves the use of private funds to support government-managed housing, with rent limits for renters determined by their income.
Lee stated that each single-family home purchased by corporations reduces the number of available ownership units for families looking to buy their first homes.
AB 2584 is scheduled for committee review on March 16.