- “These investors are crushing the dream of homeownership and forcing rents too damn high for everybody else.” – California Gov. Gavin Newsom
California Gov. Gavin Newsom used his State of the State address Thursday to call for new limits on large institutional investors that buy and rent single-family homes, framing the issue as a matter of fairness, accountability and housing access for working families while stopping short of proposing an outright ban.
“I just humbly submit, I think it’s shameful that we allow private equity firms in Manhattan to become some of the biggest landlords here in our cities in California,” Newsom said during the address. He said his administration would work with lawmakers to combat what he described as “monopolistic behavior, and strengthen accountability, level the playing field for working families.”
During Thursday’s State of the State Address, Newsom argued that large investors are rapidly accumulating housing stock and worsening affordability pressures.
“There’s another area that also requires our, I think, urgent attention,” he said. “And that’s the institutional investors that are snatching up homes by the hundreds and thousands at a time. These investors are crushing the dream of homeownership and forcing rents too damn high for everybody else.”
Newsom said potential responses could include more oversight and enforcement and changes to the state tax code.
“At the end of the day, it’s just monopoly, monopolistic behavior and strength and accountability, level the playing field for working families,” he said, adding that he looks forward to working with the Legislature in the coming weeks.
The remarks signal a notable shift in emphasis for a governor who has spent much of his tenure focusing on increasing housing construction as the primary solution to California’s affordability crisis.
In his final year in office, Newsom appears to be leaning into a more populist critique of Wall Street-backed landlords, even as questions remain about how much influence institutional investors actually wield in California’s housing market.
Newsom’s comments came just one day after President Donald Trump announced that he plans to seek a federal ban on large institutional investors purchasing additional single-family homes, creating a rare moment of rhetorical alignment between two political adversaries.
“I am immediately taking steps to ban large institutional investors from buying more single-family homes,” Trump wrote on his Truth Social platform. “People live in homes, not corporations.” He said he would call on Congress to codify the policy and promised additional housing proposals in an upcoming speech in Davos, Switzerland.
Trump blamed rising housing costs on what he described as record inflation and deep-pocketed investors, arguing that homeownership has become increasingly out of reach for younger Americans.
A New York Times report on Trump’s comments said he wanted Congress to stop purchases by big investors “which have driven up rents and set obstacles for first-time buyers in some markets.”
Neither Trump nor the White House provided details on how institutional investors would be defined under the proposal, how existing holdings would be treated or why the policy would focus specifically on single-family homes rather than apartments or other forms of housing.
While Newsom has not endorsed a federal-style ban, his language during the State of the State reflected a similar political diagnosis. His office said proposals could include “enhanced state oversight and enforcement and potential changes to the state tax code,” though no legislation has yet been introduced.
The convergence between Newsom and Trump comes amid rising public frustration over housing costs, even as California continues to approve and build more housing than at any point in decades. It also follows years of legislative efforts by California lawmakers to track, limit or ban large-scale corporate ownership of single-family homes, most of which have failed to advance.
According to data from the California Research Bureau, fewer than 3% of single-family homes in the state are owned by companies that own at least 10 properties. About 20,000 homes statewide are owned by firms with portfolios of 1,000 units or more.
The largest such owner is Invitation Homes, which owns more than 11,000 homes in California and reached a settlement last year with the state attorney general over allegations it illegally raised rents on more than 1,900 properties.
Housing economists and policy experts caution that these figures complicate claims that institutional investors are a primary driver of California’s affordability crisis. Some argue that focusing on corporate landlords risks overselling the impact of a relatively small segment of the market while deflecting from the state’s longstanding shortage of housing.
“It’s really hard to buy a house right now so people are looking for someone to blame for that, but I think institutional investors are more of a symptom of the affordability crisis than they are a perpetuator of it,” said Caitlin Gorback, an economist at the University of Texas at Austin who has studied investor behavior in housing markets.
Critics outside academia have been even more blunt.
One critic summarized the political push as “yet another proposal to address affordability that doesn’t actually address affordability but instead polls well because people mistakenly believe it’ll address affordability.”
John Arnold, a Houston-based philanthropist who has funded research on housing policy, criticized what he described as a flawed narrative surrounding institutional ownership.
“Moving existing inventory from individual ownership to rentals cannot simultaneously drive up both home prices and rents,” Arnold said.
Housing analyst Max Dubler argued that restricting investor purchases would not resolve the underlying supply problem.
“Institutional investors buy single family homes and then rent them out to tenants who live in them,” Dubler said. “While banning this might move some homes from the rental market into the ownership market, it will not address the housing shortage that is driving up prices.”
Research on the subject has produced mixed conclusions.
Many studies suggest that when owner-occupied homes are converted into rentals, rental supply increases, which can exert downward pressure on rents, even as reduced for-sale inventory contributes to higher home prices. Supporters of investor restrictions counter that those tradeoffs still limit access to homeownership and concentrate market power in the hands of large firms.
Politically, attacking institutional investors has become an increasingly bipartisan impulse. Lawmakers ranging from New York Rep. Alexandria Ocasio-Cortez to Ohio Sen. Bernie Moreno have supported measures to curb corporate ownership of housing, often framing the issue as a challenge to economic fairness rather than market efficiency.
Any proposal to regulate or limit institutional ownership of housing would require legislative approval. Similar efforts in recent years have stalled in the Legislature after facing opposition from real estate, rental housing and business organizations.
Newsom’s comments place corporate ownership of single-family homes alongside housing production as an issue likely to receive increased attention in the coming legislative session. Economists and housing researchers continue to debate the role institutional investors play in affordability, while lawmakers consider whether additional oversight, tax changes or enforcement mechanisms could affect homeownership and rental markets in California.
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“Newsom’s comments came just one day after President Donald Trump announced that he plans to seek a federal ban on large institutional investors purchasing additional single-family homes, creating a rare moment of rhetorical alignment between two political adversaries.”
Yup, Trump beat him to it. Now he has to follow Trump’s lead.
They are both wrong anyway
This is a rare time when I am alignment with two politicians I despise (for completely different reasons). Of course the devil is in the details. I became aware of the scourge of corporate ownership of rental properties a couple of years ago when I watched a very detailed special on some markets in the South where a couple of corporations, investment firms, had bought up a significant percentage of the properties in a market. The hosts showed mathematically how the companies used algorithms to price the rent at higher than market value by *withdrawing* units they owned from the market, thus driving their overall profits higher by creating a shortage of housing in the area. They showed how you didn’t even need to own a majority of the housing, I believe the magic number was about 40% – and that could be split among cooperating firms using the methodology, to pull this off. This is the very definition of the sort of evil corporate anti-trust that the government is supposed to look out for in order to make capitalism work and I *hope* what Newsom and Trump are going after. This is what I think the Vanguard should be going after instead of supporting YIMBY and Weiner schemes which ultimately just increase rents. Attacking anti-trust gets to the core of corporate rot.