Success! Anti-Housing Legislation Dies in California

Three state bills that would have reduced investment in California housing have died.

In April, I wrote an op-ed for the Wall Street Journal titled “The Latest Plan to Exacerbate California’s Housing Crisis,” which exposed and opposed three state bills that sought to restrict or ban corporations from investing millions of dollars in single-family home rental properties. The commentary sparked a vigorous national debate, with about 400 posted comments.

The bills, Senate Bill 1212 authored by State Senator Nancy Skinner (D–Berkeley); Assembly Bill 2584 authored by Assemblyman Alex Lee (D–San Jose); and AB 1333 authored by Assemblyman Christopher Ward (D–San Diego), would have made California’s housing affordability crisis worse. Thankfully, each bill died in the Senate Judiciary Committee—in the case of SB 1212, only 10 days after the publication of my commentary.

As I mentioned in the WSJ piece and in social media posts circulated by the Independent Institute,

Despite their relatively small scale . . . 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.

Corporate investors provide much needed financial capital to increase the housing supply in California and elsewhere. Misguided efforts by politicians to curtail that investment make the housing crisis worse by reducing the future stock of housing and increasing prices.

The way to ameliorate the housing crisis is to eliminate burdensome restrictions on home building and rehabilitation of existing properties, and to strengthen private-property rights.

As explained recently by my colleague Christopher J. Calton in the San Diego Union-Tribune and the Orange County Register,

The well-documented reality that California’s policymakers are unable or unwilling to acknowledge is that when you make it easier to build housing for any income level, the cost of housing falls for every income level. One New York University researcher found that for every 10 percent increase in the supply of market-rate housing, rents declined by 1 percent across the board. The reason for this is not hard to grasp—new market-rate housing creates vacancies elsewhere.

The solution to California’s housing crisis is more private investment to build, build, build. Corporate investors play a crucial role in that process. The Independent Institute will continue to fight for housing development in California and across the country by helping to defeat flawed ideas and bad legislation.