In his final State of the State speech, Gov. Gavin Newsom took aim at a group that some say contribute to California’s housing affordability crisis: corporate landlords.
Newsom vowed to take a tougher stance toward institutional investors, such as hedge funds and private equity groups, that buy up hundreds or thousands of homes in order to rent them out.
“It’s shameful that we allow private equity firms in Manhattan to become some of the biggest landlords in many of our cities,” he said, adding that the practice crushes the dream of home ownership and raises rents for Californians.
It’s unclear exactly which form the crackdown will take.
“Over the next few weeks we will work with the Legislature to combat this monopolistic behavior, strengthen accountability and level the playing field for working families,” he said. “That means more oversight and enforcement, and potentially changing the state tax code to make this work.”
It’s a rare moment of political alignment between Newsom and President Trump, who vowed a similar directive in a social media post in which he announced immediate steps to ban institutional investors from buying single-family homes.
The post sent shockwaves through the market, lowering stock prices of corporate housing giants such as Invitation Homes and Blackstone Inc., but no specific actions have been announced.
In California’s case, Newsom will have to work with the state legislature. The bill that most closely aligns with the initiative is AB 1240, which seeks to ban investors that own at least 1,000 single-family properties from buying more homes in order to rent them out.
The bill, introduced by Assemblymember Alex Lee, passed the state Assembly last year but stalled after fierce opposition from real estate agents and the California Apartment Assn. It awaits a Senate committee hearing.
Institutional investment in real estate became a focal point during the pandemic, when low interest rates sent the housing market into a frenzy, and first-time homebuyers competed with investors viewing the house as an asset, not a home. During the second quarter of 2021, 23% of home sales in L.A. County went to investors rather than someone wanting to live there.
But data show that corporate ownership makes up a much smaller share of the market. Analysis from the California Research Bureau showed that 2.8% of single-family homes in the Golden State are owned by companies that own at least 10 properties.
The biggest chunk of that appears to be smaller mom-and-pop landlords rather than giant corporations. Roughly 80,000 homes are owned by companies with more than 100 properties, while nearly 235,000 homes are owned by companies with 10 to 49 properties.
Still, renters across the state have faced problems with institutional investors. In 2024, Invitation Homes, the largest corporate landlord in California with more than 11,000 homes, agreed to pay $20 million to resolve allegations of unpermitted renovations. That same year the company agreed to pay $48 million to settle allegations of unfair eviction practices and withheld security deposits.
