ALBANY, N.Y. — On Thursday, New York Governor Kathy Hochul announced her intention to advocate for new regulations aimed at restricting hedge funds from acquiring significant numbers of single-family homes across the state.
In her announcement, Hochul indicated that she plans to propose legislation this year, which would mandate a 75-day waiting period before large investors can submit bids for new homes entering the market. Additionally, her proposal seeks to reduce specific tax advantages for these investment firms when they purchase homes.
This initiative comes amidst growing public concerns nationwide, with lawmakers recognizing the issues surrounding hedge funds and major investors absorbing single-family homes. Such practices have been seen as contributing to a decline in available housing for everyday buyers and families. Various experts attribute the ongoing housing crisis to multiple elements, such as elevated mortgage rates and a prolonged period of insufficient new home construction.
Hochul highlighted the issue by saying, “shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday homebuyers with fewer and fewer affordable options.”
According to information from the governor’s office, private equity firms currently own over 500,000 homes in the U.S., with anticipations that they may control up to 40% of the single-family rental market by the year 2030. Moreover, U.S. Census data from 2023 indicates that there are more than 145 million housing units in the nation.
A study authored by Harvard University’s Joint Center for Housing Studies revealed that non-individual investors, including landlords operating under limited liability corporations, owned about 25% of single-family rentals in 2021. The study noted that larger investors were inclined to acquire newer, more substantial homes located in areas experiencing population growth and soaring rent prices.
Additionally, a report from the U.S. Government Accountability Office disclosed that the five largest institutional investors controlled almost 2% of all single-family rental properties across the nation in 2022, a trend most evident in Sunbelt regions.
Seumalu Elora Lee Raymond, an associate professor at Georgia Tech, asserted that average homebuyers struggle to compete with hedge funds, which are often willing to pay higher prices and make immediate offers on homes. “These guys are competition for buying new homes, so if you’re trying to buy a starter home, that can be challenging,” Raymond remarked.
As a Democrat, Hochul has introduced a range of economic initiatives intended to tackle the state’s high living costs. Alongside her housing proposals, she on Thursday also made known plans to promote the construction of starter homes and provide assistance to first-time homeowners regarding their down payments.
