Calderon Legislation Aimed at Preserving American Dream of Homeownership Approved in Assembly Banking and Finance Committee

Monday, April 17, 2017

SACRAMENTO, CA – Assembly Bill 354, authored by Majority Leader Ian Calderon (D-Whittier) which requires institutional investors to submit pertinent information to the Department of Business Oversight regarding the number of residential rental properties owned, was approved by the Assembly Banking and Finance Committee today.

“California families are forced to compete against institutional investors when purchasing single-family homes,” stated Majority Leader Calderon. “In order to understand the effect of this new type of investment activity, we need to examine the size and scope of investor activity within the real estate market.”

Since 2012, many investment companies have created a new type of security similar to the mortgage-backed securities that helped cause the mortgage crisis. Instead of securitizing mortgages, investment companies are securitizing the rental revenue stream from their portfolio of single-family homes they bought after the crisis. This new type of financial model suggests the investments being made in these single-family homes are for the purposes of turning them into permanent rental properties.

A study by members of the Federal Reserve of Governors concludes that although buy-to-rent investors have been a very small share of the aggregate market and comprise 1 to 2 percent of all single-family purchases from 2012 to 2014, they are far more active in certain markets of California than their report suggests. For example, in Sacramento’s market from 2011 to 2013, Blackstone alone picked up more than 1,000 single family homes with a cumulative value of about $189 million, according to RealtyTrac. At that time, Blackstone’s purchases accounted for 47% of all investor activity.

“This new type of investment activity requires proper safeguards in order to keep the American Dream of home ownership within reach for all Californians,” Majority Leader Calderon stated.  “We have to provide middle-class families an opportunity to participate in the market again and AB 354 is a step in that direction.”

AB 354 will require institutional investors to register with the Department of Business Oversight with the following information:

  • Total number of residential properties owned, including the number of units occupied by renters within each county. 
  • Annual number of residential properties purchased.
  • Total number of offers made annually.
  • Total dollar value of all assets owned.

AB 354 will also define an institutional investor as a private corporation that owns more than 40 residential properties valuing ten million dollars in the state.

Majority Leader Ian C. Calderon was elected in November 2012 to represent California's 57th Assembly District, which includes the cities of Industry, La Habra Heights, La Mirada, La Puente, Norwalk, Santa Fe Springs, South El Monte, Whittier and the unincorporated communities of Avocado Heights, Bassett, East La Mirada, East Whittier, Los Nietos-West Whittier, South San Jose Hills, South Whittier, and Hacienda Heights.

CONTACT: Lerna Shirinian, (562) 692-5858