Calderon Legislation Aimed at Preserving American Dream of Homeownership Passes Assembly Floor

Wednesday, May 31, 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 single family home, passed the Assembly Floor today. 

“California families looking to purchase a home are forced to compete against institutional investors who have billions of dollars to invest in single-family homes,” stated Majority Leader Calderon. “This obstacle presents significant challenges for homebuyers, tenants, and communities of color. We have to provide middle-class families an opportunity to achieve the American Dream of homeownership and AB 354 is a step in that direction.”

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.

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 100 residential properties valuing ten million dollars in the state.

Contact: Lerna Shirinian (562) 692-5858