Democratic New York Governor Kathy Hochul is seeking to limit hedge funds, private equity firms and other institutional investors from buying up one-and two-family homes.
Why It Matters
Private equity firms own over 500,000 homes nationwide, according to a news release from Hochul issued Thursday. The release said that by some estimates, these firms are expected to own up to 40 percent of the single-family rental market in five years.
"When large investors hold a disproportionate share of a local housing market it removes opportunities for homeownership, exacerbating the existing scarcity and driving up prices for remaining homes on the market," the release read.
What To Know
Hochul is proposing to require institutional investors to wait 75 days to make an offer on one- or two-family homes and to limit certain tax benefits when these investors buy houses.
What Else Is Hochul Proposing?
On Thursday, Hochul also proposed $50 million in capital funding to incentivize the construction of more starter homes and $50 million in new state funding to help first-time homebuyers with their downpayment.
Additionally, the governor proposed creating an affordable homebuyer property tax incentive and said that she would propose actions to make discriminatory appraisal practices unlawful.
What People Are Saying
New York Governor Kathy Hochul said in Thursday's news release: "The cost of living is just too damn high — especially when it comes to the sky-high rents and mortgages New Yorkers pay every month.
"Last year, we passed the most transformative plan in half a century to build more housing and lower costs for families. But shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday homebuyers with fewer and fewer affordable options. I'm proposing new laws and policy changes to put the American dream of owning a home within reach for more New Yorkers than ever before."
Seumalu Elora Lee Raymond, an associate professor at Georgia Tech, told the Associated Press (AP) that the average home buyer can't compete with hedge funds that are willing to spend more money on a home and put the money down immediately.
"These guys are competition for buying new homes so if you're trying to buy a starter home that can be challenging," Raymond told the AP.
What Happens Next
Hochul's proposals for disincentivizing institutional investors from buying one- and two-family homes still need to be approved by the state's Legislature. If passed, New York "would be creating a nation leading model" for the practice, according to Thursday's news release.
This article includes reporting from The Associated Press.
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Rachel Dobkin
Rachel Dobkin is a Newsweek reporter based in New York. Her focus is reporting on politics. Rachel joined Newsweek in ...
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