The San Diego County Board of Supervisors voted 3-1 Tuesday in favor of a proposal that will address corporate “bad actors” who purchase homes and, in the words of the proposal, contribute to an already difficult affordable-housing situation.
Vice Chair Terra Lawson-Remer said her sponsored policy aims “to protect communities from illegal business practices, and safeguard housing options for first-time homebuyers and working families.”
Lawson-Remer said private equity giants and large corporations “are increasingly buying up the nation’s scarce supply of homes, including in the San Diego region,” driving up prices for their own profit and making the housing affordability crisis worse.
According to Lawson-Remer’s office, the proposal will:
- analyze how pervasive commercial ownership of single-family residential properties is in the county by using property tax roll data, and look at single-family detached property sales over the past five years to see ownership trends;
- examine possible legal actions in response to allegations of price gouging, tenant harassment and price-fixing across the county real estate market;
- analyze local ordinances and legislation to address increasing threats to renters, single-family homeowners and mom-and-pop landlords due to allegedly unfair and anti-competitive practices;
- supporting state legislation to “rebalance” the housing market and limit influence by institutional investors.
Supervisor Jim Desmond introduced a friendly amendment that will also have the policy look at townhouses and condominiums. It will also include a “threshold number” of 25 on what is considered a mom-and-pop business, according to Lawson-Remer’s office.
Before the vote, Lawson-Remer said California leads the nation in the number of single-family homes purchased by investors.
In 2021, the Blackstone private equity firm spent $1.5 billion to acquire 66 properties, or 5,600 units, in San Diego County, Lawson-Remer said, adding that those properties would otherwise go toward affordable housing with modest rents.
Blackstone is the largest residential landlord in the United States, according to Lawson-Remer’s office.
Blackstone on Tuesday said the company has “invested approximately $100 million to improve living conditions for thousands of San Diego residents who live in our communities.”
The allegations from Tuesday’s board meeting “rely on cherry-picked data and are not based on any facts whatsoever,” Blackstone officials said. “The reality is that average rents at these San Diego communities are 20% below the San Diego market average.”
Resident review scores have increased 40% under Blackstone ownership and “resident retention rates are significantly higher than the national average,” Blackstone said, adding the company has completed “over 44,000 repairs, including those that were previously unaddressed.”
“We hold ourselves and our operators to the highest standard of care,” Blackstone officials said. “During the pandemic, Blackstone recognized that many were experiencing extreme hardship. We believe we are the only major landlord in the (United States) that did not evict a single tenant for non- payment during those two-plus years.”
Supervisor Joel Anderson voted no on the proposal, which he said takes time away from building more housing for residents.
“We don’t need to quibble over whether 10% of the market is being manipulated,” Anderson said, adding that California has an attorney general who can prosecute investors who break the law.
Anderson also said that without investment from large corporations, many housing projects would not be built.
During public comment, over a dozen people spoke in favor of the proposal.
“I can’t stress it enough, but as tenants, we are getting displaced due to corporate greed,” said Patricia Mendoza, of the Alliance of Californians for Community Empowerment. “Our communities are not for sale.”
Alysson Snow, a Lemon Grove City Council member, said she remembers growing up in a time “where you used to be able to afford your first home.” However she said the system now encourages all-cash buyers, who snatch up homes in a manner that was widespread after the 2008 financial crisis.
Opponents said more regulation was unnecessary. Melanie Woods of the California Apartment Association said the proposal “is a solution in search of a problem,” as the percentage of single-family homes owned by large property owners is less than 1.7%, and is trending downward.
Woods added that out of 800,000 housing units in the county, only 60,000 belong to large property owners, and there are already mechanisms in place against those who price gouge.
A rental housing representative said that while the county policy is well-intended, it is “just more regulation on top of regulation.”
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