New York governor wants to limit hedge funds from buying up homes

By ANTHONY IZAGUIRRE The Associated Press

FILE - New York Gov. Kathy Hochul speaks during the Democratic National Convention, Aug. 19, 2024, in Chicago. (AP Photo/Paul Sancya, file)[ASSOCIATED PRESS/Paul Sancya]

ALBANY, N.Y. (AP) — New York Gov. Kathy Hochul on Thursday said she will push for new laws to make it harder for hedge funds to purchase large numbers of single-family homes in the state.

In a statement, Hochul said she would propose legislation this year that would require a 75 day waiting period before large investment firms could place bids on new homes hitting the market and limit certain tax benefits when the firms purchase homes.

The plan comes as lawmakers elsewhere have also sought to address public concerns that hedge funds or other big investors are buying up single-family homes and shrinking the housing supply for individual buyers and families. Experts have blamed housing scarcity on several factors, including high mortgage rates and years of underbuilding of new homes.

Hochul, in her statement, said “shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday homebuyers with fewer and fewer affordable options.”

Private equity firms own more than 500,000 homes nationwide, according to the governor’s news release, with some estimates expecting the firms to own up to 40% of the single-family rental market by 2030. There were more than 145 million housing units in the country in 2023, according to U.S. Census data.

A report from Harvard University’s Joint Center for Housing Studies found that non-individual investors — which includes landlords who form limited liability corporations — owned a quarter of single-family rentals in 2021. Larger investors tended to buy newer and bigger homes in places with population growth and rapid rent increases, according to the report.

A different report from the U.S. Government Accountability Office found that the country’s five largest institutional investors owned nearly 2% of all single-family rental homes nationally in 2022, with the issue most pronounced in Sunbelt states.

Seumalu Elora Lee Raymond, an associate professor at Georgia Tech, said the average home buyer can’t compete with hedge funds that are willing to spend more on homes and put money down at a moment’s notice.

“These guys are competition for buying new homes so if you’re trying to buy a starter home that can be challenging,” Raymond said.

Hochul, a Democrat, has rolled out a series of economic proposals for the state’s legislative session that are geared toward addressing the state’s high cost of living. On Thursday, she also announced proposals to incentivize the construction of starter homes and help first-time homeowners with down payments.