Anti-Investor Bills in 2025
There were more than 50 anti-investor housing bills introduced in state legislatures this year. A number of them are attempts to block landlords from using pricing algorithm software. Hawaii’s bill passed. (Edit: Sorry. That is incorrect. The bill passed the Senate but didn’t go further.)
Pricing software is marginally helpful in helping landlords find the market clearing rent. Marginal is the key word, however. Banning or constraining it is a signal of unseriousness about housing and a red flag that the sponsors will be a potential source of other unhelpful populist legislation that will make working class families worse off. (Previous posts on this topic: 1, 2, 3, 4) But, it’s probably not going to change the housing market much on its own. It sucks for RealPage and for landlords who find value in the service, but housing markets aren’t going to change much with or without it.
The more dangerous bills are the bills meant to obstruct large scale corporate homeownership. When I saw the first few of them being introduced, I freaked out a bit. There were just a handful then. Little did I know that that was just the start. Most of them didn’t go anywhere, fortunately.
But, a couple took some baby steps past being filed.
Georgia
Georgia’s House Bill 555 made it out of committee with bipartisan support (5 Republicans and 1 Democrat sponsors). But, it lost steam after that. It would limit any investor from owning more than 2,000 homes or 10 apartment properties, statewide.
The Atlanta Civic Circle has a nice roundup of Georgia housing bills. They quote former Georgia Attorney General Sam Olens. “I’m taken aback by how companies that follow the law — and are listed in many of our mutual funds [and] many of our retirement funds — are, in this bill, just determined to be evil corporate citizens.”
Nicely put.
On the opposition side, they quote Taylor Shelton, a Georgia State University geographer. “Without these kinds of interventions, Georgia tenants and prospective homebuyers are going to continue to be squeezed and pushed out of the market by these companies in their continual drive to extract as much profit as possible from our communities.”
Georgia, as well as other states, have introduced bills for inquiry commissions to measure the effects of large scale home ownership. With researchers like that, frankly, inquiries are likely to put a patina of respectability on prejudicially motivated low-quality analysis.
The problem is that the economics academy that could be a source of sanity when the geographers start doing financial analysis has failed on this issue and did not produce a correct canon of counter narratives.
This leaves statements like this, asserted as a background fact in the article, as poison in our well of discourse. “Powerful hedge funds, private equity groups, and real estate investment trusts have bought up tens of thousands of single-family homes across Georgia, driving up housing prices and shutting out first-time homebuyers from already expensive markets.”
No. No they didn’t. I mean, sure. If we assume a vertical supply curve, all demand increases prices and reduces supply for other buyers. In that case, it’s not an economic question. It’s a question of prejudice. Who is “we” (that homes should be cheap for) and who is “they” (that drives up the price for “we”). What gets sneaked in with this framing is that, since renters need investors, renters are “they”.
I don’t blame the Atlanta Civic Circle for making that mistake. I blame the economics academy. We can’t expect laypeople and communicators to fix the errors of the experts.
First, the large push of institutional ownership happened in the mid-2010s. You can see in Figure 1, that’s when homeownership rates were declining in Georgia. For much of that time, home prices were deeply below a reasonable level (especially in low tier submarkets that were locked out of the mortgage market by federal regulators). Home prices were no higher when homeownership bottomed than they had been before it started to decline. By the way, Georgia offers a stark counterpoint to the narrative that mortgages to marginal homeowners needed to be tightened in 2008 because those mortgages had led to a housing bubble. In Atlanta, homeownership peaked in 2001 and there wasn’t really much of a price bubble.
Nearly ten percent of Georgian households were knocked out of homeownership! And, to this day people, including professors of finance and economics, will insist that this could have been a change in preferences and that causation has to be more firmly established. Only 64% of Georgia’s families owned homes when low tier Atlanta was at 40% of its 2000 price level when 72% had been owners. Then prices and homeownership both turned back up.
This poses some sort of mystery for the average educated intelligent citizen because the economics academy’s narrative of the 21st century housing market is a hallway of funhouse mirrors.
By the way, ignore the big bump in homeownership in 2020. That’s measurement error associated with Covid.
Homeownership has been increasing relatively steadily, by about 1/3% annually, since the after-effects of the mortgage shock ended. The number of naturally forming households qualified for mortgages is closer to the 62% bottom, and the current homeownership rate in Georgia is inflated because renter households aren’t forming. It’s the lack of renter households that is lifting the homeownership rate. (Adult children living with parents. People taking on roommates. Etc.)
In the public discourse that has grown out of the funhouse mirrored academy, renters are “they” by association with the investors who they need to own their homes. The market is bereft of options for renters, to the point that it has distorted household formation trends that go back decades. And Georgia finds bipartisan support to address the problem that “they” are “shutting out first-time homebuyers”.
Question for the bipartisan sponsors. If homeowners are being shut out of the market, why are new single-family homes still being permitted at barely half the rate they were when homeownership was above 70%? Did any of the sponsors wonder about this? Because it’s a pretty obvious freaking question to ask if you’re blocking reasonable economic activity because people are being “shut out”.
And, if the investors are trying to buy up properties to rent, I wonder what’s holding the construction of apartments below 2,000 units annually across the state. It’s a mystery.
Well, it’s not. Georgia’s legislature can’t be blamed for the lack of single-family permits. That has been largely because existing homes were too cheap, so that builders couldn’t compete. But it can be blamed for the pitiful number of multi-family permits.
I’m guessing that Taylor Shelton, Georgia State University geographer, has some regressions showing a rise in institutional home ownership from 2012 to 2016 which shows a high correlation between institutional buyers and rising home prices when prices rose from 40% of their previous norm back up to 85%.
That GSU research notes that 3 large scale single-family rental firms own 19,000 homes in the Atlanta area - about 11% of single-family rentals. Single-family rentals are less than 10% of the housing stock. Atlanta has a bit less than 3 million homes, so that’s about 0.6% of the homes in Atlanta. “Shutting homebuyers out” of 0.6% of homes.
In Atlanta, the 37th percentile home value appears to be about $325,000. So, I looked up a couple, randomly, in Zillow. One says the mortgage payment on a refi would be $1,934 and it would rent for $2,544. One says the mortgage payment would be $2,264 and rent would be $2,802. Oh, those poor home buyers getting priced out of ownership by the big landlords. (Homeowners have additional expenses, but the payment is fixed while the rents will rise each year.)
Also, in the decade leading up to 2008, Georgia reliably permitted new homes equal to about 2.5% of the existing stock of homes. It hasn’t topped 1.5% since 2007. Georgia permitted 0.5% of its existing stock of homes in 2012, when institutional buyers were starting to enter the market. It’s taken more than a decade for large institutions to buy up a couple percentage points of Georgia homes. If this was a problem - if this really was “shutting homebuyers out” of the Georgia housing market, exactly how was this not a solvable problem? Georgia couldn’t have permitted an additional, say, 0.2% of new homes for homeowners each year to make up for it? What is keeping Georgia from doing that? That is the question. That is the pitiful state of Georgia housing markets. That’s the problem to solve, not “loosening Wall Street’s grip” on them.
This is why I am so worried about these bills. The case for them is so weak - it crumbles under the slightest amount of curiosity - that their supporters clearly are motivated by something other than reason and a quest for positive outcomes.
Virginia
SB1424 in Virginia also had bipartisan support and was recommended out of committee but didn’t make it further. It appears to be a flat out ban on large scale single-family ownership.
Same story. Homeownership collapsed well before Wall Street seriously started buying homes. Similarly to Georgia, the collapse in homeownership stated well before the 2008 crisis and was falling throughout the subprime boom. Homeownership has been recovering for most of the past decade, but with very little growth in new construction. Homeowner families are crowding out renters, not the other way around. Single-family permits are still half what they commonly were before 2008 and apartment permits are never allowed in quantities that could make a meaningful difference.
All the same points apply. All of them will fall on deaf ears because nobody would take a position that corporations are crowding out families from the single-family housing market if they have the slightest interest in a fact-based position.
Two bills got out of committee this year - both bipartisan. Dozens wait in the wings. Meanwhile, with mortgage access and apartment permits still legally blocked from growing more than they currently do, healing in the housing market will likely start to require hundreds of thousands of new single-family homes to be purpose-built as rentals. That is likely going to require “Wall Street” involvement.