New York Gov. Kathy Hochul wants to make it more difficult for private equity firms and hedge funds to buy up residential real estate properties in the Empire State.
Hochul on Thursday proposed several measures to the state budget that would prevent institutional investors from bidding on homes in the first 75 days that they are listed on the market.
The governor’s plan also calls for removing certain tax benefits such as interest deductions for firms who buy the homes at well-above market value.
Hochul said in a statement that “shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday homebuyers with fewer and fewer affordable options.”
But advocates for landlords panned the proposals. James Whelan, president of the Real Estate Board of New York, told the New York Times that it was “another example of policy that will stifle investment in housing in New York.”
The soaring cost of housing is primarily a problem that has been caused by the lack of supply, according to experts.
Between 2012 and 2022, New York State added approximately 462,000 housing units, marking a 5.7% increase — a growth rate that is below the national average.
New York State ranks 32nd in the nation in housing unit growth during this period, according to data compiled by the Office of the State Comptroller.
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 US 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 US 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.
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.
With Post Wires
