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Don Perata is a former California state senator who served as president pro tempore of the state Senate from 2004 to 2008.
It doesn’t happen often in today’s politics, but sometimes bitter rivals from different parties arrive at the same conclusion at nearly the same moment because the facts leave little room for denial. That’s what happened this month on housing.
Governor Gavin Newsom recently put a spotlight on a problem Californians know all too well: large institutional investors and private equity firms are buying up Golden State homes at scale, crowding out working families and first-time buyers. Homes, he argued, should be places to live — not just financial assets for Wall Street portfolios. President Donald Trump followed suit by signing an Executive Order on the same subject.
Different parties, same diagnosis.
And they’re right: America’s housing crisis is being exacerbated by Wall Street money flooding into a market already constrained by limited supply. And unfortunately, California is ground zero for that reality.
One in five homes is a corporate asset
Roughly one in five homes in California is now owned by corporate investors, representing well over a million properties statewide. That matters enormously in a state that has underbuilt housing for decades and now faces a multi-million-unit shortage according to recent state data. As a result, median home prices are near historic highs, and less than one in five California households can afford the median-priced home.
Meanwhile, California’s rate of homeownership, which has historically lagged behind the rest of the country, has declined dramatically. In California, the average age of homeowners is 49 years old. By comparison, across most of the United States that average age is 35.
Only 43.5 percent of Californians aged 25–75 were homeowners in 2021, down from 49.8 percent in 2000. The decline was even more pronounced for Californians aged 35-45, where home ownership declined from 49.5 percent to 39.7 percent.
With cash offers and fast closings, private equity forces that do not need mortgages routinely outbid families that can’t match their high-priced offers. The homes and condos they buy are then often rented back into the market at rates that most state residents can just barely afford.
It’s easy to see why both political parties are concerned about private equity gobbling up single family homes. If left unchecked, consolidation of housing stock by big investors will continue to put homeownership out of reach for many buyers.
In past housing debates, I’ve been sympathetic to concerns about policy overreach. For example, I opposed efforts to ban algorithmic software used to analyze housing prices. These tools don’t set prices; they only respond to supply and demand by signaling when rents should rise or fall. In fact, California itself relies on similar algorithmic models to manage toll pricing on state highways.
Institutional investors are different. They aren’t trying to better understand supply and demand; they are trying to manipulate the market by buying up as much housing as they can — because they know that the more properties they control, the more they can dictate their prices. That’s not capitalism, it’s crony capitalism.
Getting institutional investors out of the single-family housing market won’t solve everything, but it will address a major source of distortion and give families a fairer shot.
This housing crisis didn’t happen overnight, and it won’t be fixed overnight either. But meaningful reform always begins the same way — by finding clarity about what needs to change. And that clarity is finally emerging.
With leaders across the political spectrum acknowledging the same problem, California has a rare chance to make progress.
The window for reform is opening. It’s up to us to make sure it doesn’t slip away.
This is opinion, maybe correct, except that Gavin Newsom is with corporations and multiconglomerates. It’s all over the United States, not just California. Gavin Newsom? He is never right, because he is part of the housing market takeovers. He is just pretending to be upset. Years ago, 60% of Zillow, was bought by China, then started loans, thru China Banc. No one politician, in this United States, did anything about it. Zillow, influenced the market, can collect info and own homes by default, especially in states like fire prone California where insurance is cancelled and no one will cover, one owner houses or bleed them dry of cash. Gavin allowed this to happen, and even took away environmental protection laws, on property buildings, to help corporations. Look it up. On normally protected beach, ecosystems areas, streamlined no environmental studies, needed to build high density housing? He also promised foreign investors, would bring money, right after fires, in Palasades, and SoCal. He is part of the Wall Street corporate, foreign, buying process.
He did that, just last year. So the opinion letter, is correct, except mentioned, Governor Gavin Newsom. He is with those corporations, and helping them. I suggest, read all the laws and his works, that are not on mainstream news. Read what corporations own housing search, abd sales websites Reading will show who, he is helping. It’s not Californians. It’s himself.
Exactly, he hasn’t done anything to stop it! No EO’s or legislation! At least Trump is doing something! Newsom is empty space!
Let’s see how many of our “elected” officials are invested in those same companies.
I’m not hearing any solutions in this article, just that multiple people are acknowledging a problem.
Just one technical correction, due to Don Peralta’s seeming confusion: Don says that “President Donald Trump followed suit by signing an Executive Order on the same subject”; in fact, Trump announced the executive order on January 7th, and then it was NEWSOM who “followed suit” by making essentially the same announcement at the State of the State address on January 8th. I’m not sure any of this was a coincidence; after all, Newsom has taken up copy-catting Trump as some sort of worthy, expedient political strategy.
Wallstreet is a problem but what should be concerning to Greaseball is the policies of CA, just look at the fire area rebuild or lack there of. Between the ridiculous permit process and cost as well as the over the top delay because all the idiotic policies get in the way, CAs biggest housing enemy are its politician’s.
This is garbage. The author identifies buyers – “corporate buyers” – as the culprit for CA’s housing crisis. But he just glosses over the real issue; “underbuilt housing for decades”. In a real market economy, the increased demand, including corporate demand, would spur increased production, but that’s not happening because CA has over regulated and disincentivized development. The real issue is bad government, which Don Perata was a part of. Instead of fixing the supply, he blames the demand. And I wonder if the current home owners/sellers hate these bad corporate buyers driving up their property values?
Newsom and california politicians are the main problem. Wall Street snuck in because of them. It’s extremely expensive to build in california due to all the over sized regulations and red tape.
Ineeded 19% of single family homes are owned by investors. The vast majority of said homes are owned by smaller landlords like me, who due to liability reasons, wrap ownership in LLC.
So, I’m not sure where the writer got his facts. Is he conflating multi unit properties with single family homes? If so, who else can fund such investments besides deep pocket firms? Who else can staff such projects and manage such risk?
Newsom is part of it all. Journalists and media need to stop pandering to their side of the aisle and start doing some real journalism. You all are just fakes.
The argument fails because there are 49 other states. Texas and Florida have much lower housing costs because they don’t regulate home building as severely as California. And news flash, institutional investors buy homes there too. This is the most specious argument I’ve heard in a while. If you can’t recognize the problem you’ll never find a solution.
What a deceptive article. The author includes apartment complexes in the data that never were constructed or designed or ever will be SFRs. There is no problem to be solved. Only a tiny fraction of SFRs are owned by corporate. I’m not in the market for a 200 unit complex bidding against Wall Street. Are you?
This is a typical response from a politician who who has no real understanding of the economy and the market forces. California housing crisis is not caused by corporations, they just follow the profitable markets. When politicians like this author make it impossible for Builders to build in California because they’re more interested in protecting some shrubs or mystical shrimp or frog at the expense of California families, when it takes you 2 years to get a permit for one house, or 5 years to get a tentative map for 10 homes subdivision, or when you end up paying 15% of the construction cost in permit fees and other utility connection and other red tape fees, the problem is not corporate buyers, the problem is Newsome and Democratic senators running the state into the ground. So, if you really want to solve the problem, the solution is very simple, walk right in front of a mirror, and look at yourselves! That’s where the real problem is! Cut the red tape, eliminate half of the building departments, make it simpler to get permits and build houses, especially in the remote areas. Then the margins will shrink, and corporate buyers will be just one of 100 other buyers who can potentially buy houses here at reasonable prices
Just one technical correction, due to Don Peralta’s seeming confusion: Don says that “President Donald Trump followed suit by signing an Executive Order on the same subject”; in fact, Trump announced the executive order on January 7th, and then it was NEWSOM who “followed suit” by making essentially the same announcement at the State of the State address on January 8th. I’m not sure any of this was a coincidence; after all, Newsom has taken up copy-catting Trump as some sort of worthy, expedient political strategy.
I don’t like Newsom or Trump. And I don’t believe the leadership of the REPs or the DEMs care about the regular working class. But I will say…NO SURPRISE!! DUHHH!!! We have known about this for many years already. Yet only now are these politicians acknowledging the situation?? And here they are showing up like they are the heroes??? Wow!!