Amid record home prices across the region, the Board of Supervisors agreed Tuesday to fight back against corporate homebuyers and landlords they say are manipulating the local housing market and sending the cost of living soaring — and possibly to join litigation over rent-pricing software that has drawn price-fixing accusations.
Private equity giants and large corporations have increasingly been buying homes nationwide in recent years, using capital reserves to make all-cash offers and scoop up available properties. Supervisor Terra Lawson-Remer, who proposed the motion, contends this has driven up prices and made the housing affordability crisis worse.
Tuesday’s motion, approved 3-1 with Supervisor Joel Anderson voting no and Chair Nora Vargas absent, will target corporate behavior that Lawson-Remer said “not only puts homeownership out of reach for many hopeful buyers but also undermines the character, stability and diversity of San Diego neighborhoods.”
It will also consider any litigation and other legal options to address allegations of price gouging, tenant harassment and price fixing, as well as consider local legislation to protect renters and individual homeowners.
That litigation could include a growing spate of lawsuits over technology that critics say lets major landlords to collude to set rental prices.
A growing number of tenants around the country have sued, arguing that corporate owners have abandoned independent pricing and rely on algorithm-based software companies like RealPage to conspire illegally to inflate rental prices.
That argument has the support of federal antitrust regulators. In March, the Federal Trade Commission and the Department of Justice filed a joint legal brief that said landlords and property managers can’t collude to set rental prices, including through the use of algorithms, and the Justice Department is reportedly readying a lawsuit against RealPage.
“We need to safeguard housing for renters, first-time homebuyers and working families,” Lawson-Remer said. “This action gives the county the tools it needs to help us keep homes in the hands of our friends, family and neighbors, not greedy corporations.”
Tuesday’s board action came as President Joe Biden prepared to unveil a plan to cap annual rent hikes at 5 percent for tenants of major landlords.
According to the FTC, rents have surged nearly 20 percent since 2020, particularly affecting low-to-middle-tier apartments rented by lower-income residents.
Investor home sales hit an all-time high in the fourth quarter of 2023, with more than a third of California homes being sold directly to institutional investors — more than any other state in the country.
Locally, the median resale price of a single-family home recently topped $1 million — a first for the county. The region’s overall median, which includes newly built homes, resale homes and condos, also reached a new high of $898,000, up 10.9 percent in a year.
A 2022 San Diego Union-Tribune analysis of sales of properties zoned as single-family homes from January 2021 through April 2022 showed that investors and large corporations bought roughly 7 percent of all such properties sold countywide, with some buying hundreds each.
The trend is only projected to increase, with institutional investors forecasting a tenfold increase in corporate homebuying by the end of the decade — from 700,000 single-family homes in 2022 to 7.6 million homes by 2030, according to research by MetLife Investment Management.
The board’s action Tuesday agreed to analyze how pervasive commercial ownership is in the county, using data from property tax rolls to estimate how many single-family homes, townhouses and condos are owned by individuals rather than commercial entities and looking at home sales over five years to see trends in ownership.
On Monday, Lawson-Remer joined a protest against Blackstone, one of the nation’s and region’s largest corporate landlords, at one of their properties in Pacific Beach alongside a few dozen residents and policy advocates from the ACCE Institute and San Diego Organizing Project.
Blackstone has about 300,000 rental homes nationwide and acquired 66 buildings in San Diego County in 2021, for a total of about 5,600 homes in the region. A 2023 report by the ACCE Institute found that as units became vacant, Blackstone would raise rents in some by 43 percent higher than just two years prior, and that asking rents in its apartment buildings had as much as tripled.
“San Diego is ground zero for this alarming trend,” Lawson-Remer said. “Homes in our neighborhoods should be for people, not corporate raiders working on behalf of Wall Street hedge funds.”
Nearly all of the two dozen people who spoke about the item at Tuesday’s meeting were in support, many sharing their own struggles with corporate landlords and saying they were being priced out of the region.
Among the handful in opposition was the California Apartment Association and Southern California Rental Housing Association, which said putting a property in corporate ownership is a common practice for tax benefits and that the policy would waste county resources.
The county’s chief administrative officer is set to report back to the board in 90 days with more data and options for the county to file or join such litigation, and in 180 days with options for policies and ordinances to bar anti-competitive behavior, price-fixing and unlawful rent increases.
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