California legislature threatens American dream
AB 1240 would cap needed investment in housing, making it harder for Californians to afford good homes
Today, not everyone can afford to buy a home. For many people, single-family rentals (SFRs) are an entryway into a better home in a safe neighborhood with a better school. For millions across the country, SFRs are a bridge to the American dream, helping working families afford a home to grow their families while they continue to save money and the economy improves.
At a time of rising inflation, high mortgage rates, complex zoning regulations, and limited housing supply, we should be making it easier, not harder, to access affordable housing that creates opportunities to climb the socio-economic ladder.
Unfortunately, in their attempt to address the housing affordability crisis, some state legislatures are considering badly flawed ideas that would restrict investments in SFRs. These efforts may be well-intentioned, but they are misguided and ignore the people most directly impacted: the families renting these homes.
California is grappling with a housing shortage. Yet, instead of tackling the root cause of the issue – the lack of housing supply – they are advancing legislation that would only make things worse. If passed, these policies would make it harder for Californians to access a home, or even threaten to evict families living in SFRs, who may be unable to afford a down payment in the same neighborhood.
CALIFORNIA:
California state legislators are considering AB 1240, an ill-advised attempt to address the state’s pervasive housing crisis. This legislation would limit critical investments in communities across the state and hurt California renters, who are at risk of losing the place they have learned to call home.
As state legislators continue to debate this bill, they must keep Californian families front of mind and prioritize solutions that actually address California’s housing shortage. Even California’s Department of Housing and Community Development acknowledges that housing production is falling well short of projected needs. The last thing California, which already has the nation’s most restrictive regulations on building and development, should be doing is enacting more rules that would suppress the growth of the housing supply.
THE DATA IS CLEAR: SFRs CREATE A PATHWAY FOR PEOPLE TO PURSUE THE AMERICAN DREAM
Every family deserves the opportunity to choose from a diverse and affordable set of housing options, including SFRs. The benefits of a diverse housing stock are evident. Researchers from Virginia Tech University and the University of North Carolina-Charlotte found that an increase in the supply of SFRs opens the door for more children to access and enroll in high-performing schools. Research from Harvard University highlights how access to these opportunities creates a path for upward mobility.
Proponents of legislative efforts to limit professionally managed rental providers in the housing market argue that their investments greatly distort the marketplace. This is a false narrative. According to Matthew Yglesias, institutional investment is “genuinely quite small relative to the scale of the single-family home market.” The Government Accountability Office (GAO) also found that institutional investors own only two percent of all SFRs in the nation, suggesting that smaller entities operate most single-family homes.
These proposals may sound good on paper, but they are not the solution to reducing housing costs and risk displacing millions of Americans living in SFRs. In a recent podcast, Ezra Klein noted that “sometimes government has to get out of the way, as in housing.” Policymakers can’t just sweep professionally managed rental housing providers under the rug while families suffocate from the consequences. These bills would worsen access to housing and unintentionally force renters out of their homes, with limited options to find a home due to tight supply, inflated prices, and elevated interest rates.
Policymakers must listen to families most impacted by these legislative proposals and redirect their focus to tackling the root cause of the affordability crisis by enabling private sector investment in the housing market. Embracing private sector investment will boost diverse housing options, including SFRs. SFRs provide housing options and a bridge to homeownership, and we can’t stand for threats that will take away opportunities for families instead of addressing why families can’t afford to buy homes in the first place.
