The Los Angeles City Council will consider a motion on Friady introduced by Council President Nury Martinez aimed at keeping private companies from buying up the city's affordable, single-family housing supply as investments.
Tech real estate companies known as iBuyers, like Opendoor, Rockethomes, and Redfin, as well as private equity firms "primarily target affordable, single-family homes and compete to buy up as much inventory as possible, flip them and then sell them for profit," the motion stated. It was seconded by Councilmember Nithya Raman.
Corporate investors snapped up 15% of U.S. homes for sale in the first quarter of 2021. They are often subject to more favorable large-scale loan interest rates than individual borrowers can obtain on mortgages, allowing them to tack on tens of thousands in additional cash to offers, triggering bidding wars and driving up home prices.
"As of August 21, [L.A.] recorded a price increase of 11.3% compared to the prior year," Martinez's motion stated. "Low-income Angelenos, who have lived in their neighborhoods for decades, are unable to compete with these iBuyers. This has led to many longtime residents being pushed out of their homes, neighborhoods and communities."
Roughly one in five homes sold in California in 2020 were purchased by corporate investors—with the vast majority being affordable, single-family residences.
If passed, the Martinez's motion directs L.A.'s Chief Legislative Analyst and City Attorney to report on recommended strategies for preventing tech and private equity firms from housing flipping.
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