{"id":186764,"date":"2026-02-06T12:40:34","date_gmt":"2026-02-06T19:40:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=186764"},"modified":"2026-02-06T12:40:37","modified_gmt":"2026-02-06T19:40:37","slug":"governor-newsom-calls-for-californias-own-ban-of-institutional-investors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/governor-newsom-calls-for-californias-own-ban-of-institutional-investors","title":{"rendered":"California Governor Gavin Newsom Calls For the State to Implement Its Own Institutional Investor Ban"},"content":{"rendered":"\n

California Governor Gavin Newsom has rarely been in lockstep with the federal government recently, but they agree on one issue: stopping corporate investors from buying single-family homes.<\/span><\/p>\n\n\n\n

Investors in California have quietly snapped up 40% of the fire-scorched lots in Altadena, a Los Angeles suburb, according to a recent<\/span> Redfin report<\/span><\/a>. Newsom is calling for new state oversight in stopping large investors from buying single-family homes in California.<\/span><\/p>\n\n\n\n

\u201cWhen housing is treated primarily as a corporate investment strategy, Californians feel the impact,\u201d<\/span> a source in the governor’s office said<\/span><\/a>. \u201cPrices go up, rents rise, and fewer people have a chance to buy a home.\u201d<\/span><\/p>\n\n\n\n

It echoed <\/span>President Trump\u2019s earlier post on Truth Social<\/span><\/a>, where he said, \u201cI am immediately taking steps to ban large institutional investors from buying more single-family homes.\u201d<\/span><\/p>\n\n\n\n

Waiting for More Details<\/span><\/h2>\n\n\n\n

There have been no specific numbers on what \u201clarge\u201d institutions investors mean<\/span>, although<\/span> the president’s use of the word \u201cinstitutional\u201d would imply Wall Street <\/span>REITs<\/span><\/a> and hedge funds rather than smaller mom-and-pop investors. Newsom hasn\u2019t offered further details, but a recent statement implies that Wall Street was also the target of his ban.<\/span><\/p>\n\n\n\n

\u201cThese investors are crushing the dream of homeownership and forcing rents too high for everybody else,\u201d<\/span> Newsom said in a statement<\/span><\/a>. \u201cI think it\u2019s shameful that we allow private equity firms to become some of the biggest landlords in our cities.\u201d<\/span><\/p>\n\n\n\n

Smaller Investors Own Most of California\u2019s Single-Family Rentals<\/span><\/h2>\n\n\n\n

As with much of the U.S. single-family housing market, corporate investors are not the primary owners in California, where fewer than 3% are owned by companies that own at least 10 properties, according to an analysis by the<\/span> California Research Bureau.<\/span><\/a><\/p>\n\n\n\n

Only 20,066 homes <\/span>are owned<\/span> by firms with portfolios of 1,000 or more, the largest being Invitation Homes, which owns 11,000 in the state, the <\/span>California Research Bureau<\/span><\/a> says<\/span>.<\/span> That is a sliver of the more than 16 million rental units across California, according to Census data.<\/span><\/p>\n\n\n\n

This information <\/span>was stressed<\/span> by Scott Lincicome, vice president of general economics and trade at the Cato Institute, who told<\/span> CNBC<\/span><\/a>, \u201cInstitutional investors are just not the main market movers. It\u2019s mainly a supply issue.\u201d He describes the proposal as \u201cpopulism 101.\u201d<\/span><\/p>\n\n\n\n

Are Fire-Damaged Lots a Good Investment?<\/span><\/h2>\n\n\n\n

The combination of federal and state efforts to curb large investors buying single-family homes, when applied to neighborhoods where<\/span> institutional investment <\/span>is concentrated<\/span>,<\/span><\/a> could mean fewer bidding wars against deep-pocketed adversaries for fixer-uppers and rentals. <\/span><\/p>\n\n\n\n

However, to buy anything in areas affected by the L.A. wildfires, such as Pacific Palisades and Malibu, you need deep pockets. Mom-and-pop investors in these neighborhoods are already multimillionaires. But for the homeowners, selling their lots is likely a different story.<\/span><\/p>\n\n\n\n

\u201cIn Altadena, there\u2019s a real push around the idea that the community is not for sale,\u201d Redfin agent Sylva Khayalian said in the Redfin press release. \u201cPeople who plan to stay are encouraging others not to sell because of how much it could change the neighborhood\u2014but for some residents, selling is the only option that makes financial sense.\u201d<\/span><\/p>\n\n\n\n

Consequently, some are \u201csigning on the dotted line because they\u2019re desperate to sell\u201d due to the cost of cleaning up smoke and ash damage, Khayalian adds, which can run into hundreds of thousands of dollars, especially when remediation and the cost to treat lead exposure and landscape destruction after heavy rains <\/span>are factored in<\/span>.<\/span><\/p>\n\n\n\n

High Outlay<\/span><\/h2>\n\n\n\n

For investors, buying one of these fire-damaged lots means a big initial outlay. Khayalian says that Altadena lots are selling in the $500,000 to $600,000 range, and surviving lots with similar homes might command $1 million or more. Meanwhile, in Pacific Palisades and Malibu, the number is closer to $1.3 million to $1.6 million. <\/span><\/p>\n\n\n\n

\u201cThere are so many lots sitting on the market that sellers are starting to cut prices to attract offers,\u201d Khayalian said, suggesting that leverage has tilted in favor of buyers here. Still, it\u2019s a heavy initial outlay for an investor, even though they are not bidding against Wall Street behemoths.<\/span><\/p>\n\n\n\n

Adding Units Through ADUs Could Be a Game Changer<\/span><\/h2>\n\n\n\n

A lot depends on the nature of Newsom\u2019s crackdown. If the legislature adopts tax changes that penalize bulk acquisitions or tighten rules on corporate ownership, it may ease competition and create opportunities for small landlords to buy single-family rentals and small <\/span>multifamily<\/span><\/a> properties.<\/span><\/p>\n\n\n\n

If this is combined with Newsom\u2019s already stated interest in alternative construction methods, including modular housing, and with encouragement of ADU construction, smaller investors could benefit by adding units, converting properties, and participating in rebuilding efforts, despite the initial outlay required to purchase lots and damaged homes.<\/span><\/p>\n\n\n\n

Final Thoughts: Factors Smaller California Investors Must Consider<\/span><\/h2>\n\n\n\n

Investing in a single-family home in California, especially in a fire-prone area, is not a simple process. Khayalian explained:<\/span><\/p>\n\n\n\n

\u201cThe homes for sale that didn\u2019t burn are only attracting offers if <\/span>they\u2019re priced<\/span> reasonably and the owner has remediated ash and smoke damage. The most important thing someone looking to buy in this area can do is <\/span>figure out if<\/span> they can afford insurance. Mortgage lenders in California require homebuyers to have fire coverage, and premiums have gone up by 35% to 50% since the fires.\u201d<\/span><\/em><\/p>\n\n\n\n

Unfortunately, even if a neighborhood was not recently affected by a <\/span>wildfire<\/span><\/a>, investors in California could still be affected by one, given the state’s proximity to forests. <\/span>Most of California is a potential tinder box<\/span><\/a>. <\/span><\/p>\n\n\n\n

Deciding where to invest means getting a good deal on homeowners’ insurance. Between 2019 and 2024,<\/span> more than 100,000 homeowners lost coverage<\/span><\/a>. The<\/span> California FAIR Plan<\/span><\/a>, known as the \u201cinsurer of last resort,\u201d has grown by 155% since 2021, but its coverage still pales in comparison to conventional insurance. For the time being, it\u2019s all that many Californians have, and rental property investors have to decide whether that\u2019s a risk worth taking.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

California Governor Gavin Newsom has rarely been in lockstep with the federal government recently, but they agree on one issue: stopping corporate investors from buying single-family homes. Investors in California […]<\/p>\n","protected":false},"author":613725,"featured_media":183866,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7384],"tags":[],"class_list":["post-186764","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics-policy"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/186764","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=186764"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/186764\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/183866"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=186764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=186764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=186764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}