Skinner Introduces 2024 Housing Package to Bar Hedge Funds from Purchasing Homes

Photo by Gustavo Zambelli on Unsplash

Special to the Vanguard

Sacramento, CA – On Friday, Senator Nancy Skinner announced the introduction of her 2024 Housing Package, which includes legislation designed to spur the creation of more housing, reduce housing costs, and expand homeownership.

The housing package by Sen. Skinner, who was recently named chair of the Senate Housing Committee, includes:

  • SB 1211, which would open the door for more accessory dwelling units (ADUs), also known as second units or backyard cottages, on properties with multifamily housing.
  • SB 1210, which would reduce the cost of housing by lowering and capping utility hook-up fees, such as for water, sewer, electrical, and gas service, on all new housing units.
  • SB 1212, which would increase opportunities for homeownership by barring hedge funds and other corporate investment entities from buying single-family homes in California.

“California has made progress toward addressing our housing supply and affordability crisis, but there is still plenty of work to do,” Sen. Skinner said. “My 2024 Housing Package builds on our accomplishments by spurring the creation of more ADUs, which have added much-needed new housing to existing residential areas; by capping costly utility hook-up fees on new residential construction; and by easing the path to homeownership by blocking big corporations who are gobbling up single-family homes with all-cash offers and outcompeting families.”

Over the past decade, California has enacted numerous laws designed to incentivize the creation of ADUs, which are generally cheaper to build than other housing and provide much-needed infill development. Today, ADUs are the fastest growing sector of the housing market. A decade ago, California was permitting only about 800 ADUs per year. Now, that number is more than 20,000 annually.

SB 1211 is designed to further boost California’s ADU market by allowing more detached ADUs on properties with multifamily housing. Under the bill, properties with apartments, condos, or townhouses would be allowed to add detached ADUs up to 25% of the total housing units.

For example, a property with 24 apartments would be eligible to add a minimum of two and up to six detached ADUs (space permitting). In addition, if a property owner decides to replace a carport or driveway with an ADU, they would not be required to replace that parking.

SB 1210, meanwhile, would address the costly hook-up fees levied on new housing. Currently, hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each housing unit, including ADUs. Under SB 1210, each utility hook-up fee would be capped at 1% of the cost of the building permit value of the housing unit. In addition, property owners would be allowed to pay hook-up fees over a 10-year period, rather than upfront.

SB 1210 would also require utilities to post on their websites the fees they charge and to prioritize housing utility hook-ups over other structures.

Finally, SB 1212 would increase homeownership opportunities for California families by prohibiting hedge funds and large investment entities from buying single-family homes in the state, starting in 2025.

Since the foreclosure crisis during the Great Recession, large corporations have purchased hundreds of thousands of homes in California, with single-family homes becoming for the first time a Wall Street asset class. In 2021, nearly one in seven homes sold in the U.S. was bought by corporate investors. By 2030, Wall Street is expected to control up to 40% of the single-family home rental market nationwide.

Corporate buyers in the single-family housing market have made it increasingly difficult for families to compete because hedge funds and other large investors often buy homes before they are listed, can pay in cash, and can buy multiple homes at one time. A corporate owner is also more likely to leave a home vacant, exacerbating the housing-supply crisis.

California is now experiencing the lowest rate of owner-occupied home ownership in decades, with Black and Brown families and Californians age 35 to 45 experiencing the steepest decrease in home-ownership rates. The share of adults who own their own home in California is more than 15 percentage points lower than the rest of the country.

“California’s housing crisis requires a multi-pronged approach,” Sen. Skinner added. “We must build more housing, lower costs and expand home ownership. My package offers innovative solutions to all three of these issues and gives more folks a chance to build generational wealth.”

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Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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