A Virginia senator hopes to ban big investors from buying houses in the state
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State Sen. Glen Sturtevant has a bold new proposal to address the state's housing shortage and affordability crisis: banning large investment firms from buying single-family homes in Virginia.
Why it matters: Investors have been snapping up a huge share of U.S. homes in recent years, according to multiple reports.
State of play: Sturtevant, who represents Chesterfield, introduced legislation to bar investment firms worth more than $50 million from purchasing homes in Virginia.
- The bill is meant to target big Wall Street firms, not smaller or local investors who may own a few properties, he told the Virginia Mercury.
- His hope is that with investment firms locked out, inventory could open up for local homebuyers who up until now have had to compete against hedge funds.
Zoom in: Sturtevant has pointed to some pretty stunning stats to back up the need.
- Around 4,300 single-family homes in the Richmond area are owned by investors, he tells Axios, citing data from John Burns Research & Consulting.
- That data shows investors of all sizes were behind around 18% of home purchases in the Richmond MSA for the last two years, compared to 11% a decade earlier.
- In Chesterfield alone, 9% of single-family home purchases in the last year were by investors, he said.
Zoom out: Investor activity locally reflects a national trend. Investors bought one of every six homes sold in the nation in the second quarter of this year, per a recent Redfin report.
- For "low-priced" or affordable homes, it was one in four.
- 69% of those home purchases were of single-family homes.
Threat level: Home purchases by investors more than doubled during the pandemic before cooling off in 2023 and then coming back with a vengeance this year, Redfin reported.
- High rental demand, fueled by high mortgage rates keeping homeowners on the sidelines, inspired their return.
Flashback: Institutional investors helped drive much of the increase in Richmond's housing market in recent years, per a study out in 2022.
- The three-year review of Richmond's real estate market looked at Richmond, Chesterfield, and Henrico from 2018-2021 and found investor home-buying activity in nearly every neighborhood in the metro area.
- But investors bought the most homes in Richmond's once most affordable parts of town, where they bought as much as a quarter of homes for sale over the three-year period.
What's next: Sturtevant's legislation will be considered by the General Assembly in their 45-day session that begins Jan. 8.
- He's also planning to introduce bills that would allow homebuyers to inherit a seller's mortgage rate and that would incentivize employers to offer workers downpayment assistance, per the Mercury.