With efforts stalled in Congress to rein in large corporations buying a vast number of houses, San Diego County is taking its own action to address what it sees as a threat to the prospects of renters and residents for homeownership.

The county’s board of supervisors is embarking on a study of how many residential properties were sold in the past five years to investors, rather than to owner-occupants. The board said it will consider policies and legal action to restrict corporate landlords if it believes they are engaged in anti-competitive or anti-tenant practices that could drive up prices or make it harder for prospective owner-occupants to buy a house.

“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street hedge funds. Yet, San Diego [County] is ground zero for a growing trend of giant financial corporations buying up housing and driving up rent and home prices,” Supervisor Terra Lawson-Remer said in a memo to her colleagues before they decided to begin the study.

The proposal drew criticism from the Southern California Rental Housing Association, with the group issuing a statement that the federal and state governments are already working to address issues of competition in housing markets around the United States and the county doesn’t need to duplicate their efforts. The association was also concerned the supervisors didn’t distinguish between landlords with large and small holdings. The supervisors decided to only include commercial entities that own 25 or more homes in the study. The analysis will be limited to single-family homes, townhouses and condos.

“We had a concern about LLCs and partnerships being in the mix when they’re trying to target these large corporations. We also think the large corporations have a place in the market,” Molly Kirkland, director of public affairs at the rental housing association, told CoStar News.

San Diego County has a median household income in 2022 of almost $100,000, higher than the U.S. median of $75,000, according to the U.S. Census. While the wealthiest areas are along the Pacific coast, affordability is also an increasing problem in the county's interior, according to CoStar data. The median sale price in San Diego County in June exceeded $1 million, the Greater San Diego Association of Realtors reported; that's more than double the $412,300 nationwide, according to second-quarter data from the Federal Reserve Bank of St. Louis.

The issue of investor-owned housing, which economists say has driven up house costs, has drawn lawmakers’ attention as home prices escalated across the country over the past few years. Bills pending in the U.S. House of Representatives and Senate aim to discourage institutional buyers by taxing their future purchases or sales of single-family rental homes. A bill filed by Sen. Jack Reed, a Rhode Island Democrat, calls for a transfer tax on large investors who buy 16 or more single-family homes; Rep. Ro Khanna, a California Democrat, would impose an excise tax through his bill on certain investors when they sell these homes. Another bill filed by Oregon Democrat Jeff Merkley in December 2023 would force hedge funds to phase out their ownership of single-family homes over a 10-year period.

The Senate Committee on Banking, Housing and Urban Affairs held a hearing on the transfer tax bill in March but took no immediate action. Merkley's bill has yet to have a hearing. The House bill has seen no activity since its introduction in October 2022.

At the state level, California legislators introduced bills in 2024 that would block so-called institutional owners of more than 1,000 homes from buying additional properties.

More than a third of California homes sold in the fourth quarter of 2023 went to institutional buyers, according to Lawson-Remer’s memo. Nationally, about 3% of single-family rentals are owned by these large entities, according to a report by the Brookings Institution's Hamilton Project.

Lawson-Remer said she isn’t only concerned about investors buying houses that might otherwise be available to individual buyers. She cites Federal Trade Commission data that shows rents have increased nearly 20% since 2020, with the largest increases in apartments rented by lower-income residents.

She criticizes Blackstone, which she said has 300,000 rental units across the U.S. in its portfolio and acquired 66 buildings in San Diego County with 5,600 units in 2021. The company maximizes shareholder profits in part by accelerating evictions and skimping on maintenance, the supervisor alleged, and the “maximum allowable rent increases” imposed.

“These allegations rely on cherry-picked data and are not based on any facts whatsoever,” a Blackstone spokesperson told CoStar News in an email. “The reality is that average rents at these communities are 20% below the San Diego market average. We have invested approximately $100 million to improve living conditions for thousands of San Diego residents who live in our communities; we have already completed over 44,000 repairs, including those that were previously unaddressed.”

San Diego County would join Fort Worth, Texas, in studying the issue of corporate-owned housing. Fort Worth began its own analysis in June and found that 26% of its single-family detached homes are owned by commercial interests rather than owner-occupants. Fort Worth plans to study the issue further to determine how much of the 26% is made up of institutional owners.

San Diego’s supervisors directed county staff to report the results of its study by mid-October and to present options for policy changes to regulate housing investors early in 2025.