Investor purchasing of single-family homes skyrocketed during the pandemic. That has translated to more expensive homes and a harder time for families looking to buy for themselves over the last few years.
But one state legislator wants to head off the biggest investors.
Sen. Glen Sturtevant (R-Chesterfield) introduced legislation last year to prohibit large investors with $50 million or more in assets from buying homes in the state.
“It's not a true free market when you have hedge funds or private equity that have nearly unlimited amounts of money competing against your regular home buyer who's on a budget and trying to make their monthly payment work,” Sturtevant told a group during an online talk hosted by political business group Virginia Free in December.
“If a hedge fund can outbid you by 1%, 2% or 3% it makes a big difference to you, the person trying to buy the home. It's not a big difference to the hedge fund. And what that does is it helps drive up the prices and the comps of the surrounding houses.”
Recent studies found that, particularly in urban areas, more investor ownership means higher home prices overall.
One in six homes sold nationwide in early 2021 were purchased by an investor. In some parts of Hampton Roads, the rates were even higher.
The trend waned a bit as prices rose in 2022 and 2023, but recent figures show investors are increasingly buying again.
Sturtevant’s 2024 bill ultimately stalled out. The senator said he’s pared it down to try again this year, stripping out detailed language on penalties and reporting procedures to “get it down to its most basic, fundamental parts.”
“This is intended to target the big Wall Street investors, not your mom and pop investor who is buying a home or a rental property here and there and flipping it, or, you know, has a few duplexes under management. This is for the big institutional investors,” the senator said.
A recent study by the Federal Reserve Bank of Richmond indicates Virginia’s activity is mostly from small-scale investors. About 6% of all single-family homes in Virginia are owned by investors, more than half of which are in the hands of investors who own fewer than 10 properties.
The updated version of Sturtevant’s bill hadn’t been filed as of Wednesday, according to the state’s legislative information system. Legislators have until Jan. 17 to introduce them.
A recent analysis by a Christopher Newport University professor found that while total evictions are falling in the region, real estate investors buying up apartment buildings are one reason eviction rates in some Hampton Roads cities are among the highest in the nation.
