by Dick Hall-Sizemore
State Sen. Glenn Sturtevant (R-Chesterfield) plans to reintroduce his bill to prohibit investment firms worth more than $50 million from purchasing homes in Virginia, reports the Virginia Mercury.
The bill is a reaction to the perception that investment firms are buying a disproportionate share of houses on the market, particularly houses that have traditionally be seen as “starter” homes. Many feel that the presence of these large financial firms in the market has been a major factor in pushing real estate prices beyond the reach of many first-time home buyers. “It’s ultimately not fair for them to be competing with regular people,” Sturtevant explained.
It is not clear how big this “problem” is. Sturtevant cites research that shows that “around 4,300 single-family homes in the Richmond area are owned by investors.” A study of real estate sales in Richmond, Henrico, and Chesterfield during 2018-2021 showed that the three areas in which investor activity was the highest also experienced the highest increase in the median price of a house. However, in neither of these instances is “investor” defined. It could be a large hedge fund or it could be an individual buying a house with the intention of flipping it or a couple buying a house as a long-term rental investment. Sturtevant says that the two latter types of investors are not the target of his bill.
The real estate and investment community has pushed back on this legislation at the national level. They protest either that hedge funds are not buying houses at the level that is being claimed or, even if they are doing so, that activity is not affecting the cost of housing.
Sturtevant introduced this legislation in the 2024 Session. It was carried over in the Senate Committee of Courts of Justice and died quietly. He is preparing to put it in again. With so much attention on the “housing crisis”, Chris Saxman, the executive director of FREE, a business-oriented interest group, thinks Sturtevant’s bill has a good chance of being approved by the General Assembly in the upcoming session.
My Soapbox
It is worth noting that the sponsor of this legislation that would regulate business, limit private property rights, and mess with free markets is not one of those crazy, “socialist” Democrats so often criticized on this blog. And he is not the only Republican to support such legislation. None other than Gov. Greg Abbot of Texas has endorsed the idea, declaring on X that “this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. This must be added to the legislative agenda to protect Texas families.”
These are strange times.
I have been getting a call at least once a week from someone asking if I am interested in selling my house. When I ask the callers what they are willing to offer, they hedge and won’t give an answer. With one of these callers, after some back and forth discussion, I told him that my asking price was $750,000. Exasperated, he hung up. I am now wondering if there is a connection between these calls and this activity by large financial organizations. The next time I get one of these calls, I am going to ask the caller who he or she works for.
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