Bill aims to curb private equity purchases of single-family homes

When it comes to the housing market, families – especially first-time homebuyers – simply can’t compete against companies with deep pockets.

That’s what Rep. Esther Agbaje (DFL-Mpls) told the House Housing Finance and Policy Committee Wednesday during discussion of a bill she sponsors that seeks to rebalance the market by limiting institutional ownership of single-family homes.

As amended, HF2687 would prohibit private equity firms from owning single-family properties and cap other corporate ownership at 50 homes. Agbaje said the bill lays the groundwork for taking “some of the biggest players who can buy huge swaths of homes off the field.”

Committee action is expected next week.

Rep. Esther Agbaje

Agbaje described the proposal as a first step toward returning the entry-level homeownership market back to people, noting that corporate ownership of single-family homes has doubled since 2016 and is often concentrated in low-income areas. Families often cannot compete with cash or above-asking price offers, she said, leaving whole communities renting instead of building equity.

Family Housing Fund President and CEO Ellen Sahli testified that renters’ experience worsens when their landlords are corporations. Research from the organization found that property conditions decline and costs rise when a single owner controls more than 14 homes in an area.

Opponents say the bill could cause more problems than it solves.

Builders Association of Minnesota Executive Vice President Grace Keliher wrote that bulk sales to investors help keep some developers solvent — a tool the bill would remove.

Minnesota Realtors Senior Vice President of Governmental Affairs Paul Eger cautioned that the proposal does not account for market cycles. While low inventory and high demand drive prices now, at some point the market will shift, he said, and whether caused by an economic downturn, a house in need of major repair or a family in need of a quick sale, corporations are sometimes the only buyer on the market. He suggested alternatives, including capital gains tax incentives for sellers who choose owner-occupant buyers.

Rep. Jim Nash (R-Waconia) questioned whether investor activity constitutes a systemic problem warranting state intervention and raised concerns about the scale of property divestment that enforcement might require, an issue he had with an earlier version of the proposed legislation.