Economics In Brief: California Law to Slow Down the Big Investor Housing Grab Passes First Test – Next City
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Economics In Brief: California Law to Slow Down the Big Investor Housing Grab Passes First Test

California Law to Slow Down the Big Investor Housing Grab Passes First Test

Jocelyn Foreman faced down a real estate giant, and won.

A mother of five and grandmother of three, Foreman’s victory was the first test of a new California law intended to give communities and tenants the chance to stem the massive tide of large real estate investors who’ve bought up hundreds of thousands of distressed single-family residential properties across the state over the past decade, flipping them for profit or turning them into market-rate rentals.

Local public radio station KQED first reported earlier this month on how the home Foreman had been renting ended up on the foreclosure auction block. Bidding started at $175,000. The winning bid was for $600,000, from Redondo Beach-based real estate firm Wedgewood.

The name was familiar to Foreman and many others in Oakland, as it owned the vacant house occupied last year by a group of Black homeless mothers — a property the mothers later acquired in partnership with Oakland Community Land Trust.

Thanks to SB 1079, made law in California last year, existing tenants of foreclosed properties have the chance to match any winning bids at foreclosure auctions. The new law also provides for a list of “eligible buyers” who also have the opportunity to match a bid offered, which includes nonprofits, cooperatives, affordable housing developers, and community land trusts.

This week, KQED reported that Foreman entered into an agreement with Northern California Community Land Trust to match the $600,000 bid from Wedgewood, meaning she’ll own the home she’s been renting.

Partnering with the community land trust means placing the deed for the underlying land into the trust in perpetuity, but allowing homeowners like Foreman to purchase the house built on the land at a price they can afford. When the time comes, community land trust homeowners can decide to sell the building to the next owner at an affordable price, subject to the purchasing agreement with the land trust.

As Next City reported last year, SB 1079 also prohibits bulk sales of foreclosed properties in California, which investors and lenders prefer for its efficiency. Banks or mortgage companies like to sell dozens, even thousands of foreclosed properties at a time to investors. But that generally makes it impossible for tenants or community-based organizations like land trusts to participate, as they can’t afford to buy dozens or hundreds of properties at a time.

House flipping or investing in rental properties was around before the Great Recession, but, with the entry of private equity firms into the single-family market, the scale it reached during the Great Recession was unprecedented. Before 2010, corporate landlords didn’t exist in the single-family market; by March of 2020, Wall Street investment firms had acquired $60 billion worth of distressed or foreclosed properties across the country, representing hundreds of thousands of homes. Most of those properties became rentals.

NY Councilmembers Introduce Package of Pro-Delivery Cyclist Bills

After the COVID-19 pandemic heightened New York City’s already heavy reliance on delivery workers who travel almost entirely by bicycle, the city is taking measures to address some of the poor working conditions that they’ve faced for years.

This week, as reported in The City, NY city councilmembers introduced legislation including measures to boost wages and ensure tips get to workers, as well as a “highly anticipated proposal” that would fine restaurants and bars that refuse to allow a delivery worker to use the restroom — charging $50 for the first offense and $100 for every subsequent violation.

The bill came within a week of more than 2,000 delivery workers coming together for a ride through Manhattan, starting from Times Square and ending at Foley Square in the city’s civic center, where marches and rallies often start or end in New York.

As The City also reported, that ride and rally coincided with the announcement from 32BJ, a local service workers union, that the powerful union supported the delivery workers even though they can’t officially join the union since they are still technically classified as “independent contractors.” With some 85,000 members, 32BJ was also one of the crucial forces behind the city raising its minimum wage to $15.

The City also said 32BJ, technically a local chapter of the SEIU, has been meeting with the delivery workers behind the scenes for months, providing legal, legislative and other advocacy support, according to people involved.

Many of the delivery workers, who have come to be known as “deliveristas,” started informally organizing several months ago. Largely immigrants from Guatemala and Mexico, they formed a group called “Los Deliveristas Unidos,” which helped organize the ride and rally this month.

Biden Administration Creates Unionization Task Force

President Biden signed an executive order on Monday creating a task force to promote labor organizing. Vice President Kamala Harris will chair the task force.

According to the New York Times, among other things the task force will focus on helping the federal government encourage its own workers to join unions and bargain collectively, and finding ways to make it easier for workers, especially women and people of color, to organize and bargain in parts of the country and in industries that are hostile to unions.

The order comes not long after the end of a high-profile campaign to unionize workers at an Amazon warehouse in Alabama. President Biden weighed in on the campaign, unusual for a sitting President, in favor of unionization. But that campaign ultimately failed to garner the needed votes for unionization.

The order and the labor defeat in Alabama also come at a time when legislators are considering sweeping changes to the nation’s labor laws, contained in the Protecting the Right to Organize or PRO Act. The bill contains a number of measures that labor groups say would make it more difficult for employers to unjustly sway workers against unionizing or to undermine successful unionization efforts by failing to establish a first contract with a newly unionized workforce. Business groups oppose the bill.

The PRO Act passed the House in March, with five Republicans joining Democrats in voting for the bill. The House also passed the bill last year, when Republicans still controlled the Senate, which never put the measure to a vote.

Burning Man 2021 Is Cancelled

For the second year in a row, due to the pandemic. But for an interesting take on the racial dynamics and possibilities of the event that involves building a temporary city in the desert from scratch every year, see this interesting Q&A with Marlon Williams, Next City Vanguard Alumnus.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi.

Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.

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