These bills single out real estate buyers, setting dangerous precedent
Measures in Florida, New York, Congress are bad for industry, democracy
“I banned China from buying land in the state of Florida,” Florida Gov. Ron DeSantis declared at the Republican presidential debate this month. The audience erupted in applause.
The laziest and most reprehensible way to rise to power is to portray minority groups as enemies of the state, as DeSantis did when he signed Florida Senate Bill 264. The legislation banned nearly all property purchases by Chinese nationals and China-based companies.
It also restricted real estate investment by anyone associated with Venezuela, Russia, Iran and other countries, and forbade the use of Chinese capital to fund projects in the state.
DeSantis knew SB 264 would appeal to the far right. But populist, discriminatory real estate legislation is bubbling up in the Democratic and socialist wings of the political spectrum as well. More on that in a moment.
Florida’s law has already caused Lennar to delay at least two developments. Industry heavyweights including Steve Ross’ Related Companies, Barry Sternlicht’s Starwood Capital and the Real Estate Roundtable are trying to roll it back. They view it as bad for business, which is undeniable.
But it’s worse than that, as Mae Ngai explains in a New York Times op-ed. Noting that no one in northern New Jersey would sell her Chinese parents land to build a house in the 1950s, Ngai reminds us of the real estate industry’s systemic discrimination in the 19th and 20th centuries against Asians, Blacks and Jews.
No sane person would look back with pride on those policies. So why would we tolerate Florida’s SB 264 now?
At times, Chinese buyers and investors have been an important source of capital for America’s commercial real estate and luxury markets. Alarmists warned in the 2000s and 2010s that the Chinese were “taking over” the country. Has anyone seen Chinese flags flying over our government buildings? What we have seen is many of those investments lose money and the Chinese pull back. That’s capitalism.
Disingenuous politicians used to yell about the Chinese buying Treasury notes, too. It was a good applause line, but the Chinese only held 6 percent of our debt. Besides, when investors buy Treasury notes, it funds our expenditures and pushes interest rates down. A country that can’t sell its debt is a country in trouble.
Meanwhile, on the center-left of American politics, two Democrats in Congress this month unveiled a bill to ban corporations, partnerships and real estate investment trusts that manage investors’ funds from owning single-family homes.
The House sponsor is named, ironically, Adam Smith. The legendary economist of that name, who championed the power of competitive markets to help the working class, must be turning over in his grave.
On its face, the legislation makes no sense. For one thing, why ban hedge funds from owning single-family homes but not apartments? A home is a home, regardless of shape or size.
Secondly, hedge fund buyers of single-family homes expand rental options for consumers. After all, lots of Americans want to rent houses. Maybe they can’t afford a down payment, don’t qualify for a mortgage, or don’t want the burden of upkeep, taxes and insurance. They might expect to move in a few years, or fear losing their jobs and being foreclosed upon. All are excellent reasons to rent.
Smith’s bill is premised on the unproven claim that private equity is gobbling up so many homes that it’s raising the price for Americans who want to buy, especially in neighborhoods of color. But the vast majority of single-family housing is owned by individuals. They should have the right to sell to any buyer — including Venezuelans, Chinese and investors.
Making houses unavailable for rent excludes renters from some of the best neighborhoods and schools in the country. It’s unfortunate that these suburbs don’t allow apartments, but until they do, renting should be possible. The congressional bill would largely prevent that.
Renters are more likely than owners to be people of color. The bill would perpetuate segregation by keeping lily-white, single-family suburbs exclusive to homeowners.
Another reason to oppose the bill: The housing crash of 2008 would have been far worse had investors not been allowed to purchase houses. They stepped in when no one was buying and filled many vacated houses with renters who had lost their homes. Yet the popular narrative is that this was some kind of evil takeover.
Discriminatory bills appeal to the far left, too. Even socialists have gotten in on the act: New York Sen. Zohran Mamdani has written a measure to force two nonprofits, New York University and Columbia University, to pay property taxes across the board (they already pay taxes on their commercial holdings).
Mamdani’s rationale is that NYU and Columbia own a lot of property, and taxing it would help fund the City University of New York.
What about other schools and the thousands of other nonprofits that own property in New York? The big hospitals, whose executives make millions? The land-rich Catholic Church? Museums, charities, service providers, trade organizations, political clubs? Would lawmakers go after them next?
Fellow nonprofits should come to the defense of NYU and Columbia. Homeowners and renters should stand up for the universal right to buy single-family homes. People of all races and ethnicities should rally against Florida’s law targeting the Chinese and several other nationalities, as some did last week.
If they don’t, these bills would set a dangerous precedent. Eventually, the folks who remained silent would be targeted.
At that point, to paraphrase Martin Niemöller, no one would be left to speak out for them.