Governor Newsom unveiled a crackdown on large corporations that buy up single-family homes the same week President Trump announced a similar move.

SAN DIEGO — In his final State of the State address, Governor Gavin Newsom vowed to crack down on Wall Street-backed corporations that are making homeownership unaffordable for working families.

This comes as California lawmakers are also advancing legislation to ban large institutional investors from purchasing additional single-family homes.

Assembly Bill 1240, proposed and authored by State Assembly Member Alex Lee, would prohibit institutional investors that already own more than 1,000 single-family homes from purchasing any additional properties to convert into rentals. The bill has already passed the full Assembly and now awaits approval from the state Senate before it goes to Newsom’s desk for his signature.

The push to restrict corporate landlords has gained unexpected traction, with President Trump announcing on social media that he plans to ban large institutional investors from buying single-family homes on the federal level and will call on Congress to codify the restriction.

“These investors are crushing the dream of home ownership and forcing rents too damn high for everybody else,” said Newsom during his State-of-the-State address last week.

Newsom highlighted the problem of large corporations becoming major landlords in California cities. 

“I think it is shameful that we allow equity firms in Manhattan become some of the biggest landlords here in our cities in California,” he said.

The issue centers on the financial advantage large corporations have over individual homebuyers. Corporate investors with deep pockets can purchase houses outright with cash, giving them a significant edge over ordinary buyers seeking mortgages.

“It is already hard enough for an American family, a California family, to save up enough to compete for a bid on a single-family house. Now imagine competing with a corporation — you’re not going to have enough money to do so,” Lee said.

The proposed statewide legislation has faced pushback from rental and realtor associations, including the National Rental Home Council, which argues the bill unfairly targets large investors and could harm the rental housing supply.

“We just don’t think that this bill is touching on a real problem in California, and instead we should be looking at how we can increase the housing stock, which is part of what these companies are working on,” said Jim Lites of the National Rental Home Council.

According to the California Research Bureau, approximately 3 percent of single-family homes in California are owned by holders of at least 10 properties.

Lee dismissed critics who cite this low percentage as a reason to oppose the legislation. 

“It can be made to look small, but in reality, we know that if one person owns one house, and a corporation owns a thousand, there is already a power and economic disparity,” he told CBS 8.

While both Newsom and Trump have signaled their intent to restrict corporate investors, neither has provided detailed implementation plans. Newsom indicated during his address that the effort may require changing California’s tax code but offered no specifics. 

Trump was similarly vague in his social media announcement but promised to provide more details when he speaks next week at the World Economic Forum annual meeting in Davos, Switzerland.