- Mike Blount
- Communications Director
- (916) 812-6984
(SAN DIEGO, CA) – California housing speculation is hurting working class individuals and families, making it nearly impossible for them to purchase a home. Short-term investors have contributed to California’s housing crisis by buying homes and property across the state to sit on until they can sell them for a profit. Meanwhile, working class Californians are getting outbid by cash offers and are unable to borrow hundreds of thousands of dollars to compete or pay for new construction. Today, Assemblymember Chris Ward (D-San Diego) introduced AB 1771, the California Housing Speculation Act, to help make homes affordable again for the average Californian.
“Homes are places to live in. Homes help families preserve and grow their wealth. Homes aren’t a quick trade on the market – and this activity unchecked affects us all,” said Assemblymember Ward (D-San Diego).
The California Housing Speculation Act uses tax policy to target short-term investment and aims to change behavior so speculators are specifically putting their profits at risk and decide to invest elsewhere, leaving more doors open for traditional homeowners to have their bids accepted. By placing a 25% income surtax on the profits gained on a property’s appreciation within three years, a rate that would depreciate in full to year seven, the California Housing Speculation Act takes away the motivation for short-term interests, while leaving long-term homeowners without penalty.
The bill makes several exemptions for traditional homeowners, including first-time homebuyers, military service members who are ordered to move every few years, affordable housing properties and newer properties with inclusionary housing built in. It also includes properties where homeowners subdivide a lot and choose to stay on site.
Revenue collected through the California Housing Speculation Act would be placed in the “Speculation Recapture Community Reinvestment Fund.” The funds would then be allocated toward creating affordable housing, improving school districts and supporting community infrastructure.
California’s unique housing crisis requires a unique solution. The California Housing Speculation Act targets investor-buyers who are looking to make a quick profit at the expense of working class individuals and families. Without disincentives, investors will continue to contribute to the housing shortage and drive up home prices for everyone.