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Minnesota Legislators Seeking to Reduce Investor Ownership of Local Housing

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As Minnesota Women’s Press wrote about in the February Housing issue, one of the concerns has been the non-local corporate ownership of Minnesota homes, holding them vacant or under poor management by landlords.

Legislators and community members introduced legislation in a March 6 press conference aimed at limiting the ability of large investment corporations from purchasing single-family homes to turn them into rental properties.

Esther Agbaje. Courtesy photo

“With the measures in the bill,  we look to create a balanced market where every Minnesota has an equitable opportunity at achieving home ownership,” said Rep. Esther Agbaje (D-59B). “By limiting the amount that corporations can purchase for rentals in this market, we want more homes available for people. And while corporate ownership isn’t the only factor driving up housing costs, it is one. And we believe that if we take action, it can start to bring some of those prices down.”

Agbaje added: “Part of the reason we brought this bill is because, unfortunately, after the collapse of the housing market in 2008, we’ve seen some distortions in the market and we’re seeing those effects today. Corporations began entering the single-family rental market, perhaps as a way to stabilize their own portfolios, but over time this has proven detrimental in many parts of the country including here in Minnesota, where individual families are priced out of the buyer market because of all the cash bids that many of these corporations use to purchase large numbers of properties.”

Agbaje was joined by House Housing Finance and Policy Chair Michael Howard (D-51A) and Senator Liz Bolden (D-25), the author of the Senate version of the bill, Senate File 365. Also at the press conference was AsaleSol Young, executive director of Urban Homeworks, and B Rosas, a volunteer with Defend Glendale & Public Housing Coalition. Local nonprofit Urban Homeworks does housing development and provides pathways to homeownership. Defend Glendale & Public Housing Coalition is a grassroots community group working to “keep public housing public.”

“While this issue of investor-owned single-family homes impacts all Minnesotans, the most impacted today are those who have historically been left out of the opportunity of stability and wealth-building through homeownership for generations,” said Young, who noted that North Minneapolis has 20 percent investor ownership. “Not only does this prevent many BIPOC families from building wealth through homeownership, but it extracts income from hardworking Minnesota families and puts it into the pockets of corporations who do not reside in those communities and too often do not even reside in the State of Minnesota.

“House File 685 would give all Minnesotans the fighting chance they deserve to achieve family housing stability as well as the dream of homeownership.”

The Number of Corporation Owners in Minnesota

According to a report shared by the Federal Reserve Bank of Minneapolis, published in January 2023, as of 2022, investors owned 3.4 percent, or 25,000, of the detached, single-family homes in the Twin Cities metropolitan region. This equates to about “54 percent of all single-family rentals in the market,” said Sen. Bolden.

One-third of the properties owned by corporations are in Minneapolis and Saint Paul. In Minneapolis alone, 30 percent of single-family homes are owned by investors, particularly downtown and in Northeast. In Fridley and Hopkins, close to 25 percent of single-family houses are owned by an absent investor.

“Additionally, local ownership of homes by residents or smaller landlords can lead to improved neighborhood stability, residents who own have a vested interest in maintaining the community, fostering increased investment in property upkeep and a reduced tenant turnover,” said Agbaje. “A bill like this can keep more homes on the market available for actual people and bring us to a time when homeownership was closer in reach for more families.”

Rosas talked about how the conversion of single-family homes is impacting public housing tenants, who pay 30 percent of their income toward rent. When these units are transferred to corporate developers, they are often demolished and converted to housing that is no longer affordable to these residents. Elliott Twins development near the University of Minnesota, for example, was renovated, then sold to for renovation, which brings in ownership by corporate developers, such as Royal Bank of Canada.

“So far this has impacted over 736 families in Minneapolis,” Rosas said. “These conversions do nothing to help families in Minnesota and they create barriers for them to access housing. On top of that, they have led to extreme rent increases and the displacement of residents, especially public housing residents who are elderly, Black, undocumented, and extremely poor.”

Sen. Bolden said, “We have heard horror stories about absent landlords who let gas leaks go unfixed for days and lucrative rent increases that price families out of their homes. Single-family homes should not be used as financial assets to increase shareholder value. A home is a family’s anchor to a neighborhood, an investment in a community, and an opportunity for economic stability and prosperity.”

Rep. Howard offered the scenario of a family that has been searching for a home they can afford in a community they desire to be part of, who puts in a competitive bid. “And they lose out. They find out they lost to a hedge fund from New York City, that makes an all-cash offer to purchase the house. That’s what this bill is seeking to address.”

Next Steps

House File 685 was heard in the House Housing Finance and Policy committee on March 6. It was re-referred to the House Judiciary Finance and Civil Law committee. Senate File 365 was also introduced in the 2023 legislative session. There is no update as to when it will be heard in its next committee, the Senate Judiciary and Public Safety.

The legislation calls for the state attorney general’s office to enforce the ban. A corporation found violating the law would have one year to divest from the property. If the corporation fails to sell the property, it would be sold through the foreclosure process in court.

The committee approved the bill on a 8-5 vote and it will be referred to the Judiciary Finance and Civil Law Committee.

Additional information and documents from the hearing are available on the committee webpage.

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