A bill signed into law this week prevents corporations from scooping up too much of California’s valuable housing stock — a shift that could help shape how the state’s housing market weathers the COVID-fueled economic crisis.
Gov. Gavin Newsom signed SB 1079 into law this week — one of several housing protection or production-focused bills to make it off his desk. SB 1079, which was inspired by the Oakland activist group Moms 4 Housing, prevents corporations from snapping up bundles of homes during foreclosure auctions. Instead, it gives tenants and families an opportunity to buy them individually.
With the coronavirus pandemic pushing national mortgage default rates higher than they’ve been in years, the new state law could prove especially impactful.
“SB 1079 sends a clear message to Wall Street: California homes are not yours to gobble up; we won’t tolerate another corporate takeover of housing,” the bill’s author, Sen. Nancy Skinner, D-Berkeley, wrote in a news release. “Under SB 1079, families will have a fair chance at homeownership, and our local governments will have new tools to stop blight.”
Newsom this week also signed AB 3308, which allows school districts to build affordable housing for teachers and school employees on district-owned land, using low-income tax credits. And he signed SB 940, which lets San Jose make zoning changes that allow for more high-density housing in the city’s urban core, while keeping certain open spaces off-limits to development. But he vetoed AB 69, which would have created a state program to help homeowners finance new in-law units.
With the new law targeting corporate investors, the goal is to prevent a repeat of what happened in the aftermath of the Great Recession of 2007-2008 — when millions of families lost their homes to foreclosure, and Wall Street investment firms swooped in and bought groups of homes for rock-bottom prices. The effects can still be felt today. Corporations continue to control tens of billions of dollars in housing nationwide, which has led to fewer residents owning their homes, and more renting.
Today, with unemployment through the roof thanks to pandemic-related shelter-in-place orders, experts worry history could soon repeat itself. More than 8% of mortgages on one to four-unit residential properties were delinquent in the second quarter of 2020 — the highest rate in nine years, according to a national survey by the Mortgage Bankers Association. California generally has been seeing lower rates than many other states, but experts warn that doesn’t mean it’s immune from a potential foreclosure crisis when foreclosure moratoria expire.
OAKLAND, CA - SEPTEMBER 1: Moms 4 Housing activists hold a Board of SuperMOMS protest outside the County of Alameda Administrations building in Oakland, Calif., on Tuesday, Sept. 1, 2020. (Anda Chu/Bay Area News Group)
OAKLAND, CA - SEPTEMBER 1: Meloday Sage attends a Moms 4 Housing Board of SuperMOMS protest outside the County of Alameda Administrations building in Oakland, Calif., on Tuesday, Sept. 1, 2020. (Anda Chu/Bay Area News Group)
OAKLAND, CA - FEBRUARY 13: Moms 4 Housing members Misty Cross, left, Tolani King, second from left, and Dominique Walker, right, meet with civil rights attorney Walter Riley, center, outside the Wiley W. Manuel Courthouse on Thursday, Feb. 13, 2020, in Oakland, Calif. Charges against two of their members and two supporters will not be filed by the district attorney in relation to arrests made during an eviction in January. (Aric Crabb/Bay Area News Group)
OAKLAND, California - January 20: District 2 Councilmember Nikki Fortunato Bas speaks at a press conference where the Moms 4 Housing activist group announced a deal it made with Wedgewood, the property owner of the Magnolia Street home the group occupied for 58 days, at Frank H. Ogawa Plaza on Monday. (Dylan Bouscher/Bay Area News Group)
OAKLAND, California - January 20: Moms 4 Housing member Dominique Walker holds Amir, 1 year old, before announcing a deal between the housing rights group and Wedgewood, the property owner of the home the activists squatted in for nearly 60 days, at Frank H. Ogawa Plaza on Monday. (Dylan Bouscher/Bay Area News Group)
OAKLAND, CA – JANUARY 13: Council member Rebecca Kaplan, second from left, Fred Hampton Jr., center, and Carroll Fife, right, address a group of Moms 4 Housing supporters on Monday, Jan. 13, 2020, in Oakland, Calif. Members of the group Moms 4 Housing have been illegally occupying a vacant home in Oakland since November. (Aric Crabb/Bay Area News Group)
OAKLAND, CA - JANUARY 14: Supporters of the "Moms 4 Housing" members stand in front of the home the group illegally occupied in West Oakland before being evicted and arrested in Oakland, Calif., on Tuesday, Jan. 14, 2020. (Doug Duran/Bay Area News Group)
OAKLAND, CA - JANUARY 14: Misty Cross talks to the crowd of supporters and the media as she stands in front of the house she and other "Moms 4 Housing" members illegally occupied in West Oakland before being evicted in Oakland, Calif., on Tuesday, Jan. 14, 2020. (Doug Duran/Bay Area News Group)
DUBLIN, CA - JANUARY 14: Moms 4 Housing supporters wait outside of the Santa Rita Jail in Dublin, Calif., on Tuesday, Jan. 14, 2020. Several of the women activists occupying a vacant house in West Oakland were arrested in a pre-dawn raid Tuesday, and then set free on bail. (Jane Tyska/Bay Area News Group)
An Alameda County deputy escorts Moms 4 Housing founder Misty Cross away in handcuffs as four people are removed from a home on Magnolia Street in Oakland, Calif. on Tuesday, January 14, 2020. (Marisa Kendall/Bay Area News Group)
Tolani King is arrested Tuesday morning as deputies enforce the eviction of Moms 4 Housing members from the West Oakland house they had been occupying on Tuesday, Jan. 14, 2020. (Marisa Kendall/ Bay Area News Group)
OAKLAND, CA - Moms 4 Housing founder Dominique Walker struggles with deputies as they arrest her former housemates who had been squatting in a West Oakland house since November. (Marisa Kendall/ Bay Area News Group)
OAKLAND, CA - Moms 4 Housing founder Dominique Walker, left, hangs out with supporters in the dining room of a vacant house in West Oakland, Calif., on Monday, January 13, 2020. Members of the group have been illegally occupying a vacant home since November to bring attention to affordable housing issues. (Jane Tyska/Bay Area News Group)
OAKLAND, CA - JANUARY 13: Delanae Johnson, 16, the daughter of Moms 4 Housing's Misty Cross, checks her phone in a vacant house in West Oakland, Calif., on Monday, January 13, 2020. Members of the group have been illegally occupying a vacant home since November to bring attention to affordable housing issues. (Jane Tyska/Bay Area News Group)
OAKLAND, CA - Destiny Johnson, 12, bottom, and her sister Demi Johnson, 5, the daughter of Moms 4 Housing's Misty Cross, spend time in their room in a vacant house in West Oakland, Calif., on Monday, January 13, 2020. Members of the group have been illegally occupying a vacant home since November to bring attention to affordable housing issues. (Jane Tyska/Bay Area News Group)
OAKLAND, CA - Oakland Mayor Libby Schaaf, left, talks with Moms 4 Housing member Tolani King, right, during a press conference announcing revisions to Senate Bill 50 the "More HOMES Act" on Tuesday, Jan. 7, 2020 in Oakland, Calif. (Aric Crabb/Bay Area News Group)
HAYWARD, CA - A Moms 4 Housing supporter holds a sign on the steps of the Hayward Hall of Justice on Monday, Dec. 30, 2019, in Hayward, Calif. Members of the group Moms 4 Housing attended a court hearing after occupying a vacant home in Oakland since November. (Aric Crabb/Bay Area News Group)
OAKLAND, CA - Moms 4 Housing member Dominique Walker, 34, (left), activist and 2018 Oakland mayoral candidate Cat Brooks (right) and other activists react as supporters chant "power to the moms." (Marisa Kendal/Bay Area News Group)
OAKLAND, CA - SEPTEMBER 1: Moms 4 Housing activists hold a Board of SuperMOMS protest outside the County of Alameda Administrations building in Oakland, Calif., on Tuesday, Sept. 1, 2020. (Anda Chu/Bay Area News Group)
OAKLAND, CA - SEPTEMBER 1: Meloday Sage attends a Moms 4 Housing Board of SuperMOMS protest outside the County of Alameda Administrations building in Oakland, Calif., on Tuesday, Sept. 1, 2020. (Anda Chu/Bay Area News Group)
OAKLAND, CA - FEBRUARY 13: Moms 4 Housing members Misty Cross, left, Tolani King, second from left, and Dominique Walker, right, meet with civil rights attorney Walter Riley, center, outside the Wiley W. Manuel Courthouse on Thursday, Feb. 13, 2020, in Oakland, Calif. Charges against two of their members and two supporters will not be filed by the district attorney in relation to arrests made during an eviction in January. (Aric Crabb/Bay Area News Group)
OAKLAND, California - January 20: District 2 Councilmember Nikki Fortunato Bas speaks at a press conference where the Moms 4 Housing activist group announced a deal it made with Wedgewood, the property owner of the Magnolia Street home the group occupied for 58 days, at Frank H. Ogawa Plaza on Monday. (Dylan Bouscher/Bay Area News Group)
OAKLAND, California - January 20: Moms 4 Housing member Dominique Walker holds Amir, 1 year old, before announcing a deal between the housing rights group and Wedgewood, the property owner of the home the activists squatted in for nearly 60 days, at Frank H. Ogawa Plaza on Monday. (Dylan Bouscher/Bay Area News Group)
OAKLAND, CA – JANUARY 13: Council member Rebecca Kaplan, second from left, Fred Hampton Jr., center, and Carroll Fife, right, address a group of Moms 4 Housing supporters on Monday, Jan. 13, 2020, in Oakland, Calif. Members of the group Moms 4 Housing have been illegally occupying a vacant home in Oakland since November. (Aric Crabb/Bay Area News Group)
OAKLAND, CA - JANUARY 14: Supporters of the "Moms 4 Housing" members stand in front of the home the group illegally occupied in West Oakland before being evicted and arrested in Oakland, Calif., on Tuesday, Jan. 14, 2020. (Doug Duran/Bay Area News Group)
OAKLAND, CA - JANUARY 14: Misty Cross talks to the crowd of supporters and the media as she stands in front of the house she and other "Moms 4 Housing" members illegally occupied in West Oakland before being evicted in Oakland, Calif., on Tuesday, Jan. 14, 2020. (Doug Duran/Bay Area News Group)
DUBLIN, CA - JANUARY 14: Moms 4 Housing supporters wait outside of the Santa Rita Jail in Dublin, Calif., on Tuesday, Jan. 14, 2020. Several of the women activists occupying a vacant house in West Oakland were arrested in a pre-dawn raid Tuesday, and then set free on bail. (Jane Tyska/Bay Area News Group)
An Alameda County deputy escorts Moms 4 Housing founder Misty Cross away in handcuffs as four people are removed from a home on Magnolia Street in Oakland, Calif. on Tuesday, January 14, 2020. (Marisa Kendall/Bay Area News Group)
Tolani King is arrested Tuesday morning as deputies enforce the eviction of Moms 4 Housing members from the West Oakland house they had been occupying on Tuesday, Jan. 14, 2020. (Marisa Kendall/ Bay Area News Group)
OAKLAND, CA - Moms 4 Housing founder Dominique Walker struggles with deputies as they arrest her former housemates who had been squatting in a West Oakland house since November. (Marisa Kendall/ Bay Area News Group)
OAKLAND, CA - Moms 4 Housing founder Dominique Walker, left, hangs out with supporters in the dining room of a vacant house in West Oakland, Calif., on Monday, January 13, 2020. Members of the group have been illegally occupying a vacant home since November to bring attention to affordable housing issues. (Jane Tyska/Bay Area News Group)
OAKLAND, CA - JANUARY 13: Delanae Johnson, 16, the daughter of Moms 4 Housing's Misty Cross, checks her phone in a vacant house in West Oakland, Calif., on Monday, January 13, 2020. Members of the group have been illegally occupying a vacant home since November to bring attention to affordable housing issues. (Jane Tyska/Bay Area News Group)
OAKLAND, CA - Destiny Johnson, 12, bottom, and her sister Demi Johnson, 5, the daughter of Moms 4 Housing's Misty Cross, spend time in their room in a vacant house in West Oakland, Calif., on Monday, January 13, 2020. Members of the group have been illegally occupying a vacant home since November to bring attention to affordable housing issues. (Jane Tyska/Bay Area News Group)
OAKLAND, CA - Oakland Mayor Libby Schaaf, left, talks with Moms 4 Housing member Tolani King, right, during a press conference announcing revisions to Senate Bill 50 the "More HOMES Act" on Tuesday, Jan. 7, 2020 in Oakland, Calif. (Aric Crabb/Bay Area News Group)
HAYWARD, CA - A Moms 4 Housing supporter holds a sign on the steps of the Hayward Hall of Justice on Monday, Dec. 30, 2019, in Hayward, Calif. Members of the group Moms 4 Housing attended a court hearing after occupying a vacant home in Oakland since November. (Aric Crabb/Bay Area News Group)
OAKLAND, CA - Moms 4 Housing member Dominique Walker, 34, (left), activist and 2018 Oakland mayoral candidate Cat Brooks (right) and other activists react as supporters chant "power to the moms." (Marisa Kendal/Bay Area News Group)
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But if delinquencies lead to another wave of foreclosures, under SB 1079, many of those homes may stay in the hands of tenants, families and nonprofits instead of going to corporate investors.
The new law prevents multiple homes from being bundled together in a foreclosure auction and sold to a single buyer. Instead, they must be sold individually. And after the initial bids at a foreclosure auction are received, tenants, families, local governments, affordable housing nonprofits and community land trusts have 45 days to top the highest bid and buy the property.
Those rules apply to all residential properties of between one and four units, and will expire in five years.
Eliminating bundling is a huge step in the right direction, said Leah Simon-Weisberg, legal director for tenants rights organization Alliance of Californians for Community Empowerment (ACCE).
“One of the pieces that’s missing, obviously, is how are we going to fund keeping these properties in the community?” she said. “Because having to match the highest bidder is difficult without funding.”
The new law has drawn support from both sides of the issue. Oakland-based attorney Daniel Bornstein, who represents landlords in tenant disputes, said the no-bundling rule could benefit his clients too.
“Individuals who have a little bit of money can come and play in a way that normally you would not be able to,” he said.
The law also attempts to encourage landlords to use their properties. It allows cities to double the amount they fine owners for abandoned properties deemed a “blight” on the neighborhood — authorizing charges of up to $2,000 per day.
The law, which goes into effect Jan. 1, was inspired by Moms 4 Housing — a group of activists and unhoused or insecurely housed mothers who took over a vacant, investor-owned home on Magnolia Street in West Oakland last year. The group illegally occupied the house for two months before getting evicted by the Alameda County Sheriff’s Office. But the movement garnered national attention and support, and in January, the property owner — Wedgewood — agreed to let a local community land trust buy the property and give it back to the moms and activists.
Moms 4 Housing also inspired Oakland and Berkeley to introduce policies that would give tenants and affordable housing nonprofits first dibs to buy properties that come up for sale. San Francisco already has a similar policy.
