Governor Kathy Hochul today made a stop in Rochester to highlight her 2025 State of the State proposal to give more families an opportunity to become homeowners by disincentivizing institutional investors from buying up one- and two-family homes across New York State. The Governor’s proposed legislation will require a 75-day waiting period before institutional investors that own 10 or more single- and two-family properties and have $50 million in assets can make an offer on or buy one- or two-family homes. Additionally, Governor Hochul proposed reducing the opportunity for these institutional investors to take advantage of tax code provisions that make these investments in single- and two-family homes more lucrative by generally denying these entities the ability to utilize depreciation tax or most interest deductions on these properties.
“We need to level the playing field and make sure that institutional investors are not taking away opportunities from individuals and families who have spent their lives saving to become homeowners,” Governor Hochul said. “New York is the best state to start a family, and I am always committed to taking action to ensure that homeownership becomes more attainable for New Yorkers.”
Hedge funds, private equity firms and other institutional investors have played an increasingly significant role in the single-family and two-family housing market in recent years. These large entities can often outbid prospective homeowners with all cash offers and fast track their ownership by waiving inspections, appraisals and other common prerequisites that traditional homebuyers cannot. The rise in digital technologies have further paved the way for these entities to purchase single-family and two-family homes, allowing them to monitor real estate markets and move quickly to identify, evaluate and make offers on properties that fit their criteria.
Nationally, private equity firms own more than 500,000 homes. According to some estimates, private equity firms are expected to own up to 40 percent of the single-family rental market by 2030. When large investors hold a disproportionate share of a local housing market it removes opportunities for homeownership, exacerbating the existing scarcity and driving up prices for remaining homes on the market. These consequences are felt most intensely by first-time and low- or moderate-income homebuyers. This issue is apparent in cities such as Rochester, where it has been reported that hundreds of homes have been purchased by institutional investors. To help level the playing field and increase the opportunities for everyday individuals and families to purchase a home, Governor Hochul is proposing legislation to disincentivize large investment entities from cornering one- and two-family homes en masse, and will require a 75-day waiting period for institutional investors to make an offer on one- or two-family homes. Under the proposal, violators would face stiff penalties of up to $250,000 per illegal offer.
Additionally, the Governor proposed reducing the opportunity for institutional investors to take advantage of tax code provisions that make these investments in single- and two-family homes more lucrative by generally denying these entities the ability to utilize depreciation tax or interest deductions with respect to these properties. Covered investors could only claim interest deductions for homes that support the market by being sold to affordable housing nonprofits or individual homebuyers. If these measures are approved by the state Legislature, New York State would create a nation-leading model that disincentivizes institutional investors from buying up homes.
Buying a home is one of the biggest investments most families make and is one of the top ways for individuals and families to build generational wealth. However, buying a home has become increasingly more difficult because the housing supply is scarce, creating competition and inflating prices. As a part of Governor Hochul’s 2025 State of the State, the Governor also proposed $100 million to build more starter homes and support first time homebuyers with down payment assistance, along with measures that will help create more homeownership opportunities throughout that state. These proposals build on the Governor’s commitment to addressing New York’s housing crisis by ensuring that even more New Yorkers can reach the financial milestone of purchasing a home.
New York State Homes and Community Renewal Commissioner RuthAnne Visnauskas said, “Deep-pocketed investors cannot be allowed to swoop in with instant cash offers on one and two-family homes that take houses off the market before everyday New Yorkers even get a chance to take a tour, let alone make an offer. This is a growing trend that contributes to the housing shortage, drives up prices, and keeps the American dream of homeownership out of reach for too many New York families. The Governor's proposals will ensure that New Yorkers have a fair shot when it comes to owning a home and building generational wealth.”
Rochester Mayor Malik Evans said, “It is crucial to protect the American dream of homeownership before it’s swept into the net of faceless investors. Cities like Rochester are witnessing a takeover of their neighborhoods with more and more single-family homes and duplexes being purchased by institutional investors that literally tout their ability to acquire ‘large scale portfolios’ of housing stock. By purchasing these properties in bulk, they reduce the supply of affordable homes for first-time homebuyers, driving up prices and making it harder for moderate-income households to enter the market. Governor Hochul’s common-sense proposals put the interests of residents who work hard and save for years to purchase their first home and build generational wealth ahead of deep-pocketed housing speculators who have no interest in the long-term health and stability of our neighborhoods.”
Greater Rochester Housing Partnership Inc. President Theodora Finn said, “The Greater Rochester Housing Partnership and Rochester Housing Development Fund Corporation have a long history of providing quality, affordable homeownership opportunities to first-time homebuyers. In recent years, the housing market in Rochester and Monroe County has become increasingly competitive making it harder for homebuyers to achieve their goals. Proactive strategies, like those proposed by Governor Hochul, that level the playing field for homebuyers to compete with investors will help ensure homeownership is an option for those in our community who have worked hard to enjoy the stability and financial benefits it can offer.”
Governor Hochul’s Housing Agenda
Governor Hochul is committed to addressing New York’s housing crisis and making the State more affordable and more livable for all New Yorkers. As part of the FY25 Enacted Budget, the Governor secured a landmark agreement to increase New York’s housing supply through new tax incentives for Upstate communities, new incentives and relief from certain state-imposed restrictions to create more housing in New York City, a $500 million capital fund to build up to 15,000 new homes on state-owned property, an additional $600 million in funding to support a variety of housing developments statewide and new protections for renters and homeowners. In addition, as part of the FY23 Enacted Budget, the Governor announced a five-year, $25 billion Housing Plan to create or preserve 100,000 affordable homes statewide, including 10,000 with support services for vulnerable populations, plus the electrification of an additional 50,000 homes. More than 55,000 homes have been created or preserved to date.