Does corporate ownership impact Bay Area housing prices?

But as the meeting progressed, legislative experts surfaced another factor exacerbating housing issues — the role of institutional investors and private equity firms.

“The legislature has done very little in trying to provide any sort of assistance or addressing this particular issue,” Dane Hutchings, founder and CEO of the California Public Policy Group, said. “There are major deficiencies here that simply aren’t being addressed. The go-to is to say, ‘well, local governments just need to plan more.’”

Hutchings said in many cases, large corporations, often backed by private equity, purchase the properties and leave them vacant — in part to increase scarcity and subsequently drive up home values — or use them as short-term rentals. It’s led to 700,000 owner-occupied single-family homes going off the market in California since 2010, he said.

Such corporate entities have received national criticism, including politicians on both the left and right. After the Great Recession, these firms purchased homes in record numbers, due to the high number of foreclosures, and subsequently converted them to rental properties. Across the country, residents of those neighborhoods started blaming them for increasingly unattainable housing prices, often citing the decrease in supply of for-sale homes, off-market transactions and all-cash offers.

In notoriously pricey places like the Bay Area, elected officials often run on platforms dedicated to tackling housing affordability challenges. Assemblymember Alex Lee, D-Milpitas, introduced legislation that would prohibit institutional investors that own more than 1,000 single-family homes from purchasing more properties and converting them into rentals; however, it didn’t go very far. Other bills that just call for more transparency of corporate home ownership are quickly killed as well, Hutchings said.

“Bills that seem to target local government tend to fly through the process, but bills that even acknowledge that there are other factors at play in the larger housing crisis don’t seem to get enough traction to advance or become law,” Hutchings said.

But other housing experts are skeptical of the claims that private equity and large institutional investors are significant drivers of high housing costs, especially on the Peninsula. After all, according to data from the California Research Bureau, less than 1% of single family homes in San Mateo County are owned by large property owners with 100 or more properties.

The housing vacancy rate in San Mateo County is about 7.4%, similar to the state and not far off from the national average, according to the U.S. Census Bureau American Community Survey data.

“This idea that corporations are buying up all these homes and leaving them vacant — you can see in the vacancy rates — is not true,” Jeremy Levine, policy manager at the Housing Leadership Council of San Mateo County, said. “The share of homes owned by corporations in total is not very big, but especially large corporations.”

Robert Pedro, owner of Signature Realty, said that Hutching’s other claim — that short-term rentals are a part of the issue — also doesn’t appear to be a major factor in high costs, not just because of their low numbers relative to total housing stock, but also because of the changing hotel landscape and high operational costs needed to operate Airbnb-like businesses.

“If you’re worried about a flood of Airbnbs, then it would drive the price down of the Airbnbs, and then the investor would be like, ‘It doesn’t make sense to do it here,’” he said. “An Airbnb business is tough to run. About 40% to 60% of your rent is going to cost, so you need to double the rent just to make it make sense, and that doesn’t always happen.”

One of the firms purchasing single-family homes in San Mateo County is Thomas James Homes, but rather than purchasing them to rent out — or keeping them vacant — the company typically purchases a house, demolishes it and rebuilds a much larger home, usually sold to new buyers. Its increased presence has drawn scrutiny from some Peninsula residents about the once-modest homes in their neighborhoods transforming into luxury houses that the typical resident can no longer afford.

While Pedro acknowledged that some residents could eventually get priced out of those neighborhoods, those smaller “starter homes,” often built between the 1940s and 1960s, are being replaced with modern condominiums and townhomes that don’t need significant updates or costly renovations.

“From a marketing standpoint, when I have a listing and it’s a two-bedroom, one-bathroom house, it takes a lot longer to get it done,” Pedro said.

The Thomas James Homes approach is different from some other corporate buyers, especially in environments that are less land-constrained and less pricey, such as the Sacramento and Central Valley regions. In those cases, the firms often buy a large number of homes concentrated in one geographic area and rent them out.

“Some investors may find our area a good place because of the appreciation, but that’s not most investors. They’re investing in areas that may not appreciate as much because they want a return on their cash,” Pedro said. “The cash flow way is where you’ll find most inventors in this space, because you can duplicate it.”

According to the Research Bureau data, Fresno, Tulare and Kern counties have the highest share of single-family homes owned by large companies, each one ranging between 5%-6%.

If Lennar, a major homebuilder, builds 400 homes that get purchased by a corporation, Pedro said, that can actually keep home prices down.

“If Lennar can sell those homes to one buyer, they’re instantly sold out, and Lennar gets their cash, and then they can build another development much faster than if they had to wait for the typical three- to five-year build-to-sell-out of those same homes,” he said.

Research, including a 2024 University of California, Berkeley, study, has shown that places with higher shares of single-family rental homes give lower- to moderate-income households access to those neighborhoods they otherwise wouldn’t have — which can lead to a host of other benefits, including better school districts and other economic opportunities.

However, the paper also noted that without building more housing stock, the number of for-sale homes decreases, which can drive up home prices.

The corporate skepticism gets to the heart of an issue that is not just about affordability but more specifically access to homeownership. After all, the amount of new apartment and condo units has increased significantly over the last several years, and even though most of those are rentals, the additional supply has helped lower condo prices, which have decreased by 3% between September 2019 to September 2025, according to Redfin data. Conversely, single-family homes, which comprise a tiny share of new housing construction, have seen prices increase by 14% over the same time period.

Despite welcoming the new multiunit housing, many city leaders and housing experts are starting to wonder if and when they’ll start seeing more for-sale units in their cities, whether they’re condos or houses.

According to U.S. Census Bureau American Community Survey data, 59% of occupied housing units in the county are owner-occupied, a little less than the 65% national average.

Mitch Speigle, Sequoia Real Estate Realtor, said the lack of new for-sale units is a concern — though the solution will be updating regulation to incentivize its construction, ranging from efficiency standards to defect liability laws — rather than banning corporate ownership.

“Investors purchasing homes to rent out is a very small slice of the more macro problem which is underbuilding and the lack of supply, so it feels more palpable because there is such a shortage,” Speigle said.

Hutchings said he’s aware that the number of Peninsula homes owned by corporate entities may not be incredibly high, but that’s even more of a reason why they shouldn’t have an issue with legislation that creates more transparency.

“If it’s so miniscule, then what’s wrong with transparency?” Hutchings said. “Why do they spend millions trying to stop these bills?”