“We have banned China from purchasing land in Florida,” Florida Governor Ron DeSantis declared during this month’s Republican presidential debate. The audience erupted in applause.
The laziest and most reprehensible way to gain power is to paint minority groups as enemies of the state, as DeSantis did when he signed Florida Senate Bill 264. The bill banned nearly all real estate purchases by Chinese people and China-based companies.
It also restricted real estate investments by people with ties to Venezuela, Russia, Iran and other countries, and prohibited the use of Chinese capital to finance projects in the state.
DeSantis knew SB 264 would appeal to the far right. However, populist and discriminatory real estate legislation is gaining momentum in the Democratic and socialist camps of the political spectrum as well. More details later.
Lennar has already delayed at least two developments because of Florida law. Industry heavyweights including Steve Ross’ affiliates, Barry Sternlicht’s Starwood Capital and the Real Estate Roundtable are trying to roll back the policy. They think it’s bad for business, that’s undeniable.
But as Mae Ngai explains in a New York Times op-ed, things are worse than that. Ngai points out that in the 1950s, no one in northern New Jersey wanted to sell their Chinese parents’ land to build a house, and that in the 19th and 20th centuries, real estate was sold to Asians, blacks, and Jews. It was a reminder of the industry’s systemic discrimination.
No sane person would be proud of these policies and make a disgusted face. So why condone Florida’s SB 264 now?
Chinese buyers and investors have sometimes been an important source of financing for the U.S. commercial real estate and luxury goods markets. Alarmists warned in the 2000s and 2010s that the Chinese were “taking over” the country. Has anyone seen the Chinese flag flying over government buildings? What we’ve seen is that many of these investments lose money and the Chinese exit. . That is capitalism.
Even dishonest politicians used to shout that the Chinese were buying Treasury notes. It was a great applause, but China only held 6 percent of our debt. Additionally, when investors buy Treasury securities, they fund our spending and push down interest rates. A country that cannot sell its debt is a country in trouble.
Meanwhile, on the center-left of American politics, two Democratic members of Congress this month announced legislation that would ban corporations, partnerships and real estate investment trusts that manage investor money from owning single-family homes.
The name of the House sponsor is, ironically, Adam Smith. The legendary economist who championed the power of competitive markets to help the working class must be turning over in his grave.
At first glance, this law makes no sense. First, why would hedge funds be prohibited from owning single-family homes, but not apartments? A home is a home, no matter its shape or size.
Second, hedge fund buyers of single-family homes expand rental options for consumers. After all, many Americans want to rent their homes. You may not be able to afford the down payment, you may not qualify for a mortgage, or you may not want to pay the maintenance costs, taxes, and insurance. You may be expecting to move in a few years, or you may be afraid of losing your job or being foreclosed on. All are great reasons to rent.
Mr. Smith’s bill is premised on unproven claims that private equity is gobbling up too many homes, driving up prices for prospective buyers, especially in neighborhoods of color. However, the majority of single-family homes are privately owned. They must have the right to sell to any buyer, including Venezuelans, Chinese, and investors.
Losing the ability to rent homes would exclude renters from some of the best neighborhoods and schools in the country. It’s a shame that apartment buildings are not allowed in these suburbs, but until they are, they should be available for rent. Congressional legislation would significantly block that.
Renters are more likely to be people of color than owners. This bill perpetuates racial segregation by keeping suburbs of lily-white single-family homes for the exclusive use of homeowners.
Another argument against this bill is that the 2008 housing crash would have been much worse if investors were not allowed to buy homes. They stepped in when no one would buy, filling many vacant properties with homeless renters. However, the prevailing theory is that this was some kind of evil takeover.
Discrimination legislation is also attractive to the far left. Even socialists have gotten in on the act, with New York State Senator Zoran Mamdani authoring a bill that would force two nonprofit institutions, New York University and Columbia University, to pay property taxes across the board (they already pay taxes on commercial property).
Mamdani’s rationale is that New York University and Columbia University own a lot of real estate, and taxing it would help fund the City University of New York.
What about other schools and the thousands of other nonprofits that own real estate in New York? What about the executives at major hospitals making millions? A Catholic church with rich land? Museums, charities, service providers, trade associations, political clubs? Will lawmakers go after them next?
Our nonprofit friends should defend New York University and Columbia University. Homeowners and renters should assert their universal right to purchase a single-family home. People of all races and ethnicities should come together, as some did last week, against Florida’s law targeting Chinese people and several other nationalities.
Otherwise, these bills would set a dangerous precedent. Eventually, those who remained silent will be targeted.
And, in the words of Martin Niemöller, there will be no one left to speak up on their behalf.