NC proposed bill to outlaw institutional landlords

[Chris Martin]

This bill (short title Home Ownership Market Manipulation) will not pass, but it's interesting that some NC state house members put in writing and propose limiting real estate rental ownership to 100 or less properties. The main text is below:

§ 75-152. Impermissible ownership quotas

It is unlawful for a person, including affiliates of the person, to purchase a single-family home in a qualifying county for a purpose other than use by the person as a residence if the person, including affiliates of the person, owns 100 or more single-family homes in qualifying counties that are used primarily for rental purposes.

What I see is a proposed statute (an act) that violates free trade and commerce that is covered by NCGS 75-1 and NCGS 75-2. I put the text after this paragraph. What I also see is a signal that the build-to-rent model is still deemed (by the NC authors of this faulty legislation) viable in NC, since this bill explicitly states, "purchase a single-family home" as opposed to "build or purchase a single-family home". This blog post from The School of Government at UNC Chapel Hill states that zoning may regulate land use, but not the form of ownership under current laws. 

§ 75-1. Combinations in restraint of trade illegal.

Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal. Every person or corporation who shall make any such contract expressly or shall knowingly be a party thereto by implication, or who shall engage in any such combination or conspiracy shall be guilty of a Class H felony.

This bill will go nowhere. It should end up in the same pile as the Rental Registration mess that the NC legislature overturned in 2019. The wording at the state level is now (in § 160D-1207. Periodic inspections):

(c) In no event may a local government do any of the following: (i) adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission under Article 11 or Article 12 of this Chapter from the local government to lease or rent residential real property or to register rental property with the local government, except for [gross code violations]

Why are they bringing this bill to the floor now? My take: housing affordability is really bad, and people are #1) priced out of home ownership, #2) pissed off, #3) complain to the politicians. High mortgage interest rates, high housing costs, and high new home construction prices have created an environment for politicians to exploit. About the only 'action' local politicians can take is to interfere with commerce by artificially limiting real property ownership. 100 houses. Seems arbitrary. Why not 110? 

Let me take a step back: 12 years ago, house prices were so low, appraisers didn't know how to handle it. This is what I wrote on BP on 7/27/2011: 

Then you have issues like this, directly from a current appraisal that basically says there is no way to value the property: "The problem with the MC [sic] data presentation is that the subject's submarket is so small, wild fluctuations can appear from period to period... No truly like kind sales were available from within the past 12 months... This market has effectively collapsed over the previous 12 to 18 months... price for fixerupper properties have dropped to lows not seen in a generation"

My point is that real estate markets change. A dozen years from now, who knows what the market will look like. Think about this. If this proposed (faulty) bill existed in 2011, the local (Raleigh area) real estate market would never have benefited from the mass buying of American Homes 4 Rent that, literally, transformed the market in 2013. I wrote about that on BP as well. 

I believe in sensible regulations. This proposed bill is nonsense. The Texas bill that sponsors Discrimination by National Origin at the state level is equally nonsensical.