Private equity giants worsen California’s housing crisis. Why are we giving them public dollars?

For the better part of the last decade, California leaders of every conceivable political stripe have told us that addressing the state’s housing affordability crisis was a top priority.

A plethora of proposals soon followed: “by right” laws, environmental reforms and measures to expand construction of ADUs were suggested as strategies to boost supply. Cities that failed to build new units were sued. We passed laws to improve construction job quality so we could attract more of the skilled workers we need to do the building, and much, much more.  

Unfortunately, any impact of these well-intentioned efforts has been more than offset by inflationary spikes that have pushed the cost of housing further out of the reach for everyday working families, students, seniors and other vulnerable populations.

Accelerating this trend has been market power of private equity firms and hedge funds – massive, multibillion-dollar financial instruments buying up housing units with cash, then raising rents, evicting tenants and skimping on things like ordinary maintenance and pest control in order to maximize returns for shareholders.

Their market power has been augmented by their political power as major contributors to candidates, and against ballot measures designed to control rent increases.

It’s not just a problem in California anymore. The United Nations has now linked these instruments, such as Blackstone’s Real Estate Investment Trust, to a level of market distortion that’s created a global housing affordability crisis. Congress has introduced legislation to curb the practice, which comprised 28% of all U.S. home sales in 2022 alone, according to The Pew Charitable Trusts.

For employers, this dynamic only further antagonizes an already tight labor market. When workers are priced out of homes near their jobs, they often seek employment elsewhere.

Evidence from the University of California, the state’s third largest employer, suggests this is already happening. The UC’s vacancy rate has tripled in recent years, amid a decline in inflation-adjusted wages for many campus service and patient care jobs and a spike in the number of people who forced to commute long distances or sleep in their cars. 

Over the same period, the UC Board of Regents invested $4.5 billion to prop up Blackstone’s Real Estate Investment Trust, even though UC communities already cost 30% more than comparable campuses across the country on average, and the institution only houses 38% of its students.

In doing so, UC officials called the investment – which included the pension funds of UC employees being priced out by private equity giants – “a capitalistic win for retirees.”

Really?

It bears repeating that the UC is a public institution, supported with billions of California taxpayer dollars each year, and millions more to support food banks for students struggling with the cost of living. By any objective standard, private equity landlords such as Blackstone are making California’s (and the nation’s) affordability crisis worse. 

The university’s Board of Regents includes Lt. Governor Eleni Kounalakis and State Superintendent of Public Instruction Tony Thurmond. Both are running for governor in 2026 and claimed they are in favor of more affordable housing. Yet as members of the UC board, they failed to stop the institution from making investments that benefit investors more than UC workers and students.  

In fairness, UC is not the only public system investing in institutions that accelerate the affordability crisis. Other public pension funds in California – and elsewhere – have made similar choices.

But shouldn’t public investments align with our stated public policy goals? Shouldn’t we expect that – in the case of Kounalakis and Thurmond – that they at least align with stated campaign priorities? 

The first test of leadership for the people making these decisions – and seeking to make even more consequential decisions for our state – should be not making our biggest problem worse. The apparent willingness of aspiring politicians to go along with these investments should serve as a flashing red light for the electorate.

The alternative, of course, would be for entities such as the UC Board of Regents to consider the well-documented concerns of their workers and students and reverse course, as they once did with apartheid in South Africa, or as some have done with the fossil fuel industry. That would mean immediately divesting from private equity giants like Blackstone and investing in housing that actually helps students and workers.

California can no longer afford leaders who are unwilling to attack our biggest problems head on. 

For the record: A previous version of this commentary incorrectly linked Senate President pro Tempore Emeritus Toni Atkins to the current UC Board of Regents. She has not served on the board since 2016.