Gavin Newsom's Latest Executive Order: A Blow to Property Rights and Market Liquidity in California's Real Estate
How N-7-25 Interferes with Free Market Dynamics, Prolongs Recovery, and Undermines Homeowner Rights and Freedom
Gavin Newsom’s incompetence continues with his “order to protect fire victims from predatory real estate speculators.” While Newsom puts forth this executive order, N-7-25, to protect his constituents, it will do the opposite by interfering with the free market’s ability for liquidity in the real estate market.
Yet, let us examine what this order does. First and foremost, it is an obvious overreach of government powers, quashing one’s property rights. It also disrupts the free market of real estate, not allowing homeowners to obtain much-needed money to leave the area and help rebuild elsewhere. People should be able to offer homeowners prices that they can accept or reject. Newsome’s order prevents this consideration from taking place.
Another problem with this order is that it prevents liquidity in the local real estate market, preventing those who wish to sell from doing so — transactions, if they occur at all, will be delayed. This does nothing but prolong the distress and uncertainty of homeowners.
The executive order creates a form of price controls on the affected real estate, and gets murky as to what is considered a “fair” offer, thereby distorting the pricing mechanism of real estate in the affected areas. This is nothing but government overreach.
It is also an affront to investors who seek to help with reconstruction and revitalization efforts. This action by Newsom deters investment in the area, slowing down recovery efforts by reducing capital to flow where it is most needed.
Lastly, I will add the moral hazard of more dependence on the government. While Newsome frames his order as protecting property owners from “predatory” buyers, he risks creating dependence on government interventions in the future. This could discourage owners from seeking out the best offers or negotiating vigorously, knowing that government regulations might favor them, thus potentially leading to less efficient outcomes.
This executive order is counterproductive to California’s recovery efforts. It will prolong the misery while also disrespecting the property rights of Californians at a time when they most need those rights respected.
