Given President Trump’s pledge to conquer America’s housing crisis, and the plan he just grandiosely delivered to do it, you’d think he’d soon hatch a new credo to spotlight the campaign—something like MAHAA, for “Make America’s Homes Affordable Again.” Indeed, the biggest part of the overall “affordability” problem that’s so crucial to voters, and increasingly dominates the debate among politicians—led by Trump himself—is the explosion in the cost of housing. The rise in what families need to pay for the staple of staples that they strive to own over all others has, since just before the pandemic’s onset, far outstripped the sticker shock on the likes of groceries, cars, insurance, or any other key item. Put simply, America’s biggest household expense has grown so enormous that most first-time buyers don’t have the means to take it on.
The tens of millions of renters in the wings know the math all too well. The two factors that determine the ability to buy, home prices and mortgage rates, have both moved in the wrong direction big-time, and shockingly fast. According to the American Enterprise Institute, average prices have risen over 150% since the start of 2019, and home loan rates posted at Mortgage News Daily have ballooned by two-thirds, from roughly 3.7% to today’s 6.2%. That dire twofer, the National Association of Home Builders reckons, has made home ownership an aspiration that’s beyond the grasp for three in four U.S. households.
Trump proposes an unorthodox fix: Blocking institutional investors from amassing homes to rent
On Jan. 6, Trump unveiled a program to restore housing affordability by banning what he considers a major force driving prices higher: purchases of homes by big investors that they recast as rentals. As the president wrote on Truth Social, “For a very long time owning a home was considered the pinnacle of the American Dream [that’s become] increasingly out of reach for too many people, especially younger Americans. I am immediately taking steps to bar large institutional investors from buying more single-family homes. I will be calling on Congress to codify it.”
The same day, in an unusual confluence in policy, Gavin Newsom basically endorsed the president’s initiative. A spokesman for the California governor declared, “When housing is treated mainly as a corporate strategy, Californians feel the impact. Prices go up, rents rise, and fewer people have a chance to buy a home.” The idea that Wall Street is a potent force in inflating home prices, and must be stopped, has also stirred prominent voices in Congress. Senators Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) have each introduced (so far unsuccessful) legislation that would impose tax penalties on big home acquirers. New York Gov. Kathy Hochul has joined the chorus calling for a crackdown, blasting the large own-to-rent purveyors for “buying up the housing supply and leaving everyday homebuyers with fewer and fewer affordable options.” The movement’s also gaining traction at the local level: Two municipalities in Indiana recently nixed long-term rentals by investors, the first in the U.S. to do so.
Restricting institutional housing buyers is counterproductive, says a leading expert
The president and his growing crowd of allies from both parties are essentially arguing that by purchasing large numbers of single-family homes, either in new developments or long-standing neighborhoods, then renting them out, large investors are substantially shrinking the inventory available for sale. That supposedly drives up prices for regular folks, since they’re bidding on a pool of available houses that’s a lot smaller than if those big players weren’t competing with them. The theory goes, stop the institutional buying led by such publicly traded giants as Invitation Homes and American Homes 4 Rent, and an array of investment firms including Pretium Partners and Brookfield Asset Management, and prices would fall or at least flatten, notching a big advance in affordability.
“There’s no empirical evidence that large institutions have driven up housing prices,” says Ed Pinto, codirector of the American Enterprise Institute Housing Center. Pinto argues that the rise of institutional buyers is a symptom, not a cause of the housing crisis—and that in fact, they’re helping to address the real problem that misguided policies engineered on Main Street and in Washington, D.C., caused in the first place: a severe shortage of new construction, and hence homes for sale, caused by restrictive local zoning and excessive demand for that paltry supply triggered by the Fed’s easy-money policies that drove mortgage rates to super-bargain levels following the pandemic. It’s that combination—not these supposed marauders—that unleashed the rampant price run-up that’s locking out most Americans. “These companies are not pillaging homebuyers,” says Pinto. “It’s just the opposite. As more and more people can’t afford to buy single-family homes, they’re providing the option of living in one at lower cost by renting. That takes those people out of the purchase market, and hence can take pressure off prices.”
Single-family rentals also provide extra flexibility for America’s workforce. Say someone moves to a new city for a job as a nurse or construction foreman, but believes they may relocate in a year or two for a fresh position in another locale, either in the same company or for another employer. The ability to rent a home means they get all the lifestyle benefits of owning, but don’t need to make a big financial commitment on a property that they may live in only for a relatively short time.
Pinto points out that in two rough periods for housing, investors came to the rescue. The first was the real estate crash that defined the Great Financial Crisis. “The investors bailed out the market,” says Pinto. “There were nowhere near enough individual buyers to soak up the houses thrown on the market and going through foreclosure, despite the collapse in prices. Few potential buyers had sufficient credit. Investors bought tens of thousands of derelict homes sight unseen, many of them owned by the banks, and set a floor under the market.” Then following the pandemic, when the sharp drop in rates orchestrated to reboot the economy sent prices soaring, the buy-to-rent players boosted their portfolios once again, this time not because people didn’t have credit or were unemployed or cash-strapped, but since towering prices were pushing would-be buyers into long-term renters. That trend gave families suddenly unable to purchase but who still wanted that third bedroom and backyard the opportunity to live in a house while they waited to become homeowners.
Another advantage provided by institutional buyers, says Pinto: They sweep up rundown houses en masse, then invest heavily to fix roofs, rewire electrical systems, repair flooring, and install new appliances, all to win renters. He also cites a big misconception in the critics’ view of the industry. These housing investors aren’t only buyers. In fact, they’ve recently been selling slightly more houses than they’re acquiring.
A misconception about what’s making housing so expensive
Pinto notes that investors overall have long been big owners of single-family homes. But it’s small, mom-and-pop businesses that always dominated the market, and that’s the case today. The institutions play a minor role, though they contributed greatly as purchasers of last resort during the GFC and providers of sorely needed rentals in the pandemic. Today, over 12% of the nation’s stock of single-family houses is held by landlords owning 100 properties or less. The institutions, at 100-plus, account for just 1% of the total. In not a single county does a large investor harbor over 10% of the homes, and in 60% they own none at all. Atlanta, for example, has relatively huge investor presence at 4.2%, and Dallas and Houston also rank high at 2.6% and 2.2% respectively.
It’s especially informative to study the recent trend in purchases by the institutions—and it doesn’t show the kind of listing-crushing accumulation the president and others targeting the industry suggest. Pinto assembled data that runs for the 21 months ending in November 2025. He found that overall, investors large and small bought around one-quarter of all homes sold. But the share accumulated by the 100-plus club amounted to just 2%. Plus, their portfolios actually slipped since they sold more than they bought. Here’s the data: In that almost two-year period, large landlords acquired 178,000 single-family houses, and exited 184,000, for a net decline of 6,000. Despite all the criticism claiming that these alleged exploiters squeezed out regular folks looking to make the life-transforming leap, their holdings barely budged. Sean Dobson, CEO of the Amherst Group, an Austin investment firm that owns around 50,000 homes for rent, says the idea that the institutions compete with regular buyers is wrong. He notes that Amherst purchases homes that require significant rehab, typically costing $30,000 or more, and that it caters to consumers who can’t buy now due to tightened credit.
By Pinto’s estimate, the large buyers purchased around 40% of their newly acquired homes from developers who built new dwellings for them, often in bespoke communities conceived specifically for rental. The industry is as much about build-to-rent as fix-up to rent. For example, in 2023 Pretium Partners forged a pact to buy 4,000 single-family homes erected by D.R. Horton in such states as Georgia, Florida, Texas, and Arizona. Once again, these are additions to the nation’s housing stock that fulfill a need by enabling priced-out Americans to live in a roomy cape or ranch, say, instead of a cramped apartment. The necessity to rent effectively created the new house.
When rental markets soften and sale prices improve, the investors typically put a portion of the homes originally built for lease back on the market. That increases the roster of listings, the reverse of what the critics denounce as the institutions’ supply-hammering role. It’s a similar story for the fixer-uppers. Many of these homes are so dilapidated before the investors purchase them that they’re extremely difficult to sell, if they’re livable enough to find buyers at all. Once again, when the owner market rebounds, these older dwellings, now fully refurbished, frequently boomerang back as “for sale.” In the mid-2010s, it appears the investors were net sellers as the owner crowd stormed back in the recovery from the GFC.
As Pinto’s stats show, today the industry’s powerhouses are taking a middle stance by acquiring about the same volumes as they’re marking “for sale,” even tilting a bit toward lightening their portfolios. The ebb and flow that investors furnish by hatching rentals when demand for them is strong, then switching toward sales when buyers return, helps balance in the marketplace. “We are able to step in when consumers step out, says Dobson. “This serves as a shock absorber that reduces volatility across cycles.”
Here’s the clincher for Pinto: His research shows absolutely no relationship between the level of institutional ownership and the shortage of housing—the principal factor inflating prices—in the individual markets. Pinto studied the price increases in 150 metros from January 2012 to June 2025, and compared them to the degree of institutional ownership in each city. Many of the biggest jumps came in locales where the large landlords barely participated. Prices in Boise City, Idaho; Bend, Ore.; Modesto, Bakersfield, and Stockton, Calif.; Prescott Valley, Ariz.; Ocala, Fla.; and Austin, Texas, all rose between 165% and 270%, above to well above the national average, yet investors in each city held less than 1% of the homes. By contrast, metros featuring relatively large shares witnessed below-average price appreciation over that almost 13-year span, including Birmingham, San Antonio, Indianapolis, and Columbia, S.C. Memphis had the highest share of institutional rental homes among all the cities at 4.5%, yet home prices increased far less than the nation’s norm.
Pinto stresses that the focus on the big buyers obscures the real reasons for the affordability crisis and the structural solutions needed to fix it. “Institutions own 1% of the nation’s single-family housing stock, yet prices rose 154% from 2012 to 2025,” he says. “Institutional investors are not the root cause of rapid home price appreciation. America faces a shortage of 6 million homes because of restrictive land use practices and zoning regulations, and because of the Fed’s easy-money policy in the pandemic. In California, there’s a 15% housing shortage, the biggest in the country, and investors own under 1% of the homes. The solution is build a lot more houses. Big investors have nothing to do with how the housing shortage got created.”
So what will be the impact of barring large investors from adding to their portfolios? Keep in mind that they’re not increasing their stocks right now. So in the short term, the effect would be negligible. But if we suffer a sharp economic downturn, they won’t be able to jump in and provide the support to prevent a free fall in prices, their crucial function in the GFC. More low-income folks will get stuck in one-bedroom rentals instead of getting the chance to have a garden and separate bedrooms for mom and dad and the two preteens. And the investors won’t be around contributing the capital expenditures for fixing the flooring and replacing the bathrooms in the country’s most battered homes. Nor will any new manses they specially buy from developers to rent hit the marketplace when demand rises, and they can get a better deal selling than renting.
“I always worry about the unintended consequences of these kind of plans,” says Pinto. “And for this plan, they could easily be not even neutral but negative.” This could be a bad deal for America’s aspiring homebuyers and for folks shut out of home ownership for now who cherish the prospect of living in a house, even as a rental. Denying this vast demographic-in-waiting that option removes a step that brings them closer to the American Dream.
Politics8 years ago