The housing affordability crisis has become one of the defining economic challenges for American households. Since early 2019, the cost of buying a home has surged by more than 150%, while mortgage rates have climbed from historically low levels to above 6%. Together, those shifts have pushed homeownership beyond reach for a large majority of U.S. families, particularly first-time buyers.
Against that backdrop, President Donald Trump has proposed a blunt solution. His plan would bar large institutional investors from purchasing additional single-family homes, arguing that Wall Street ownership has driven up prices and reduced supply for everyday buyers. The proposal has drawn bipartisan praise, including supportive comments from California Governor Gavin Newsom and progressive lawmakers who see corporate landlords as a key culprit in the housing affordability crisis.
A political fix meets economic reality
The theory behind the proposal is simple. If institutional buyers are removed from the market, more homes should be available for owner-occupants, easing competition and lowering prices. The idea resonates with frustrated voters who see rising rents and shrinking options, and it fits neatly into a broader narrative of curbing corporate influence.
Yet housing economists argue the evidence does not support the claim that large investors are the primary driver of higher prices. According to research from the American Enterprise Institute, institutional owners with portfolios of more than 100 homes account for roughly 1% of the nation’s single-family housing stock. In most counties, they own none at all.
Ed Pinto, codirector of AEI’s Housing Center, says the focus on institutional investors distracts from the real cause of the affordability crunch, a chronic shortage of homes. Restrictive zoning rules, slow permitting, and years of underbuilding have left the U.S. short by an estimated 6 million homes. Easy monetary policy after the pandemic amplified demand for that limited supply, sending prices sharply higher.
Do investors raise prices or absorb pressure
Pinto’s analysis shows little correlation between institutional ownership and home price growth. Some of the fastest price increases since 2012 occurred in markets where large investors own less than 1% of homes, including Boise, Idaho and Bend, Oregon. By contrast, metros with higher investor shares, such as Memphis or Birmingham, often experienced below-average appreciation.
Institutional landlords also play a stabilizing role during downturns. During the housing collapse following the global financial crisis, large investors bought thousands of foreclosed properties when individual buyers lacked credit or confidence. That activity helped set a floor under prices and prevented deeper market damage.
More recently, as prices climbed beyond what many families could afford, institutional buyers expanded single-family rental options. For workers who need flexibility or cannot qualify for a mortgage, renting a home can provide space and stability without the long-term financial risk of ownership.
Build-to-rent and the supply question
Another overlooked factor is that institutional investors are not only buyers of existing homes. A significant share of their acquisitions comes directly from builders through so-called build-to-rent developments. In these cases, new homes are added to the housing stock specifically to meet rental demand.
When market conditions shift, those same homes often return to the for-sale market. Investors tend to sell when buyer demand improves and rental returns soften, increasing available inventory rather than permanently removing it.
Data from late 2023 through 2025 show that large landlords collectively sold slightly more homes than they purchased, resulting in a small net decline in holdings. That pattern challenges the narrative of relentless accumulation that crowds out individual buyers.
The risk of unintended consequences
Blocking institutional investors may have limited short-term impact, since their holdings are currently flat. The longer-term risks emerge during economic stress. Without institutional capital, fewer buyers may step in during downturns, increasing volatility and deepening price swings.
Rental supply could also tighten, pushing more households into smaller apartments and raising rents for families who cannot yet buy. At the same time, fewer aging or distressed homes would receive the large-scale renovations often funded by institutional owners.
The housing affordability crisis is real and politically urgent. But experts caution that targeting a small segment of the market may do little to solve it, and could make matters worse. Expanding supply through zoning reform, faster construction, and incentives to build remains the most direct path to restoring balance.
