Congress is moving closer to restricting large institutional investors from buying single-family homes as lawmakers in both parties respond to growing voter frustration over housing costs.
According to Politico, bipartisan majorities in both the House and Senate have supported legislation that would prevent major investment firms from purchasing additional single-family houses. Supporters argue the measure is aimed at helping ordinary Americans compete in an increasingly difficult housing market where affordability has become a major political issue.
“We want homes for people, not for corporations,” President Donald Trump said during his State of the Union address in February while backing the proposal.
Even with broad political support, housing experts say the overall impact on affordability could be modest. Institutional investors currently own less than 1% of single-family homes nationwide and about 2% of single-family rental properties, according to figures cited during the debate.
Tobias Peter, co-director of the American Enterprise Institute’s Housing Center, said limiting investor activity could create some additional opportunities for homebuyers, but it may also reduce the number of rental properties available.
“So, it’s probably a wash,” Peter said.
Still, the issue has become politically powerful because many voters see institutional investors as part of a broader housing affordability problem. Rising home prices, elevated mortgage rates, and limited inventory have made homeownership increasingly difficult for younger families and first-time buyers.
“It’s symbolic about who’s in charge, who’s making decisions, and, more importantly, who is keeping you from fulfilling your dreams,” said Democratic strategist Rick Ridder. “And so often, voting is about fulfilling your dreams.”
The effects of institutional ownership are especially visible in parts of the South and Southwest, where large investment firms have accumulated substantial portfolios of rental homes. An Urban Institute report found that institutional investors control roughly 72,000 single-family rental properties in the Atlanta area, compared to 33,000 in Phoenix and 27,000 in Dallas.
Supporters of the legislation argue that acting now could prevent the trend from spreading further into other housing markets across the country.
“It is significant that a ban on institutional investors stops this model from spreading to other cities,” said Laurel Kilgour of the American Economic Liberties Project.
Some lawmakers and housing organizations, however, are concerned that portions of the Senate proposal could unintentionally discourage new home construction. Critics warn that requiring certain long-term rental developments to eventually transition into individually owned homes could reduce incentives for developers to build additional housing.
“There’s no bill that will come out of Congress that’s going to solve the housing affordability crisis,” Dennis Shea of the Bipartisan Policy Center said. “But this bill contains a number of very important items that can contribute to a solution.”
Economists in the White House estimate the United States currently faces a shortage of roughly 10 million homes. In an April report included in the Economic Report of the President, administration economists argued that reducing regulations and encouraging more construction could help stabilize prices, increase homeownership rates, and strengthen long-term economic growth.
