President Donald Trump has announced his intention to enact a policy prohibiting institutional investors from acquiring single-family homes, a proposal that has garnered rare bipartisan support within Congress and enjoys broad public appeal. The announcement, made via his social media platform, Truth Social, directly targets companies like Blackstone, which has amassed a significant portfolio of rental properties, and firms such as Invitation Homes and American Homes 4 Rent. Market analysts believe this initiative could significantly impact these private equity giants.
However, experts are expressing doubts about the effectiveness of this policy in addressing the ongoing affordability crisis. Daryl Fairweather, chief economist at Redfin, argues that measures focused on increasing housing supply, particularly through dense housing developments in desirable locations, would be more impactful than a ban on institutional landlords. Fairweather explains that the primary driver of the current housing affordability issues is a shortage of homes, prompting investors to acquire properties due to observed scarcity.
The role of large landlords in the market is a complex topic. These companies—typically defined as those owning over 1,000 homes—came under scrutiny following the financial crisis of 2008, when they began purchasing distressed properties, renovating them, and renting them out. Critics alleged that this activity contributed to rising rental prices and home values by reducing the supply of homes available for owner-occupancy, and that some corporate landlords were prone to quick evictions while offering inadequate maintenance. Despite owning around 80,000 homes, institutional investors represent a relatively small share of the overall U.S. housing market, accounting for approximately 3.4% of all rental homes. Landlords with 100 or more homes constitute less than 1% of all purchases, according to data from housing consultancy John Burns Research and Consulting.
The dominance of smaller investors in the rental market remains significant. “Mom-and-pop” investors, owning fewer than 10 homes, have actively participated in the market, accounting for roughly 14% of home purchases during the third quarter of 2025, according to data provided by Cotality. Meanwhile, institutional investors accounted for 2.5% of purchases during this same period. Institutional investment tends to concentrate in fast-growing Southeastern metropolitan areas. A study by the Government Accountability Office revealed that large investors held 25% of the single-family market in Atlanta, 21% in Jacksonville, Florida, and 18% in Raleigh, North Carolina, as of 2022.
The impact of institutional investment is not a straightforward one. Wall Street’s preference for purchasing homes in areas with robust job growth and high demand makes it challenging to assess the precise influence on rents. Selma Hepp, chief economist at property data company Cotality, notes that high-demand areas experience rent increases, attracting institutional or general investors, rather than the other way around. Joshua Coven, an assistant professor of real estate at Baruch College’s Zicklin School of Business, has researched the effects of institutional investors. His research suggested that large landlords decrease rents by increasing the rental supply, however, policies aimed at restricting large investors could negatively impact supply, potentially driving prices upward. He also found that these large landlords decrease the supply of homes suitable for owner-occupancy, accounting for roughly 20% of price increases in markets where they are most active. This limitation of supply makes it more difficult for individuals to purchase homes, contributing to higher prices and reducing the number of homes available for owner-occupancy while simultaneously increasing the supply of rental properties.
Read more:Is now a good time to buy a house?Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.Sign up for the Mind Your Money newsletterClick here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more.
