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As policymakers continue to debate the role of Wall Street investors in residential real estate markets, one analysis confirms what many housing observers have been saying for some time. In other words, the share of institutional investors in home purchases is small and even shrinking.
Investors who have purchased 350 or more single-family homes since 2015 account for just 1% of all purchases nationwide, according to the report released March 13 by Realtor.com economists. Moreover, their purchasing activity has been steadily declining since peaking in 2021.
“Large corporate investors are often seen as the main drivers of today’s housing affordability problems, but the data shows their influence is relatively small,” Daniel Hale, chief economist at Realtor.com, said in a release accompanying the report.
The report was released a day after the U.S. Senate passed the 21st Century Road to Housing Act, the first broad-based bipartisan housing law in more than a decade. Among the bill’s provisions is a provision that would limit the purchase of new single-family homes by large institutional investors that directly or indirectly own at least 350 single-family homes.
The exemption includes “large institutional investors seeking to purchase or construct new single-family homes specifically for the rental market, but requires those properties to be sold to individual homeowners after seven years,” according to a summary by the Bipartisan Policy Center.
In January, President Donald Trump signed an executive order entitled “Preventing Competition from Wall Street and Main Street Home Buyers,” which states, “It is the policy of my administration that large institutional investors should not purchase single-family homes that families can afford.”
Many Americans would likely agree with that statement, but it may be the wrong focus to focus on when pushing for more available and affordable housing.
“Policies focused on promoting housing supply are likely to have a far greater impact on affordability and homeownership than restricting some buyers,” Hale said in a March 13 report. Most other analyzes agree with this.
But perhaps just as important, the Department of Housing and Urban Development implemented a number of policies during the Biden administration to encourage owner-occupancy in the market.
But over the past year, HUD has rolled back many of those protections, said Sarah Edelman, who helped develop some of these policies from her role at the Federal Housing Administration. Edelman, now with the nonprofit National Community Stabilization Trust, spoke to USA TODAY in January, when President Trump was first considering banning Wall Street home purchases.
The real estate agent’s analysis puts into perspective other consumer advocates who have noted that some metropolitan areas have a disproportionately strong institutional investor footprint, making it difficult for residents there to enter the housing market.
In Memphis, the area with the highest number of corporate purchases, only 4.4% of homes were purchased by corporate owners over the 10-year period.
