This week, the American Enterprise Institute published a report fact-checking the recent surge of misinformation about institutional investors’ role in the U.S. housing market, and debunking a series of proposals to restrict their investment in housing at the federal, state, and local levels. AEI’s analysis underscores a point Pinpoint has made repeatedly: institutional investors and are not the driver of America’s housing affordability crisis. Like our earlier work Housing Lies Outrunning the Facts (May 2024) and Scrutinizing the Private Equity Housing Tracker (April 2025), AEI highlights how misplaced blame on “Wall Street” distracts from the real culprits in housing affordability: Restrictive zoning, excessive regulation, and failed monetary policy that have left our country with a multi-million housing shortage — cutting off the American dream for far too many.
Institutional Investors in the U.S. Housing Market: Myths and Realities
By Sissi Li, Tobias Peter, and Edward J. Pinto
American Enterprise Institute
August 25, 2025
Summary:
In recent years, institutional investors have drawn substantial negative media attention for their purported role in limiting housing supply and driving housing unaffordability.
Policymakers at all levels of government have taken notice and advanced a wave of proposals aimed at reining in institutional investors in the housing market. At the federal level, Senator Jeff Merkley has introduced legislation to impose tax penalties for institutional investors owning over 100 homes. Senator Elizabeth Warren has also advocated for removing tax breaks for corporate investors. At the state level, efforts to restrict institutional investors have gained steam in 2025, with often bipartisan bills introduced in at least 22 states– albeit some of them have failed. Examples include New York’s SB-1572 (also known as “End Hedge Fund Control of New York Homes Act”), California’s AB-2584 banning mega-investors from further acquisitions, and Texas’s SB-443 limiting corporate ownership of rental homes to ten properties (for a list of other state bills, see Appendix A). At the local level, Fishers and Carmel in Indiana became the first cities to implement long-term single-family rentals bans this year.
These legislative efforts suggest a widespread consensus that institutional investors are a major culprit behind the nation’s housing affordability crisis. However, this narrative is not supported by empirical evidence, as the market share of institutional investors is less than 1% nationally, with 22 counties (0.7% of counties) having percentage as high as 5-10%.[3] Further, their emergence was not a cause, but rather a reaction, to government regulatory failures. These failures include restrictions on home building that have resulted in a multi-million housing shortage, as well as the Federal Reserve’s easy money/inflationary policies, particularly during the COVID-19 pandemic, that incentivized investors to ramp up home purchases. The solution is not to ban institutional investors but to allow more housing to be built.
Read the full report here.