Highlights
The U.S. housing challenge is fundamentally a supply problem. In much of the country, especially in fast-growing metro areas, housing production has lagged population and job growth for over a decade. In some jurisdictions, as housing affordability has become an increasingly salient policy issue – policymakers at times resort to pointing fingers rather than doing the hard work of examining policy barriers to affordable housing.
Among the frequent villains are institutional investors, often called “Wall Street.” Despite study after study disproving the narrative that institutional investors are materially pushing up housing prices, some policymakers remain immune to basic economics. The housing affordability challenge is a function of a basic market reality: not enough homes have been built. While there are some jurisdictions that recognize the basic laws of supply and demand, others, such as Nevada, appear willing to consider policies that not only won’t ameliorate their housing woes – they’ll compound them.
Austin: A Case Study in Supply and Demand
The experience of Austin, Texas is a clear case study in the operation of housing market dynamics. Like many sunbelt areas, Austin has seen a recent population boom. In the face of rising demand – which did push housing costs upwards – Austin let loose a homebuilding boom. Aided by a permissive policy climate, Austin became a leader in housing construction per capita. Supply met demand, and the result was predictable: data shows median rents in Austin declined 22 percent off its peak in 2023. Despite rising investor activity, the city’s rental market has seen rents fall by nearly 6% year-over-year, driven by a surge in new construction. If institutional capital were the central cause of unaffordability, this pattern wouldn’t hold. Instead, it shows that when more homes are built, prices respond—even in investor-heavy markets.
Nevada’s SB391 would take the state in the opposite direction. The bill would create an institutional investor registry and allow local governments to impose caps on their ownership share. In the face of a housing shortage, this bill would dampen investment. Limiting who can own a house does not increase the number of houses available. It’s a regulatory effort aimed at reallocating a fixed supply rather than expanding it – and it sends a signal to market participants to reduce investment.
Similar policies are being pursued in other jurisdictions, such as California’s AB1240 and a proposal in Fishers, Indiana. That California would seek to further hobble the state’s housing market with an anti-housing policy is particularly unfortunate, given that housing costs in the state substantially outstrip national norms. From prevailing wage laws to “green energy” mandates, California imposes a regulatory regime sufficient to substantially inflate home-ownership and rental costs. These measures all share the same, deeply misguided premise that limiting housing investment will somehow result in new housing.
Institutional Investment in Housing
Institutional ownership of single-family rentals remains a small share of the market. Most homes are still owned by individuals or small-scale landlords. And as outlined in testimony from Pinpoint to the Texas House Committee on Business and Industry, not only do they not price out residents – institutional investors often bring capital, scale, and professional property management practices that benefit tenants. These firms tend to operate in growth markets with high barriers to entry and fill critical housing gaps – offering families opportunities for economic mobility that are otherwise out of reach.
A recent study from the Texas Conservative Coalition Research Institute reinforces this view. It finds little evidence that institutional investors are driving up prices or displacing homeowners. In fact, in areas where institutional investment is concentrated, rental stock tends to be newer and better maintained: characteristics associated with better tenant outcomes. A 2025 working paper further supports this, showing that institutional investment often improves property quality and may help insulate markets from volatility in downturns.
The push to cap or block investor ownership is ultimately a political response to scarcity—not a solution to it. If policymakers want to improve affordability, the path forward is clear: reduce zoning and permitting barriers, enable more housing construction, and improve the functioning of the land use system. Targeting who can own a home without addressing how more homes can be built will only preserve the underlying shortage.