Housing affordability is perhaps the most pressing pocket-book issue of the day. President Trump signaled the significance of this challenge by taking action on this issue within hours of being sworn in. Among his first actions in office was to sign an executive order directing federal agencies to “deliver emergency price relief” to the American people. The very first priority in this directive was to lower the cost of housing and expand supply. In a new report, the Texas Conservative Coalition Research Institute (TCCRI) provides critical analysis of the factors affecting housing affordability nationally and in Texas, dispels certain prevailing myths, and provides key recommendations for improving housing affordability in Texas that could be modeled in other states.
Housing Affordability and Policy Distractions
Unfortunately, overcoming the thicket of regulatory barriers that artificially inflate housing costs and reduce supply takes time, and homebuilding itself will take time to respond to market signals. In the meantime, some policymakers have been pursuing distractions from the drivers of housing affordability challenges and have attempted to shift the blame away from policy failures to market actors.
Among the many narratives shaping the conversation, few have gained as much traction as the claim that institutional investors – frequently caricatured as “Wall Street landlords” – are driving up home prices and locking families out of the market. This narrative has fueled legislative debates across the country, including in Texas, where proposals have emerged to curb institutional property ownership.
While these concerns may resonate emotionally, the reality is far more complex. Institutional investors’ role in the housing market has been grossly overstated, their contributions to price pressures are negligible, and, in some cases, their presence brings tangible benefits to the housing landscape.
The Role of Institutional Investment in Housing
The data paints a strikingly different picture from the one portrayed in headlines. Nationally, institutional investors—defined as entities owning more than 1,000 properties—make up just 3 percent of single-family rental homes, according to the Department of Housing and Urban Development. In Texas, their footprint is even smaller, accounting for merely 3 percent of single-family rentals and just 0.4 percent of the state’s entire housing market. Contrary to the viral claims that institutional investors dominate the market, their share of home purchases has been declining, with recent figures showing they accounted for only 0.3 percent of purchases in 2024. Assertions that institutional investors are crowding out homebuyers are simply not supported by the evidence.
Moreover, institutional investment does not meaningfully contribute to housing price inflation. Research by economists from the University of Southern California and the Federal Reserve Bank of Philadelphia found no evidence that institutional investors drive up sale prices. In fact, the study observed a slight negative correlation between institutional presence and sale-to-list price ratios, indicating that these investors are not placing upward pressure on home prices. Much of their activity focuses on distressed or hard-to-sell properties, which are typically overlooked by traditional buyers. This not only adds liquidity to the market but also supports the rehabilitation of neglected housing stock.
Housing Challenges and Opportunities in Texas
As the TCCRI study makes clear, the focus on institutional investors as the primary driver of housing affordability challenges is misplaced and distracts from the real issue: a critical shortage of housing supply. Texas alone faces a shortfall of over 320,000 housing units, a deficit mirrored in many parts of the country. Addressing this shortage requires bold policy reforms aimed at increasing housing availability rather than scapegoating market participants whose role is often misunderstood.
Policymakers should prioritize reforms that unlock housing supply. TCCRI has identified 7 avenues for policy reform that could ease supply conditions. Restrictive zoning laws that prevent higher-density development should be reexamined, as should minimum lot size requirements that artificially constrain land use. Streamlining permitting processes would reduce costly delays in construction, while incentivizing accessory dwelling units (ADUs) could provide affordable housing options without significant land use changes. Reducing development fees, which raise the cost of building homes, would also help bring more units to market faster.
Policymakers should heed these affirmative steps to improve housing markets in Texas and elsewhere and move past the distraction of scapegoating. Institutional investors’ footprint is modest, their contributions to price pressures are negligible, and their presence can bring real benefits to communities. Efforts to limit their role risk ignoring the far larger problem of inadequate housing supply.
Blaming a small slice of the market for systemic issues is not a pathway to progress. Instead, a focus on meaningful reforms that address the core challenges in the housing market will ensure more families have access to affordable, quality homes.