Highlights
The Private Equity Stakeholder Project (PESP) continues to promote housing policies that are guaranteed to make Americans poorer. In particular, the organization continues to demonize investment at a time when Americans need all the housing they can get. In its newly-released Private Equity Multi-Family Housing Tracker, the group claims that private equity firms now own more than 2.2 million apartment units or about 10 percent of the U.S. total. Yet the report doesn’t make the data public, its definitions are slippery, and PESP’s policy conclusions are exactly what you’d expect from an organization committed to ignoring the basic laws of supply and demand.
A Database Without Data
For a report premised on accountability, the tracker is remarkably opaque. PESP does not release the underlying database or the methodology used to classify ownership.
None of that is clear, and the footnotes offer little help. We’re left with headlines and heatmaps, not a reproducible dataset. This matters, because their headline ownership claim of 2.2 million units, or roughly one in ten apartments in the U.S., does not appear to be replicated elsewhere. Even if the 2.2 million figure were correct, it’s not clear what kind of housing is being counted. Importantly, a footnote in the report casually notes that the total includes “student housing, senior housing, and affordable housing” – categories that have distinct tenant populations, financing models, and regulatory constraints.
Including these alongside market-rate apartments creates an apples-to-oranges comparison that inflates the scope of private equity’s role in traditional housing markets. For example, more than 4 million private housing units are subsidized, and over 3.6 million units have been built using Low-Income Housing Tax Credits. These aren’t speculative assets; they’re regulated, often below-market properties that follow strict compliance rules. Conflating these housing markets raises concerns about the underlying data.
Supply and Demand
The core implication of PESP’s tracker is that large-scale investment is bad for housing markets. But that assumption doesn’t hold up – especially in fast-growing metro areas where demand for housing has far outpaced supply.
Austin, Texas is a case in point. While Austin saw significant population growth, like other sunbelt cities, it also became a leader in housing construction per capita. The result was that supply not only kept pace with demand, but also tempered a hot market. Rent growth cooled faster than almost any other major city. Austin’s robust permitting environment and a surge in homebuilding helped alleviate pressure on rents, even during a nationwide inflation spike. Redfin data shows median rents in Austin declined 22 percent off its peak in 2023.
The plain lesson that is that the laws of supply and demand prevail. In the face of a national housing shortage, the only way out is homebuilding. Private investment in housing is essential to growing supply, provided the policy environment allows for it.
PESP’s Policies Would Restrict Housing Supply
PESP concludes their housing investment critique with a set of policy recommendations. These recommendations reflect a fairly standard progressive activist wishlist that will unquestionably restrict housing supply. PESP’s advocacy for rent control would be particularly harmful to the housing market and renters. A recent paper examined 112 empirical reports assessing the effects of rent control. Unsurprisingly, this meta study confirmed that rent controls reduce mobility, reduce housing quality, increase rent in uncontrolled markets, and generally reduce the supply of new rental housing. In short, rent controls singularly fail to mitigate housing affordability challenges. Other related housing policies supported by PESP would likewise adversely affect the housing market.
There’s a real affordability problem in U.S. housing, especially for renters in high-demand cities. But solving it requires new construction, flexible capital, and smart deregulation – not Marxist advocacy backed by misleading analysis.