Small Investors Own 90 Percent of Rentals

In January 2026, President Trump signed an executive order banning large institutional investors from buying single-family homes. California Governor Gavin Newsom announced similar restrictions days later. The moves came after years of mounting frustration over housing affordability, with politicians from Alexandria Ocasio-Cortez to J.D. Vance united in their conviction that Wall Street landlords were pricing ordinary Americans out of homeownership. There was just one problem: the data suggests institutional investors own less than 0.5% of all single-family homes in America.

The Numbers Don't Match the Narrative

When most people picture institutional investors dominating housing markets, they imagine a reality that doesn't quite exist. Large institutional investors own just 3% of single-family rentals nationwide. Small investors—individuals owning ten properties or fewer—control more than 90% of investor-owned homes. The largest players, those with over 1,000 properties, account for a mere 2% of investor-owned housing stock.

This doesn't mean investors aren't active in housing markets. They are. In the second quarter of 2025, investors purchased one-third of all single-family homes sold, the highest share in five years. But lumping mom-and-pop landlords together with private equity firms obscures what's actually happening. The teacher who owns three rental properties operates nothing like Invitation Homes or American Homes 4 Rent.

Where Institutions Actually Matter

The national averages hide significant regional variation. In Atlanta, institutional investors own 25% of the single-family rental market. Jacksonville sits at 21%, Charlotte at 18%. These aren't random locations. Institutional investors gravitate toward areas with population and employment growth, which makes untangling cause and effect nearly impossible. Did investors drive up prices, or did they simply buy where prices were already rising?

After the 2007 financial crisis, institutional investors did something that hadn't existed before: they created a new asset class by buying distressed properties in bulk. This actually helped stabilize prices in markets flooded with foreclosures. The homes they purchased typically needed $20,000 to $40,000 in repairs. Individual buyers struggled to compete, partly because renovation loan denial rates hit 44% in 2024. Institutional buyers could secure bulk pricing on appliances and materials, renovate efficiently, and convert these properties to rentals.

The Build-to-Rent Pivot

Something shifted in recent years that most policy discussions miss entirely. Institutional investors have been net sellers for six consecutive quarters as of October 2025. They sold over 104,000 homes in the second quarter alone, with 45% going to traditional homebuyers. Their market share increased during this period only because overall home sales weakened, not because they ramped up purchases.

The real action moved to build-to-rent developments. Rather than buying existing homes and competing with families, institutional investors increasingly fund new construction designed from the start as rental properties. Single-family rental securitizations totaled $8.7 billion in 2025, with $25 to $30 billion outstanding. This approach adds housing supply without removing existing inventory from potential homebuyers.

The policy response, however, remains focused on the old model. Trump's executive order targets purchases of existing homes, but most new institutional activity happens in purpose-built rental communities. It's like installing a security system on the back door after the burglar started using the front entrance.

What the Research Actually Shows

The academic literature on institutional investors and home prices is messy and contradictory. Some Federal Reserve studies conclude they contribute modestly to price increases. Brookings and Freddie Mac research found minimal impact. A Freddie Mac report stated that investor purchases are "at most, a very modest contributor to the run-up in home prices."

Economist Caitlin Gorback of the University of Texas put it bluntly: institutional investors "are more of a symptom of the affordability crisis than they are a perpetuator of it." The real drivers—restrictive zoning, construction costs, mortgage rates, and decades of underbuilding—don't make for satisfying political targets. A faceless corporation buying thousands of homes does.

The Altadena situation following the Los Angeles fires illustrates both the legitimate concerns and the scale problem. Investors purchased 27 of 61 burned vacant lots that sold after the disaster, more than 40% of available properties. It's predatory behavior that deserves scrutiny. But even if every one of those purchases had gone to a family instead, it wouldn't meaningfully change housing affordability in Los Angeles County, where millions of people compete for limited housing.

Banning the Margins

Francis Torres of the Bipartisan Policy Center noted that "some of the most sweeping actions don't immediately lead to new housing." That observation applies perfectly here. Restricting institutional investors might feel satisfying, but it addresses a fraction of a fraction of the housing stock. Even in Atlanta, where institutional ownership peaks at 25% of rentals, that represents a small slice of total housing.

The policy push also ignores who benefits from institutional rental housing. Not everyone wants or can afford to buy. Families with damaged credit, people relocating for work, or those saving for a down payment need quality rental options. Institutional landlords, whatever their flaws, often provide better maintenance and more professional management than small-scale landlords. Pushing them out doesn't automatically convert renters into homeowners.

The bipartisan consensus against institutional investors reflects something genuine: widespread frustration over housing costs. But consensus on a solution doesn't make that solution effective. Banning institutions from buying 0.5% of housing stock won't build the millions of homes America needs. It won't reform zoning laws or reduce construction costs. It won't address the 44% denial rate on renovation loans that gives institutional buyers their competitive edge on distressed properties.