The ripple effects of banning institutional purchases of single-family rentals

The growing salience of housing affordability across our society foreshadowed a response from the political sphere. We got one recently in tweet form on January 7, 2026, when President Trump proposed a ban on further purchases of single-family housing units by institutional investors for the purpose of renting them out.  In this short piece, I evaluate the proposal, first by outlining the broader market context in which the single-family rental (SFR) market exists and then by discussing its pros and cons. 

A small share of single-family rental homes are institutionally owned

Recent data from the American Community Survey for 2024 reports that there were 132,737,146 total occupied housing units, of which 46,101,640 (or 35%) were rental units.  Nearly one-third (14,392,315 or 31%) of those occupied rental units are single-family detached or attached in nature. Obviously, the single-family rental sector is a much smaller share of the owner-occupied stock (17%) and the total occupied housing stock (11%).   

While there is no official definition of what makes an investor “institutional” in nature, various studies conclude that the amount of institutionally owned single-family rental units is quite low. For example,  Ellen & Goodman (November 2023) estimate that large institutional investors own just over 3% of the rental stock. Given that the number of owner-occupied units is almost double the number of rental units, the institutionally owned SFR share is under 2% of the owner-occupied stock.¹ Thus, even the banning of renting any institutionally owned single-family housing unit would increase the amount of single-family units available for purchase by no more than 1%-2% of the owner-occupied stock. In aggregate, that is not a big enough change to improve general affordability conditions in an economically meaningful way.

SFR homes are concentrated in specific markets and neighborhoods

The business of renting single-family housing units is not distributed evenly across the country or across neighborhoods within a given housing market. The SFR product is concentrated in Sunbelt and Midwestern markets, as illustrated by Table 1’s data on the twenty metropolitan areas in which Ellen & Goodman (2023) found the biggest share of single-family rental units in the multifamily stock. The only West Coast market in the top twenty is Seattle, and there are none from the northeastern part of the country. Hence, the proposed policy cannot have much effect in the nation’s most expensive housing markets on the Atlantic and Pacific coasts or throughout the New England region, where little institutional ownership of SFR product exists.

Within a metropolitan-area housing market, recent academic research shows that there can be much higher concentration of institutional SFR ownership in specific zip codes, typically in suburban areas of markets in the Sunbelt region. Barbieri and Dobbels’ (2026) study of the Atlanta metropolitan area finds some very high institutional shares (e.g., 50%+) of actively listed rental homes, typically in zip codes in counties on the periphery of that very large metropolitan area. Coven (2025) uses different micro-data sets to identify purchasers and measure concentration at the local level, too, and finds higher concentrations especially in the Atlanta, Phoenix, and Tampa markets, so this is not simply an Atlanta phenomenon. Both papers investigate whether monopoly power is being exploited in the neighborhoods with the most concentrated ownership. There is evidence that more geographically concentrated institutional investors are able to raise rents above what a purely competitive market would generate. Those instances should be addressed by antitrust authorities, not by a ban on purchases by large investors. That a ban is not the appropriate policy response is indicated by two other findings of these researchers. First, the effect on rent is not particularly large on average. Second, it is small enough to be counterbalanced by other changes in the housing market induced by the entry of large institutional SFR investors. It is to those effects that we next turn.

Spillover effects between owner-occupied and rental housing markets

Owner-occupied and rental markets must be considered in tandem when analyzing changes to the single-family rental market, as any shift in supply in the owner-occupied market will have attendant impacts on the rental market and vice versa. Since institutional investors are suppliers of rental housing, limiting their ability to purchase homes will decrease the future supply of rental units as it expands the supply of owner-occupied homes.  Both Barbieri & Dobbels (2026) and Coven (2025) found that while big institutional investors did lead to higher home prices in their most concentrated geographies, institutional investment also led to lower rents.²

Importantly, both price effects were modest economically, at least partially due to accompanying supply changes. Removing previously owner-occupied units from the owned sector and moving them to the rental sector would, all else equal, put upward price pressure on owner-occupied homes. In practice, however, higher prices led to more construction of single-family units, which in turn reduced the ultimate price increase. Consistent with these dynamics, Coven (2025) estimates that entry into a local market by institutional investors decreased the number of homes available for purchase by owner-occupiers by only 0.22 units for each home bought by the SFR firms. Rents declined modestly on net following institutional entry, reflecting the combined impact of both the transfer of housing units into the rental sector and greater operating efficiencies among larger institutional landlords, some of which were captured by tenants. Coven (2025) also finds that relatively few, smaller SFR landlords were wiped out by the increased competition following entry of institutional players.³

That rents are lower on net in markets with high institutional ownership of single-family rental homes is not recognized by President Trump’s proposal. His Truth Social tweet contained the sentence that “People live in homes, not corporations.” That is true, but so is the fact that people sometimes rent, rather than own, the homes in which they live. Preventing large institutional investors from supplying the rental market will lead to higher rents, harming existing renters, as well as some new families that would want to or must rent. This cost should be explicitly considered in any evaluation of the president’s proposal. Stated differently, banning purchases of single-family units by large rental companies will lead to a very small net increase in the number of homes available for purchase, and some families will benefit from living in them. However, other families that would have benefited from renting that same house no longer can do so. 

Banning institutional investors weakens property rights

Another potential cost is the spillover or fallout from the abrogation of property rights.  Trump’s proposal would restrict housing investment in unexpected ways.⁴ Research in other parts of the housing market shows that new or unexpected limitations on property rights can have large market effects.⁵ In the case of rent control, the most important is the decline in investment in the sector over time, which reduces future supply, thereby worsening the affordability conditions that probably precipitated the policy intervention in the first place.⁶ Unexpectedly limiting what firms in the SFR sector can do will lead investors to be more cautious about dedicating capital to the sector going forward. In this vein, we should not forget that private equity investment in housing was welcomed a decade ago for its surge in buying of foreclosed single-family homes that put a floor on house price declines following the global financial crisis.  In general, the small size of the institutionally owned single-family rental sector likely limits the damage from this channel, but it bears watching as experience from the traditional multifamily sector shows us that effects on future supply can be large and long-lived. 

Conclusion

The primary cause of America’s growing housing affordability problem is a lack of sufficient new supply of housing, single-family owner-occupied units especially.  That should be the focus of government policy, and this proposal fails to address that issue in a meaningful way.  The institutional grade SFR sector is so small that it is hard to imagine a policy intervention targeting it that could do so. Recent research suggests that in the owner-occupied sector, only one-fifth of a single-family home is lost for every one purchased by an institutional investor for renting out. A net reduction in supply that small simply cannot be a major contributor to the worsening housing affordability conditions in the single-family housing sector over the past 10-15 years. In addition, there are costs to renters that must be considered by any good cost-benefit analysis. Other costs to consider include those associated with setting up the bureaucracy needed to enforce the new regulation. They will start with creating a precise definition of what an institutional investor is but will not end there. The country needs a healthy, balanced housing market that expands supply across both the rental and owner-occupied sectors, not policies that mostly reshuffle housing between households.