Economists Say Ban on Institutional Investors Would Not Ease Homeownership Barriers

Economists told Fortune that legislation restricting institutional investors from purchasing single-family homes would not address the main obstacles to homeownership. They stated that the proposals would leave supply shortages and price pressures intact.

The same economists warned that the restrictions could shrink the supply of rental housing available to lower-income residents. They noted that institutional ownership currently accounts for a small share of the single-family market.

Data cited by the economists show that institutional investors hold less than 3 percent of single-family homes nationwide. Most single-family rentals remain owned by individual landlords. The economists said any reduction in institutional purchases would likely be offset by other buyers entering the market.

They added that broader barriers such as zoning limits and construction costs would continue to constrain new supply.

The economists stated that low-income households could face fewer rental choices if institutional owners exit certain markets. They said the legislation does not include measures to increase overall housing production. No timeline for further legislative action was provided in the reporting.