After years of backlash against Wall Street landlords, the federal government is taking its first step to limit large investors’ ownership of single-family homes.
A new housing affordability law bars the biggest institutional investors from buying more houses. The provision was added to the 21st Century Road to Housing Act after President Donald Trump signed an executive order to “stop Wall Street from competing with Main Street homebuyers.”
Lawmakers on both sides of the aisle have applauded the limit on mega-investors, such as private equity. But those mega-investors own just 0.66% of the nation’s single-family homes – making it unlikely the measure will make housing much more affordable.
In fact, most landlords are smaller mom-and-pop investors who aren’t impacted by the law at all, according to property data firm Cotality.
Large institutional investors own few, if any, single-family homes in most of the United States. Their ownership is concentrated in a handful of Sun Belt metropolitan areas. But even in Atlanta, which has the highest concentration in the country, large-scale investors own only about 4% of single-family housing stock.
That means the new restriction would most likely reshape the small number of neighborhoods where institutional investors have a significant presence.
“The provision is more likely to help at the margin,” said Michael Seiler, a professor of real estate and finance at William & Mary. “It could give some owner-occupants a better chance in specific markets, but it will not overcome high mortgage rates, limited inventory, zoning constraints and construction costs.”
The bipartisan law mostly aims to improve housing affordability by increasing the supply of homes on the market. This includes encouraging local governments to ease permit and zoning restrictions that hold up homebuilding.
Still, Trump held off on signing the bill into law after it passed Congress, calling it a “big yawn.” Without the president’s veto, though, it automatically became law on Saturday.
Institutional investors became a flashpoint in the housing affordability debate after prices soared during the pandemic. But their push into the single-family housing market began more than a decade earlier, in the wake of the 2008 financial crisis.
As foreclosures flooded the market, firms such as Blackstone bought thousands of single-family homes at steep discounts and converted them into rentals.
When mortgage rates plunged to record lows during the pandemic, those investors re-accelerated their purchases.
The US housing market is short millions of homes, so any additional competition for homes can push prices higher. In some cities, like Atlanta, real estate agents told CNN that large investors routinely made all-cash offers that many families couldn’t match.
A 2024 report from the Government Accountability Office found that institutional investors may have contributed to rising home prices and rents after the financial crisis, though the report acknowledged that this is difficult to prove. But advocates for investor-owned properties say they give renters who may not otherwise be able to afford a home the opportunity to live in single-family neighborhoods.
Under the new housing affordability law, investors that currently own 350 or more single-family homes are not permitted to buy more – but they don’t have to sell their housing stock, even if it exceeds 350 homes.
Even before the law, though, many mega-investors began to slow purchases and sell more of their existing inventory. Purchases by mega investors with 350 or more homes are down almost 70% this year compared to their peak in 2021, according to a June report from Realtor.com.
The largest single-family corporate landlords, including Tricon (owned by Blackstone) and other private-equity-backed housing firms, are listing hundreds of homes for sale in major cities — more than they are buying, according to real estate data firm Parcl Labs.
The Sun Belt areas will likely feel more impact from the new restriction than most of the country. For example, large-scale investors own roughly one in seven single-family homes in some areas of Atlanta, according to Parcl Labs.
Real estate professionals in Atlanta told CNN the post-pandemic years were hard on their buyers, who were often left competing with corporations in all-cash deals. But today, with hundreds of those homes hitting the market, buyers aren’t biting.
“The reason that first-time homebuyers are not buying as large a share of homes as they used to is not because of large investors. It’s because home ownership has gotten so unaffordable,” Daryl Fairweather, Redfin’s chief economist, told CNN before the bill passed.
Juli St. George, an Atlanta-area real estate agent, recently helped a smaller investor buy a home from a large institutional investor.
The property had sat on the market for weeks. It wasn’t staged by the mega-corporation, which St. George declined to name. The home also needed cosmetic updates and failed to appeal to many first-time buyers, giving her client room to negotiate the price down by thousands of dollars, she said.
With mortgage rates still above 6% and home prices hovering near record highs, many first-time many are wary of properties that were cheaply renovated by large investors, St. George said.
“First-time homebuyers right now are paying through the nose,” she said. “They want the house to be perfect.”
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