What is the role of institutional investors in the US housing market?

Author: Roger Ashworth, Head of Research and Data

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Recent public statements from President Trump regarding institutional participation in the US housing market have renewed attention to the role of large investors in residential real estate and the potential for federal policy intervention. Below we outline relevant market context, structural constraints, and possible policy pathways, with a focus on how any such measures might realistically be implemented.

This note is intended to provide background and analytical context rather than to express a policy view or forecast legislative outcomes.

US Housing Is Predominantly Owner Occupied, and Institutional Single-Family Ownership Is a Small Share of a Decentralized Market

The US housing market consists of approximately 133 million housing units, of which roughly 87 million are owner occupied homes and 46 million rental units.⁽¹⁾ Of the rental units:

• ~31 million are apartments
• ~14 million are single-family rental homes
• ~2 million are mobile homes, boats, etc.

Single-family rental (SFR) ownership is highly fragmented:

• ~77% of landlords own 1–9 homes
• ~16% own 10–99 homes
• ~4% own 100–999 homes
• ~3% own 1,000+ homes

As a result, single-family rentals remain predominantly a small-scale, “mom-and-pop” business, with ownership dispersed across millions of households rather than concentrated among large operators. The largest institutional owners collectively account for an estimated ~2–3 million units nationwide, representing only a modest share of total US housing stock.⁽²⁾

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‍Measured Investor Activity Depends Heavily on Definitions with Large Institutions Representing a Minority of Transactions

Estimates of investor participation in the housing market vary significantly based on data source and methodology:

• Redfin (all investors, including small landlords): ~17–18% of US home purchases in 2024–2025⁽³⁾
• Harvard University (non-individual investors include partnerships, trustees for estates, real estate corporations, real estate investment trusts, nonprofit organizations, and other entities): 25% of single-family rental ownership, up 8% over the past two decades⁽⁴⁾
• BatchData (broader definition including second homes and short-term rentals): 33% of purchases in Q2 2025, up from 27% in Q1 2025, and ~18.5% in 2020-2023 (average)⁽⁵⁾
• ATTOM (institutional investor defined as purchasing 10+ homes per year): ~6% of purchases nationallly, varying by market⁽⁶⁾

If policy efforts focus narrowly on large institutional investors, the affected share of total home purchases is likely low single-digits. Broader restrictions applied to “investors” more generally could impact 17–25% of transactions, including many small landlords that operate through LLC or similar entity structures.

Investor activity is also regionally concentrated, with higher participation in southern and faster-growing markets.⁽⁶⁾ In addition, many large operators have increasingly shifted toward purchasing newly built homes directly from builders, reflecting limited distressed inventory relative to the post–Global Financial Crisis period and potentially supporting housing supply while mortgage rates normalize.⁽⁷⁾

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Primary Authority over Real Estate Ownership and Regulation Rests with States, Limiting Direct Federal Intervention

Real estate law in the United States is primarily governed at the state level, consistent with the Tenth Amendment to the US Constitution.

• States define property rights, recording systems, zoning, and landlord-tenant rules
• Counties and municipalities manage deed recording and land use
• State courts adjudicate property disputes
• Contract law governing real estate transactions is state-based

While the federal government plays an important role through taxation, interstate commerce, banking oversight, and housing finance, direct regulation of property ownership has historically fallen within state jurisdiction.

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Federal Policy Levers are Financial and Regulatory in Nature Rather than Direct Ownership Restrictions

If federal policymakers sought to act, the most viable mechanisms would likely be indirect, including:

• Tax policy: Adjustments to tax rates or deductions (e.g., depreciation) applicable to institutional single-family rental ownership‍
• GSE financing rules: Changes to Fannie Mae and Freddie Mac eligibility, pricing, or loan-level pricing adjustments (LLPAs) for investor mortgages, which could also affect smaller landlords given existing caps on financed properties⁽⁸⁾‍
• Banking regulation: Higher capital requirements or supervisory scrutiny for banks lending to large institutional housing investors‍
• Securities regulation: Modifications affecting REITs or securitized vehicles concentrated in single-family rentals‍
• CFIUS expansion: Enhanced review of certain foreign acquisitions of US residential real estate near sensitive locations‍
• Conditional federal funding: Linking federal housing or infrastructure grants to state policy actions, subject to constitutional limits established by the Supreme Court⁽⁹⁾

More direct approaches, such as executive orders restricting ownership, would likely face legal challenges and conflict with long-standing state authority over property law.

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Broad-Based Restrictions Risk Affecting Small Landlords and Market Liquidity More Than Large Operators

Given the fragmented nature of single-family rental ownership and the widespread use of LLC structures across both small and large landlords, policy measures applied broadly to “investors” could disproportionately affect smaller operators, credit availability, and transaction liquidity. The ultimate impact would depend heavily on definitions, implementation details, and interaction with state-level rules.

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Portfolio Implications

From a portfolio perspective, potential policy actions in this area appear more likely to influence financing conditions, transaction costs, and market liquidity than to meaningfully alter near-term housing supply. Measures that raise borrowing costs or limit financing flexibility for investor-owned homes could have uneven regional effects, particularly in markets with higher investor participation, while also indirectly affecting homebuilders, mortgage credit, and rental operators. As with prior housing-related policy initiatives, outcomes are likely to depend on specific design choices and exemptions, rather than headline announcements alone.

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Takeaway

While political focus on housing affordability and institutional ownership is likely to persist, the structure of US property law suggests that any federal response would be incremental, indirect, and implemented through financial or tax channels, rather than outright ownership restrictions. The scope and impact of such measures will depend on how “institutional investor” is defined and whether policy targets large operators specifically or investors more broadly.

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Footnotes:

(1) US Census Bureau, Quarterly Residential Vacancies and Homeownership, data as of Q3 2025.

(2) Invitation Homes, John Burns Research, Single-family Rental Analysis and Forecast, published September 2025.

(3) Redfin, Investor Home purchase reports, data as of December 2025.

(4) Harvard, Joint Center for Housing, America’s Rental Housing, as of 2024.

(5) BatchData, Real Estate Investor Activity – nationwide, as of October 2025.

(6) ATTOM, Home Sales & Prices, Real Estate News, as of Q2 2025.

(7) National Association of Home Builders, Eye on Housing, Growth for Single-Family Built-for-Rent Construction, as of August 2024.

(8) Fannie Mae and Freddie Mac Selling Guides; investor mortgage eligibility rules, as of December 2025.

(9) Supreme Court precedent on federal spending conditions (e.g., South Dakota v. Dole).

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‍Disclaimer

This communication is provided for informational purposes only and does not constitute investment advice, a recommendation, or a prediction of policy outcomes. Certain information contained herein has been obtained from third party sources and such information has not been independently verified. Certain information contained herein has been obtained from third party sources and such information has not been independently verified.