Bipartisan Push to Ban Institutional Homebuyers May Worsen Housing Crisis, Experts Warn

In a rare moment of bipartisan agreement, President Donald Trump and Senate Democrats have united behind a proposal to ban institutional investors from purchasing single-family homes. The move, aimed at addressing the nation’s worsening housing affordability crisis, has sparked fierce debate among economists and housing experts. While the bills—including Trump’s 100-home cap and the Senate’s 350-home threshold—seek to curb corporate ownership, analysts warn the measures could exacerbate the very problems they aim to solve, particularly for low-income renters.

The Bipartisan Push to Limit Institutional Homebuyers

The Senate voted 89-10 in February to pass a sweeping housing affordability bill that includes provisions to restrict large-scale investors from acquiring additional single-family homes. The measure targets entities owning at least 350 properties, a threshold that would affect major players like Invitation Homes and American Homes 4 Rent. Meanwhile, Trump’s State of the Union address emphasized a similar cap at 100 homes, framing the issue as a fight to ensure homes are 'for people, not for corporations.'

Why Both Parties Support the Ban

The bipartisan support reflects growing public frustration over rising home prices and shrinking affordability. The U.S. currently faces a shortage of 4.7 million housing units, according to Zillow, while the median age of first-time homebuyers has climbed to 40. Both Trump and Senate Democrats argue that limiting institutional investors will free up more homes for individual buyers, though economists remain skeptical.

Why the Ban Could Backfire on Low-Income Renters

Critics, including rental housing economist Jay Parsons, argue that targeting institutional investors—who own just 3% of single-family rentals—won’t solve the affordability crisis. 'Banning a small piece of the market does nothing to address the actual challenges facing people who want to buy a house,' Parsons told Fortune. He warns that the measures could reduce rental supply, slow development, and displace millions of renters who rely on institutional landlords.

The Reality of Who Rents from Institutional Investors

Data from The Amherst Group reveals that 71% of their renters wouldn’t qualify for a mortgage under current credit and income standards. The average single-family renter has a FICO score of 650 and a household income of $88,000—far below the $150,000+ income of typical homeowners. For many, renting from institutional investors is the only viable option, as Parsons notes: 'These are real families who can’t afford homeownership, regardless of who owns the property.'

The Broader Housing Affordability Crisis

The root causes of the housing crisis extend far beyond institutional investors. Zoning laws, high land and construction costs, and labor shortages have all contributed to the 4.7 million-unit deficit. Laurie Goodman of the Urban Institute argues that banning investors won’t fix these structural issues. 'We need to focus on increasing supply and lowering costs across the board,' she said.

The Shift in Homeownership Priorities

Younger generations are rethinking the traditional emphasis on homeownership, according to Sean Dobson, CEO of The Amherst Group. High transaction fees—up to 9% of a property’s value—along with rising prices have made mortgages less attractive. Many prioritize flexibility, savings, and lifestyle choices over the financial and logistical burdens of homeownership.

What Experts Say Are the Real Solutions

Economists and housing policy experts agree that addressing the affordability crisis requires systemic changes. These include reforming zoning laws, reducing construction costs, and expanding access to affordable mortgages. Parsons emphasizes that '90% of single-family rental investors are small, local mom-and-pop landlords,' suggesting that targeting large corporations won’t yield meaningful results.

• Banning institutional investors won’t significantly increase homeownership opportunities for low-income Americans.
• The U.S. housing shortage stems from systemic issues like zoning laws and high construction costs, not just corporate ownership.
• Many renters rely on institutional investors because they can’t qualify for mortgages under current standards.
• Younger generations are prioritizing flexibility over traditional homeownership due to financial and lifestyle factors.