Are Institutional Investors Really to Blame for the Housing Crisis?
Breaking down the path to housing abundance with AIER’s Jason Sorens on the latest episode of Acton Line.
If you’ve paid any attention to the news, or talked to a friend trying to buy their first home, you know there is deep anxiety surrounding the American housing market right now.
Prices feel out of reach, mortgage rates have fluctuated wildly, and supply in major metro areas is severely constrained. When faced with a crisis of this magnitude, people look for a villain. Lately, that villain has been “institutional investors”, the large, faceless Wall Street firms allegedly buying up all the single-family homes and pricing ordinary Americans out of the market.
But is that narrative actually true?
On the latest episode of the Acton Line podcast, I sat down with Jason Sorens, Senior Research Fellow at the American Institute for Economic Research (AIER) and principal investigator on the New Hampshire Zoning Atlas, to find out.
We looked at the hard economic data driving the housing market, evaluated the bipartisan policies currently on the table, and discussed what it will actually take to build a future of housing abundance.
Here are a few key takeaways from our conversation:
The Institutional Investor Myth
It’s easy to point the finger at big corporations, but the data tells a different story. Jason points out that large institutional investors (those owning more than 100 homes) actually own less than 1% of the single-family housing stock nationally.
Furthermore, they aren’t just sitting on empty houses; they are heavily involved in the “build-to-rent” market. By adding to the supply of single-family rentals, they are socio-economically integrating neighborhoods and driving down the cost of rent. While they might marginally increase the purchase price of homes, their overall impact on the market provides vital liquidity and housing access for families who might not qualify for a traditional mortgage.
Navigating the 21st Century ROAD to Housing Act
We also dove into the bipartisan 21st Century ROAD to Housing Act. Like most sweeping legislation, it’s a mixed bag.
On the plus side, the bill attempts to leverage federal transportation dollars, moving them away from heavily-regulated, NIMBY-heavy cities and toward municipalities that actually permit and build new housing. It also includes sensible deregulations for manufactured housing.
However, the bill also attempts to ban large institutional investors from owning single-family homes for more than seven years. As Jason notes, this would effectively kill the build-to-rent market, pulling crucial supply out of the ecosystem and making the overarching problem even worse.
The Real Culprit: Local Zoning
If Wall Street isn’t to blame, who is?
THE CALL IS COMING FROM INSIDE THE HOUSE.
The primary barriers to affordable housing are local zoning regulations, permitting delays, and restrictive building codes that make it illegal or prohibitively expensive to build dense, affordable housing where people actually want to live. Jason’s work on the National Zoning Atlas is crucial here, providing everyday citizens with the data they need to show up at local township meetings and advocate for pro-growth, pro-abundance reforms.
Practical Advice for Navigating the Market
We closed our conversation with something every citizen has to grapple with: how to be a savvy consumer when you just need a place to live. Jason offered incredibly practical advice, from utilizing cost-of-living data to geographic flexibility, to renting in a new market for a few years before rushing into a purchase.
Housing will always cost money, but by aligning our policies with economic realities rather than political scapegoating, we can get back to a market that serves ordinary families.
Watch the full episode here: Jason Sorens Builds a Case for Reforming American Housing Policy
