01/21/2026
I have been seeing a lot of fake news regarding the proposed ban on institutional investors and here's an article that explains what the measures would be about. "The order doesn’t ban institutional homebuying—or force large landlords to sell off their existing portfolios—but instead seeks to restrict their access to federally backed financing and other forms of government support when acquiring single-family homes."
Why do I think this measure won't change much to the affordability issue:
- The vast majority of landlords are small businesses like Pete and I who only own a few rentals. And institutional investors only represented 1.2% of the single-family homes purchased in 2025 Q1 nationwide. The ratio peaked with 3.1% around 2022 during the post-pandemic boom where interest rates were historically low, home prices and rents were rapidly growing and capital was abundant (see chart in the article).
- In my experience working with small investors in Cincinnati - many from out-of-state, but not all - they are now focusing on purchasing on multi-family building or larger commercial rentals, not single-family homes as rates make single-family rental investing a losing proposition from a cash-flow perspective. Rates are high, which drastically reduces returns on single-family rentals.
- Some small investors still buy homes to be used as short-term or mid-term rental, but that market has changed also since the post-pandemic boom (see chart in the article).
- In Cincinnati, the homes that institutional investors were buying tended to be distressed and/or requiring very costly budgets to rehab, which is not the types of homes that owner-occupants were looking to buy anyway.
I understand that the "big guys" are an easy target to try to explain the (un)affordability issue, but the issue is way more complex than that - it is a combination of stagnating wages - reduced purchasing power, restrictive zoning laws, imbalance of supply and demand, and lack of new construction. And if you lower interest rates, more buyers will come to the market and prices will ramp up again.
But anyway, what do I know? 😉
Rental housing economist Jay Parsons: “The order doesn't actually ban institutional buyers (presumably due to legal limits) but [it] does look to limit it through various means like blocking Fannie and Freddie loans."
