The Great Housing Affordability Debate: Why Institutional Investors Aren’t the Villain
- Frank Deliessche, MBA, PMP
- Feb 17
- 8 min read
Housing affordability has become one of the loudest talking points in American politics. In recent months, public officials on both sides of the aisle have taken aim at so‑called Wall Street landlords, proposing measures to limit or even ban institutional investors from purchasing single‑family homes. The narrative goes like this: financial firms are hoarding houses, crowding out first‑time buyers, and inflating prices. It’s a compelling story, tailor‑made for campaign ads and cable news. But it’s wrong. Institutional investors simply do not control enough of the housing stock to drive a national affordability crisis, and focusing on them distracts from the policies that truly constrain supply. As a firm that invests in single‑family rentals and partners with builders to add new housing, Shore Acres Capital believes it’s time to reframe the debate.
Institutional Investors & Housing Affordability: Myth-Busting the Scapegoat Narrative
Political narratives often survive because they are simple and satisfy deeply held biases. “Wall Street is buying up all the houses” fits neatly into a populist storyline. The data tell a different story. Investors owning more than 100 properties account for roughly one percent of the U.S. single‑family housing stock and have never represented more than three percent of annual home purchases (1). In other words, if you took every corporate landlord in America off the board tomorrow, 99 percent of existing single‑family homes would remain where they are. Yet this “one percent” share has become a lightning rod for frustration over high prices.
Moreover, the oft‑repeated claim that “investors buy a quarter of homes” conflates Wall Street firms with small landlords. Mom‑and‑pop owners dominate the investor pool, and mixing them with institutional players makes the share of investor purchases look far larger than it really is. Geography also matters: institutional ownership is highly concentrated, with five percent of counties holding 80 percent of institutionally owned homes; more than half of counties have none at all (1). Even in “hot” markets such as Atlanta and Houston, corporate ownership sits in the low single digits. Some of the fastest‑growing housing markets over the past decade - San Jose, Bend, Providence - have virtually no institutional presence. That these markets still saw huge price gains underscores a simple truth: scarcity, not financialization, drives price appreciation.
When policymakers propose bans or punitive taxes on institutional buyers, they are chasing a phantom. Large institutional investors acquired 178,000 single‑family homes over the 21 months ending in November 2025 but sold 185,000 homes during the same period, resulting in a net decline of about 7,000 properties. These purchases represented less than two percent of all single‑family home sales. Such numbers make clear that investors are not a tidal wave washing away homeownership. If we banned them, the supply of available rental properties would shrink, but the flood of first‑time buyers would not materialize. Small landlords and individuals would continue to dominate the market, and prices would remain tethered to supply and demand.
The Real Root Cause: We Don’t Build Enough
If institutional investors aren’t to blame for high prices, what is? The answer is as unglamorous as it is powerful: we’re not building enough homes. Decades of restrictive land‑use policies -exclusionary zoning, burdensome discretionary review processes, costly environmental mandates - have throttled new construction and created artificial scarcity. States like California and New York face housing shortages equal to 15 percent and 11 percent of their total housing stock, while institutional investors own just 0.2 percent and 0.1 percent there. Even a draconian forced sell‑off "would only be a drop in the bucket given their small market share" (2). We can also talk about rent-controlled apartment warehousing but that deserves its own article completely.
This regulatory maze explains why prices have skyrocketed even in areas with few institutional landlords. Since 2012, national home prices have risen roughly 150 percent. Yet some of the largest gains occurred in markets with virtually no corporate ownership, while metros with higher investor shares saw below‑average price growth. Politicians often ignore this nuance because it requires confronting local zoning boards and planning commissions rather than faceless corporations. In California, for example, a patchwork of zoning rules prevents developers from building the “missing middle” housing—duplexes, triplexes, small apartment buildings—that would provide relief for middle‑income households. The state’s 11 percent housing shortage translates to hundreds of thousands of missing units (2). Institutional investors cannot conjure those units into existence, but they can help build them if allowed to operate.
Opponents of investor participation sometimes argue that removing large buyers would create space for families. Yet the biggest constraint is not competition at the point of sale but the lack of new listings. Fewer than half as many homes are built today relative to the 1970s, even though the U.S. population has grown by more than 50 percent. Not In My Back Yard politics, lengthy permitting processes, environmental lawsuits and minimum‑lot‑size requirements lock large swaths of land off limits for housing. Until those barriers are lowered, the supply of both for‑sale and rental homes will remain tight, and prices will remain high.
Build‑to‑Rent: Adding Supply Where It’s Needed
One of the least discussed but most promising ways to expand housing is the build‑to‑rent (BTR) sector. BTR communities are purpose‑built neighborhoods of single‑family homes designed for rental. They fill a critical gap between multifamily apartments and for‑sale housing by providing a detached home with a yard and garage, without requiring them to take on a mortgage. In 2024, homes in BTR communities accounted for about 30 percent of acquisitions by large institutional investors, and these homes already make up roughly four percent of the single‑family rental stock (3). That share is small now but growing rapidly.
What makes BTR important is its ability to add supply on underutilized land. Large investors partner with homebuilders to develop entire neighborhoods of rental homes on raw or under‑used parcels. These projects increase overall housing stock; they don’t siphon off existing homes from first‑time buyers. They also come with professional management, standardized maintenance and community amenities such as parks, pools and walking trails. For families who value the space of a single‑family home but aren’t ready (or don't want) to buy, BTR offers a middle path.
Critics worry that corporate landlords are crowding out traditional homeowners. In reality, banning or restricting institutional acquisitions could be catastrophic to the BTR sector, because it would remove the capital needed to finance large‑scale development. Over the last two years, BTR has been one of the fastest‑growing segments of single‑family construction. Policies targeting investors would choke off this emerging source of supply just as it begins to scale. Supply would tighten further, hurting renters and prospective buyers alike. Rather than demonize BTR, policymakers should encourage it by streamlining zoning and permitting for rental communities. Doing so would create new homes without competing with existing ones.
Our Perspective: Investing for Communities and Investors
Shore Acres Capital does not fit the caricature of a faceless corporate landlord. We are a relationship‑driven firm committed to raising capital to revitalize communities and provide strong returns. Our strategy is built around a simple idea: buy lmmmwwunderappreciated single‑family homes, renovate them to high standards, and sell them to owner‑occupiers or long‑term investors. We aren’t long‑term holders; we flip properties. But flipping isn’t about speculation - it’s about injecting capital into neglected homes, modernizing them, and bringing them back into productive use. This approach breathes new life into neighborhoods, creates jobs for local contractors and raises property values across the community.
When we partner with homebuilders, we focus on projects that need capital and attention. We often acquire underused properties or infill lots that have languished because of neglect or disinvestment. After renovation or development, we sell these homes to families or investors who will continue to steward them. Our goal is not to hoard houses; it’s to ensure that each project leaves the neighborhood better than we found it.
We also understand that renting can be a smart choice for many families, especially those planning to move within a decade. As flippers, we respect that dynamic by ensuring that the homes we sell are quality dwellings that support future renters when sold to landlords. Many of our buyers are owner‑occupiers who want a move‑in ready home; others are landlords who will offer safe rentals to their tenants. By revitalizing properties, we contribute to the quality of both the owner‑occupied and rental housing stock.
We also understand that many investors, especially high‑net‑worth individuals, want exposure to real estate but lack the time or expertise to identify and renovate properties themselves. Shore Acres Capital structures investments so that our partners share in the gains from revitalizing and reselling these homes. They participate in the upside of bringing a property back to life and helping communities flourish. By pooling capital, we can tackle projects that might be too large or complex for individual investors, further diversifying risk.
Policy That Moves the Needle
If policymakers truly want to improve affordability, they should focus on expanding supply rather than blaming investors. The AEI Housing Center suggests a federal‑state partnership that would reward states for loosening land‑use restrictions and encouraging smaller lots. By offering $25,000 bounties tied to homes built on smaller lots - states could unlock hundreds of thousands of new single‑family homes each year that sell for about 20 percent less than the median home price (2). Funding could come from repurposing existing federal housing subsidies. Crucially, states would retain flexibility in how they deploy these funds, empowering local solutions.
On the regulatory front, cities and counties should revisit minimum lot sizes, parking requirements and height restrictions that make it illegal to build the types of housing people need. New York has made an effort with the City of Yes initiative and that's a great start. Streamlining permitting and environmental reviews can shave years off project timelines, reducing carrying costs and, ultimately, rents and sale prices. Lawmakers should also make it easier for owners to add accessory dwelling units and convert single‑family homes into duplexes where appropriate. These incremental additions help fill the “missing middle” and create affordable options without requiring massive subdivisions.
Finally, regulators should avoid knee‑jerk reactions to market dynamics. Policies like capping the number of homes an investor can buy or forcing large landlords to divest might feel satisfying, but they would reduce supply and raise costs. A better approach is to encourage competition. Allow institutional capital to fund large‑scale development while ensuring robust tenant protections. Encourage small landlords to rehabilitate existing properties by providing tax incentives or low‑interest financing. And, critically, empower renters by protecting them from discriminatory practices and ensuring leases are transparent and fair.
Conclusion: Stop the Scapegoating, Start Building
Housing affordability will remain a headline issue as long as the United States fails to produce enough homes. Scapegoating institutional investors may be politically expedient, but it does nothing to address the structural underpinnings of the crisis. Institutional investors own only about one percent of single‑family homes, and their activities are dwarfed by those of small landlords and owner‑occupiers. The real culprits are restrictive zoning, burdensome regulations and a chronic shortage of new construction.
At Shore Acres Capital, we believe the path forward is clear. We need to build more housing - of all types, for all income levels. We need to embrace innovation in housing finance and development, including build‑to‑rent communities that deliver new supply. We need to partner with local governments, not fight them, to create neighborhoods that families are proud to call home. And we need to welcome private capital as part of the solution, not treat it as an enemy. By focusing on supply, streamlining regulation and fostering partnerships, we can make housing more affordable while still delivering strong returns for investors. That’s not just good policy, it’s good business.
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