Congress is moving to restrict large investors who are already spending billions rehabilitating distressed homes, while proposing a small federal pilot program to do the same thing less efficiently. This troubling contradiction sits at the heart of the 21st Century ROAD to Housing Act.
Our new research on the role of large institutional investors in single-family housing helps explain why this approach is flawed. Using detailed property-level data from Amherst Holdings — one of the largest investors in this space — we find that these firms are not primarily competing with first-time homebuyers for move-in ready homes. Instead, they systematically target properties in below-average condition within their neighborhoods, often homes with deferred maintenance or physical deterioration.
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These are not turnkey properties. They are homes that typically require substantial investment before they are livable. Amherst alone has spent roughly $1.9 billion rehabilitating about 50,000 homes, with a median investment of around $32,000 per property. These renovations are not cosmetic. They bring homes back up to neighborhood standards and return underutilized or deteriorating properties to productive use.
While our data are focused on one firm, it is not alone. At least three other large institutional investors operate with similar strategies. Taken together, total rehabilitation spending in this segment likely reaches between $5 billion and $10 billion.
This points to a broader issue in the housing market. “Housing supply” is not just about the number of units that exist on paper. It is about how many homes are actually livable. A meaningful share of the housing stock is effectively sidelined due to poor condition or deterioration. In some cases, these properties remain vacant or fall further into disrepair. Large-scale investors are playing a role in addressing that gap by deploying capital and operational capacity to bring these homes back into circulation.
This makes Section 901 of the 21st Century ROAD to Housing Act particularly concerning. The provision would restrict large institutional investors from acquiring and holding single-family rental properties. While intended to ease competition for first-time buyers, such restrictions risk reducing investment precisely where it is most needed: in the rehabilitation of distressed housing.
At the same time, Congress proposes something very different in Section 203: a federal pilot program to fund repairs for low- and moderate-income homeowners and small landlords. The goal is to preserve and improve existing housing.
Unfortunately, Congress seems to have forgotten the lessons of the past. Federal efforts to promote housing rehabilitation date back to the New Deal, including Title I of the National Housing Act of 1934. More recent programs, such as the Neighborhood Stabilization Program, delivered localized improvements but proved administratively complex and had limited overall impact. Common challenges have included weak oversight, fraud risks, inflated costs, and slow implementation.
Large-scale housing rehabilitation is difficult. It requires not just capital, but also the ability to manage dispersed projects, coordinate contractors, standardize materials, and control costs. Institutional investors have developed systems to do this at scale. These efficiencies allow them to complete projects more quickly and often at a lower cost per unit than smaller, fragmented efforts.
There is little reason to believe that a new pilot program will succeed where decades of similar efforts have struggled. Even if it could be scaled, it is unclear why policymakers would replace an activity the private sector is already carrying out at scale.
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The contradiction at the heart of the 21st Century ROAD to Housing Act is difficult to reconcile. Restricting large-scale private investment will likely reduce the flow of capital into older, under-maintained housing. That means fewer homes being rehabilitated, more properties remaining in poor condition, and ultimately a smaller effective housing supply.
Undermining large-scale private investment while attempting to replace it with a small federal program is not a solution — it is a major step backward.
Tobias Peter is co-director of the AEI Housing Center.
