It’s easy to find an unpopular scapegoat to pin the world’s problems on. In a January 7 Truth Social post, President Donald Trump implied that “buying and owning a home,” the cornerstone of the American Dream, is more difficult than ever because of “large institutional investors.” The President added that he’s taking steps to ban large investors from buying homes, directing Congress to codify the ban, and will provide more details at the World Economic Forum in Davos, Switzerland, later this month. Shortly after President Trump’s announcement, Sens. Bernie Moreno (R-Ohio) and Josh Hawley (R-Missouri) announced they’ll be introducing Senate legislation to codify the ban.
Yes, homes are increasingly unaffordable, but large institutional investors aren’t the reason. Runaway government red tape, including onerous zoning restrictions, is the main driver of America’s housing affordability crisis. Until policymakers address the real problem causing housing inflation, the American dream will remain out of reach.
Blaming big corporations for high housing prices is a common political trope, but it is completely untethered from reality. An August 2025 study by the American Enterprise Institute (AEI) found that “the market share of institutional investors is less than 1% nationally, with 22 counties (0.7% of counties) having percentage[s] as high as 5-10%.”
This simple observation demonstrates the folly of linking institutional ownership with the nationwide phenomenon of skyrocketing house prices. AEI further noted that, even in metropolitan areas such as Atlanta, Dallas, and Houston, which have garnered significant media attention for institutional home-buying, “investors do not dominate any single neighborhood.” Warnings by pundits and politicians about high institutional investor market share is not supported by the data, which also shows that larger investors have been net sellers for six straight quarters.
Similarly, claims of “investors” mass-buying single-family homes usually fail to distinguish between sprawling corporate enterprises and far smaller investors, like mom-and-pop landlords. An October Federal Reserve analysis notes that large-scale, “institutional” investors form a small fraction of the national SFR [single-family rental] market. In 2025, their share of single-family home purchases was only one-fifth that of mom-and-pop investors.” These are often families and small business owners with close ties to their local communities, who reinvest in their own neighborhoods while making a living for themselves. Introducing new restrictions and red tape will almost certainly hurt these entrepreneurs and make community investments more difficult.
The real culprit of high housing costs is far more nuanced than what political pundits proclaim. According to a 2020 Federal Reserve analysis of housing costs, investors’ impact on home prices is especially negligible in areas “where there are loose supply restrictions.” Therefore, “in the medium-term it may be optimal to let housing markets adjust through changes in supply instead of blocking the investors.” The Fed points to onerous local regulations as a chief culprit of rising costs.
Zoning laws and land-use regulations significantly contribute to rising home prices by limiting the supply of developable land, pushing affordable housing farther away from city centers. Local governments often impose restrictions on density, including single-family-only zoning, building height limits, lot size requirements, and specific land-use types. These ill-considered constraints reduce the number of housing units that can be built in a given area, particularly in high-demand urban and suburban locations.
When demand for housing remains strong and supply is artificially capped, prices naturally rise. Recent research has shown that heavily regulated markets like San Francisco, New York, and Boston have much higher housing costs compared to cities with more permissive zoning frameworks, such as Austin, Texas. “Zoning taxes” identified in this research account for 10 percent or more of housing costs, a testament to the unacceptably high price of these rules.
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Targeting institutional investors may score political points, but it won’t lower housing prices or increase the housing supply. It’s time to identify the real problems fueling house prices, roll back the red tape, and encourage more private sector investment in the housing market.
Ross Marchand is the executive director for the Taxpayers Protection Alliance.
