A new article by Charles Sauer, originally published in RealClearMarkets, pushes back on the growing political narrative that institutional investors are to blame for America’s housing shortage. Instead, Sauer argues that policymakers are targeting the wrong culprit—while ignoring the real issue: a lack of housing supply driven by government policy.
“The idea that institutional investors’ purchases of single-family homes are depriving middle and working class Americans of access to affordable housing is a good talking point… However, the truth is that private housing investors are part of the market’s solution to a problem caused by government.”
Sauer explains that institutional investors are not hoarding homes or leaving them vacant. Rather, they are putting capital to work by purchasing and renting homes—often improving properties in the process and expanding access to desirable neighborhoods.
“Institutional investors buy single family homes to rent them to families… This gives families—who cannot afford to buy a more expensive home in a desirable location—the opportunity to move to a better neighborhood.”
For many Americans, renting is not just a fallback—it’s a rational financial decision. With homeownership costs significantly higher and down payments out of reach for many households, rental housing plays a critical role in economic mobility.
“Renting makes sense for many families since the annual cost of home ownership is 40% more than the annual cost of renting… the median down payment on a house is a whopping $67,500.”
The benefits extend beyond housing alone. Access to rental homes in higher-opportunity areas can have long-term impacts on families, particularly children.
“An increase in single family rental homes means an increase in children from low-income families attending a high-performing school.”
Importantly, Sauer dismantles the claim that institutional investors dominate the housing market.
“The market share of institutional investors is less than 1% nationally… the majority of investor-owned homes were purchased by small mom-and-pop investors.”
In many cases, large investors are not competing for existing homes—they are helping build new ones, increasing supply where it is most needed.
Rather than imposing new restrictions, Sauer argues policymakers should focus on expanding housing supply by reducing barriers to construction. Evidence from cities around the world supports this approach.
“Rental prices in Austin, Texas fell by 22% after the city reduced regulations… In contrast… Rotterdam banned large housing investors. The result was significantly inflated rental prices due to a reduction in rental housing supply.”
The takeaway is straightforward: increasing supply lowers costs, while restricting investment does the opposite.
“Those serious about lowering housing costs should focus on removing government-imposed barriers to building homes.”
Sauer concludes by calling for a broader coalition—across political lines—to focus on real solutions that make housing more affordable and accessible for American families.
Read more at RealClearMarkets by clicking here.
