When Senator Ed Markey introduced the American Homeownership Act in February 2026, the headline was familiar: Wall Street is buying up American homes and pricing out working families. The House had already reintroduced H.R.7138, the Stop Wall Street Landlords Act, three weeks earlier. By March, some form of corporate landlord restriction appeared poised to become federal law.
There is one problem with this legislative surge: the empirical foundation is nearly nonexistent. The premise—that institutional investors are acquiring a significant share of the single-family housing stock and thereby driving up prices—dissolves on contact with actual data. Understanding why requires two things: a clear-eyed look at who actually owns homes in America, and an honest accounting of what is genuinely constraining housing supply.
What the Ownership Data Actually Shows
The numbers are not ambiguous. According to the American Enterprise Institute's analysis, large institutional investors—defined as entities owning 100 or more properties—hold roughly 1 percent of the nation's single-family housing stock. A Brookings Institution analysis cited by EconoFact puts their share of the single-family rental market at 3 percent—and the Urban Institute arrives at a comparable figure of 3.8 percent of nationwide single-family rental stock.
John Burns Research and Consulting, also cited in the EconoFact analysis, found that institutional investors were responsible for less than 2 percent of all home purchases nationally. Meanwhile, small investors—those owning fewer than five properties—own approximately 85 percent of all investor-held residential properties.
The Federal Reserve Bank of St. Louis documented in its October 2025 analysis of single-family rentals and the U.S. housing market that institutional investors' share of single-family home purchases in 2025 was one-fifth that of mom-and-pop investors. Data from Scotsman Guide confirms that small "mom-and-pop" landlords now account for more than 60 percent of all investor purchases.
These figures do not describe a market dominated by corporate behemoths. They describe a market where small, individual landlords are the overwhelming force—the same type of landlord who has provided rental housing throughout American history.
Sowell's Stage One Thinking
Thomas Sowell spent decades cataloguing a specific intellectual failure: focusing on the first visible effect of a policy or phenomenon while ignoring the deeper mechanisms at work. In Applied Economics, he called this "stage one thinking"—the political reflex to identify a visible culprit and legislate against it, regardless of whether that culprit is actually responsible for the underlying problem.
The institutional investor narrative is stage one thinking operating in real time. Large corporate landlords are visible. They have recognizable names—Invitation Homes, Blackstone, American Homes 4 Rent. Their acquisitions generate press releases. They are an emotionally satisfying target. What they are not is the cause of housing unaffordability.
The cause has been documented by researchers across the political spectrum for over a decade, and it has nothing to do with who owns existing homes.
The Structural Supply Deficit
The United States does not have enough homes. Freddie Mac's most recent analysis estimated the U.S. housing shortage at 3.7 million units as of Q3 2024—a figure that has persisted at roughly that magnitude for years despite significant construction activity. Realtor.com's 2026 Housing Supply Gap Report widened that estimate to 4.03 million homes in 2025—the third-largest annual deficit since 2012. In 2025, approximately 1.36 million housing units were started while 1.41 million new households formed. That gap compounds on more than a decade of underbuilding.
This shortage did not emerge from a corporate acquisition strategy. It is the product of decades of regulatory accumulation at the local, state, and federal levels: single-family zoning mandates that prohibit density on the vast majority of urban land, permit approval backlogs stretching months or years, environmental litigation deployed to halt construction, inclusionary zoning requirements that raise per-unit costs, parking minimums that consume buildable land, and impact fee structures that can add tens of thousands of dollars to a home before a single foundation is poured.
The evidence on this point is unambiguous: where zoning is permissive and permitting is fast, housing gets built and prices moderate. Where it is not, prices rise and remain elevated. The correlation between restrictive land-use regulation and high home prices is among the most consistently documented findings in urban economics.
The Price Mechanism as Signal
Friedrich Hayek's foundational insight about the price mechanism is directly applicable here. Prices are not arbitrary—they are signals encoding dispersed information about supply and demand that no central authority can fully replicate. When rents and home prices are high and rising in a given city, that is the market communicating that more housing supply is urgently needed in that location.
The correct response to that signal is to remove the barriers preventing new supply from entering the market. Legislating against the buyers of existing homes does not add a single unit of housing. It changes who owns the inventory without changing how much inventory exists.
Why the Legislation Fails on Its Own Terms
Even granting the underlying premise—which the data does not support—the proposed legislation contains structural flaws that ensure it will accomplish little. The American Homeownership Act caps corporate single-family ownership at 350 homes. But a carve-out allows companies to sell excess homes to other corporate landlords, meaning aggregate corporate ownership levels remain unchanged. The law reshuffles ownership within the institutional sector while leaving total inventory unaffected.
Meanwhile, restricting investor participation in housing markets creates disincentives for the renovation and maintenance of distressed housing stock—work that frequently requires capital and scale that individual buyers cannot easily deploy in blighted neighborhoods. Renters who cannot afford to purchase homes are not helped by policies that reduce the pool of available rental inventory.
Milton Friedman's warning that well-intentioned policies routinely produce outcomes opposite to their stated goals was not cynicism about motives. It was a caution about mechanisms. Good policy requires tracing consequences through the full chain of market effects—not stopping at the first emotionally resonant response.
What Would Actually Solve the Problem
The free-market case for housing affordability rests on a straightforward and well-supported proposition: allow more housing to be built. Remove the regulatory constraints that artificially limit supply in high-demand markets. Reform or eliminate single-family-only zoning in areas with acute shortages. Streamline permitting timelines. Reduce the impact fees and compliance costs that are passed directly to buyers and renters in the form of higher prices.
These reforms are less glamorous than targeting corporate landlords. They require confronting the diffuse, entrenched political interests of incumbent homeowners and local governments that benefit from restricted supply. They do not produce a singular villain for a press release. But they address the actual problem.
Targeting institutional investors who hold less than 1 percent of the single-family housing stock is, at best, a distraction. At worst, it consumes the political capital needed for genuine supply-side reform, delays the policy changes that would actually expand inventory, and leaves 4 million households without homes they could afford. The housing crisis was built over decades of misguided land-use policy. It will only be solved by dismantling that policy—not by redirecting attention to a scapegoat that the data does not support.
