There’s no question that the United States faces a housing affordability problem as both rents and mortgages remain above the historic average. It’s natural to try to find a boogeyman for the problem, and the latest Truth Social post by President Trump erroneously points the blame at institutional investors and Wall Street. This misdiagnosis, unfortunately, does little to address some of the main drivers of housing costs, which are local government’s barriers and mortgage rates.
Institutional investors represent a relatively small share of the overall housing market. The vast majority of single-family homes in the United States are owned by individual homeowners, not Wall Street firms. Data show the largest institutional investors collectively own 450,000 single-family homes as of 2022, representing only about 2% of the single-family rental housing stock across the U.S., according to the Government Accountability Office. This limited footprint makes it implausible to argue that they are driving nationwide price increases that have affected urban, suburban, and rural communities alike.
Critics argue that institutional ownership drives up rents, but rent growth closely tracks the relationship between supply and demand. In markets where new housing construction is robust, rent growth tends to be more moderate, even with investor participation. For example, in Austin, Texas, rents have dropped significantly due to a flood of new apartments that have opened since 2022. Conversely, in highly regulated markets like New York where government policies reduce the availability of new supply, rents rise quickly regardless of ownership structure. This underscores the central role of supply constraints, not investor behavior.
Housing prices were rising long before institutional investors became a political talking point. For years, housing supply failed to keep pace with population growth and household formation. Zoning rules that restrict density, lengthy permitting processes, environmental reviews, and local opposition to new development have made it difficult and expensive to build new homes. When demand rises but supply is artificially constrained, prices increase regardless of who is doing the buying. Institutional investors did not create these constraints, nor do they have the market power to overcome them.
Rather than pointing blame at business, Congress has been taking action to alleviate the permitting and zoning barriers imposed by local governments. For example, in December, the House Financial Services Committee passed one of the most comprehensive housing supply bills in the Committee’s history: the Housing for the 21st Century Act. The package introduces reforms intended to streamline housing production, modernize existing programs, and give counties more flexibility to meet local needs—all the while avoiding new spending authorizations that taxpayers would have to bear.
By identifying and setting new voluntary guidelines on how to modernize local zoning frameworks, the Housing for the 21st Century Act helps reduce barriers that drive up costs, delay projects, and limit housing choices—especially in high-opportunity areas near jobs, transit, and schools. Over time, better information can support smarter reforms that allow more apartments, townhomes, and mixed-use developments to be built where people want to live.
While the Housing for the 21st Century Act has passed Committee, it is still awaiting consideration by the full House of Representatives. The sooner this bill reaches the President’s desk, the sooner the private sector will be able to plan, break ground, and build more housing.
Let’s also not forget how the One Big Beautiful Bill will also help solve the housing construction dilemma. A private sector analysis estimates that 1.22 million additional affordable rental homes could be financed from 2026 to 2035 due to some of the tax provisions, including the permanency of bonus depreciation.
Cutting regulations and taxes will do more to spur housing construction than pointing blame and misguided actions to restrict housing purchases by a handful of buyers. Sure, it may be politically expedient to do so, but it ultimately does nothing to actually address a real problem. Let’s hope President Trump sticks with proven solutions to fix America’s government-caused housing affordability crisis.