Politicians want to stop companies from buying homes. A ban wouldn’t bring down costs

In 2020, Raysall Wiggins made a decision that would reflect the aspirations of countless Americans: she wanted to stop renting and purchase a home in Houston’s Acres Home neighborhood where she grew up.

“I wanted to have something of my own, something that I could eventually pass down to my children,” said Wiggins, a healthcare worker and mother of two teenage sons. “My parents never had that, and I wanted something different for my own children.”

What followed was a frustrating journey. Wiggins submitted multiple offers on homes but repeatedly lost out—not to other families, but to investors and companies, according to her real estate agent. Her experience caught national attention when President Donald Trump highlighted her story during his State of the Union address, where he accused investors of “stealing away her American Dream.”

Trump used Wiggins’ story to advocate for barring institutional investors and corporations from purchasing single-family homes, a stance that has found rare bipartisan support. Both Republicans like Trump and Democrats including Senators Bernie Sanders and Elizabeth Warren have targeted Wall Street’s role in the housing market.

“Declaring a ban on institutional investors works as a political talking point,” said Daryl Fairweather, chief economist at Redfin. “It emotionally resonates with people who understand the problem but don’t necessarily understand what the right solution is.”

The narrative around corporate homebuying intensified during the COVID-19 pandemic. Low interest rates and surging housing demand created an attractive environment for investors, who at one point purchased nearly one in every ten homes sold nationwide, according to ATTOM Data Solutions.

Texas emerged as a particular hotspot for this activity. In 2021, institutional investors purchased 68,482 homes across the state—14.2% of all Texas home sales that year, up from just 7% in 2019. The Dallas-Fort Worth and Austin regions saw especially high investor activity, while Houston witnessed a dramatic increase just as Wiggins began her search.

Kim Gartner, a Fort Worth real estate agent, observed the trend firsthand. “They got frustrated and didn’t feel like they could compete, so they just kind of decided to hold off,” she said of clients who abandoned their home searches after repeatedly losing to investors.

Despite the emotional appeal of restricting corporate homebuying, housing economists argue such measures would not address the fundamental issues driving the nation’s housing crisis. Large institutional investors own only between 1-3% of the country’s single-family homes, according to estimates. In Texas specifically, corporations owning 100 units or more control less than 1% of single-family housing stock.

“When you ban institutional investors, you’re potentially banning the people who might not otherwise have access to local schools in single-family neighborhoods or other amenities in those neighborhoods,” Fairweather noted. “That reinforces income segregation and racial segregation.”

The primary driver of high housing costs, experts consistently maintain, is a severe shortage of homes. The United States lacks millions of housing units, with Texas alone needing an estimated 319,500 additional homes. Restricting institutional investors would not create a single new housing unit.

“If you stop them from buying, will it result in more housing construction? No,” said Edward Pinto, co-director of the AEI Housing Center at the American Enterprise Institute.

The U.S. Senate has advanced legislation that would limit large investors to owning no more than 350 single-family homes, with additional restrictions on build-to-rent developments. Housing experts acknowledge such measures might give individual homebuyers a slight competitive advantage by increasing supply, but not enough to meaningfully impact prices. Additionally, reducing rental housing stock could drive up rents.

Instead of targeting Wall Street, housing economists recommend focusing on increasing housing supply through streamlined permitting processes, allowing smaller homes on smaller lots, and enabling a wider variety of housing types in areas currently restricted to single-family homes. These powers largely rest with state and local governments, where changes often face resistance from existing homeowners.

Texas made some progress last year with legislation allowing smaller homes on smaller lots in some areas and apartments in commercial zones in major cities. Austin has relaxed numerous local regulations to boost housing supply, though few other Texas cities have followed suit.

After her lengthy struggle, Wiggins finally purchased a home in 2023 through the Harris County Community Land Trust, an innovative program that offers affordable homeownership by separating land ownership from the structure. While Wiggins expressed mixed feelings about not owning the land beneath her house, the arrangement allows her to build equity and achieve her goal of having something to pass down to her children.

“It was another way of still obtaining the dream,” Wiggins said, embodying the persistence of the homeownership aspiration despite mounting obstacles in today’s housing market.