Locking the Door on Corporate Housing Rollups

A surprising first attack on large, corporate home buyers.

Photo credit: Tom Bridge

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In last week’s 2025 state legislative and policy preview, I wrote that I expect state legislators this year to place new limits on the ability of private equity firms and other institutional investors to buy up local housing stock to either re-sell or convert into rental properties. Even having made that prediction, I was quite shocked to see that the first lawmaker out of the gates with a concrete proposal on the topic was New York Gov. Kathy Hochul.

Hochul has been no friend to anti-monopoly efforts over the years (except for, to her credit, in the Big Tech space, where she did support strong legislation to rein in the harmful effects of social media on children). She counts among her donors many large corporations and real estate interests.

But one of her top priorities this year, supposedly, is preventing institutional investors from cornering local housing markets.

“Shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday homebuyers with fewer and fewer affordable options,” Hochul said ahead of her annual State of the State address. “I'm proposing new laws and policy changes to put the American dream of owning a home within reach for more New Yorkers than ever before.”

In a release, her office said she is proposing legislation that would eliminate tax incentives that help institutional investors purchase single-family properties and to “require a 75-day waiting period for institutional investors to make an offer on one- or two-family homes.” She also came out for a ban on algorithmic price-setting in rental housing, an issue with which readers of this newsletter should be familiar.

I have no special insight into why Hochul is so gung-ho on this topic, but I suspect she is worried about a populist primary challenger criticizing her on housing costs during a time of high interest rates. I also refuse to predict how far these proposals will get in the New York legislature, because betting on anything in particular to happen in Albany is for suckers, as I have learned over the years.

Still, it’s a very big deal that one of the Democratic governors most closely aligned with the more corporate wing of the party has come out in favor of these strong anti-monopoly measures. I’m now even more convinced that others will follow along in her wake. With that in mind, here are the facts and figures behind the political energy on this topic, in states both blue and red.

For years now, a lot of economic tracking has shown that institutional investors such as hedge funds and private equity firms have been buying up single-family housing to either flip or take off the market entirely and turn into rental housing. The Wall Street Journal claimed that investors bought more than 25 percent of the available homes across the country in 2022, and a recent study claimed private equity firms were responsible for 44 percent of single family home flips in 2023.

Meanwhile, according to MetLife Investment Management, institutional investors may control 40 percent of U.S. single-family rental homes by 2030. The Federal Trade Commission estimates that there are more than 30 corporations that now own more than 1,000 homes each.

(To be clear, there’s some blurring in some of these numbers between “investors” period, which is anyone who buys a home but doesn’t live in it, and “institutional investor,” which is popularly categorized as big corporations or funds that purchase a lot of homes. Though the former can certainly be a problem in many ways, I’m talking about the latter above and below.)

These purchases have been particularly focused on some metro areas, with cities such as Pittsburgh, Atlanta, Newark, Tampa Bay, and Phoenix seeing wide swathes of their housing stock purchased by investment firms in recent years, especially in certain neighborhoods traditionally targeted by first-time homebuyers. So though they only make up a tiny proportion of total home ownership today across the entire country — 2 to 3 percent, depending on who is counting and what they count — in certain communities, these large corporations have the power to significantly affect markets and prices.

This map, from a Government Accountability Office study of institutional investor home purchases, shows the metro areas most affected by corporations that hold 1,000 homes or more.

This jibes with an analysis by the Private Equity Stakeholder Project, which found that Georgia, Arizona, and Nevada are the states most vulnerable to negative private equity effects in their housing markets, though Florida also seems to be right in the thick of it.

According to several roundups of the available research, the evidence points to institutional investors raising both home prices and rents within metro areas where they’ve concentrated their purchases, especially because of their ability to engage in all-cash purchases.

As the Department of Housing and Urban Development put it, “Because institutional investors buy with cash and sometimes bypass appraisals and other typical processes, institutional investors can use these advantages to outcompete prospective homebuyers to purchase available homes. Investors also might be more willing to waive inspections — an attractive advantage for sellers of homes needing repairs, which are not uncommon in the markets investors target. These purchases not only take units off the market but also apply upward pressure on the prices of the homes that remain for sale.”

Rental properties owned by institutional investors and big management corporations are also more associated with junk fees and other tactics used to nickel and dime renters, such as charging them for maintenance visits or to access a particular platform in order to pay their rent, pushing up their effect on rental prices even further. The FTC, for example, recently took action against Invitation Homes, the largest corporate owner of single family homes, for deceiving renters about costs and using unfair, undisclosed junk fees.

This is not a universal result, to be sure, with a recent study finding modest rent decreases, alongside increased home prices, due to investor buying, as those firms brought more rentals onto the market.

But it does stand to reason that more concentration, all else being equal, will lead to more pricing power within a local community, particularly for something like housing, where buyers are often reluctant to move long distances and details such as being located within a particular school district can cause even a small concentration of purchases to have an outsized effect due to extremely limited supply.

Again, the politics are going to work in favor of the reformers here due to the relatively high interest rate environment, the inflationary pressure still hitting many necessary life items, and the very real fact that there’s a housing shortage in the U.S. that is putting a first home, or a move into a bigger, nicer home, out of the reach of many families that in the not too distant past would have been well positioned for a purchase. Especially if a state like New York leads the way, with its political and cultural pull, major reforms are in the offing.

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SHAMELESS SELF-PROMOTION: I spoke with the good folks at the “You’re Probably Getting Screwed” newsletter about my 2025 legislative preview. Give it a listen here.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Minnesota is facing a state constitutional crisis due to a bizarre set of circumstances in the state House.

• Massachusetts put new restrictions on private equity investments in health care.

• A new report shows Ohio could lose up to $1.6 billion on tax breaks for data center construction.

• “Speed and secrecy” enabled a Kentucky development project in which the state will spend $125 million in public money to move two higher education campuses less than six miles.

• The case against building an NFL stadium with NFL-sized parking lots in Washington, D.C.

• Texas is suing the insurer AllState for allegedly tracking drivers illegally.

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— Pat Garofalo