One of the most common types of small business in the United States is to own rental property. The median landlord owns two properties. It’s a side gig where people can make some money in addition to their full-time job by providing someone else a place to live.
Large investors, those with over 100 properties, own 1 percent of U.S. homes. Yet, detractors on the left and right have made them into villains who are scooping up houses from hard-working families.
President Donald Trump joined that chorus Wednesday by proposing a ban on large investors from buying single-family homes, which he called upon Congress to codify into law. “People live in homes, not corporations,” he said. The president plans to talk more about the issue later this month when he attends the World Economic Forum in Davos, Switzerland.
Until now, this was a liberal dream. “Senate Democrats tried to do this last year,” repliedSenate Minority Leader Charles E. Schumer (D-New York). The Biden White House said in 2021 that it was working to “make more single-family homes available to families instead of large investors.”
Now that Trump is onboard, hopefully it becomes easier for Democrats to acknowledge what has been true all along: this is populist claptrap.
Large-investor purchases were more common in 2021 and 2022 than now, but they never made up more than 3 percent of home purchases in a year. There is some regional variability, but no county has even 10 percent of its homes owned by large investors. And there is no correlation between a state’s housing shortage and its share of homes owned by large investors.
The large-investor purchases were one manifestation of the asset-price inflation that comes with rock-bottom interest rates. As rates rose, other ways to make money became more attractive, and large investors have sold many of the homes they purchased.
The problem with housing is that there isn’t enough of it. Government shouldn’t care who buys it. It should be looking for ways to make it easier to build more of it, which will mean getting out of the way. Scapegoating investment bankers is always politically popular, especially in an election year, but it won’t do anything to make housing more affordable.
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