Republicans at all levels of government have an historic opportunity to promote policies that improve housing affordability and help families build wealth for generations. However, some proposals, such as bans on institutional investment in housing, only empower bureaucrats and risk killing the goose that laid the golden egg. Policymakers should ditch this wealth-destroying idea and focus on cutting red tape.
When housing prices shoot up, and mortgage rates remain stubbornly high, it’s easy to find a scapegoat to blame. In his recent State of the Union address, President Trump reiterated his support for banning “large Wall Street investment firms from buying up in the thousands, single-family homes.” Left-of-center lawmakers such as Sen. Elizabeth Warren (D-Mass.) have joined the bandwagon, introducing legislation to selectively eliminate housing-related tax deductions when investors are behind the home purchase. And now, members of Congress such as Sen. Bernie Moreno (R-Ohio), are pushing for legislation to ban these large investors from purchasing single-family homes. While some proposed exceptions would at least leave investor-to-investor purchases out of the ban, any ban is wrongheaded and would lead to significant issues.
Unfortunately, several state lawmakers feel emboldened to pursue the same policies. Georgia lawmakers in particular have several bills to regulate and increase taxes on institutional investment in the state’s housing market. Grandstanding aside, raising taxes and empowering the government is the wrong way to solve the problem.
Federal and state lawmakers are focusing on the wrong culprit and ignoring the real cause of high and rising prices: land-use regulations. Until policymakers grasp this, young and struggling families will continue to be priced out of the housing market.
For all the blame that “institutional investors” get for rising home prices, they are a surprisingly small share of the market. According to a recently released analysis by the American Enterprise Institute, “[l]arge institutional investors (100+ properties) own roughly 1 percent of the single-family 1–4 housing stock.” Most investors are small and own less than 10 properties. These mom-and-pop investors account for 11 percent of the market and use rental payments to put food on the table and to reinvest back in their local communities.
Despite the small share of ownership by institutional investors, forcing these investors to sell the homes they own all at once would create a disruptive ripple effect across the economy. For starters, it would likely tank home values for owner-occupied homes in the surrounding neighborhoods. Homeowners’ home equity would decline, while renters in single-family homes would potentially be evicted. These renters would not automatically become homeowners because regulations and credit scores may well prevent them from obtaining a mortgage. Additionally, the newly vacant homes would not be purchased immediately, leaving them empty until they find a buyer—a process that takes time.
These reckless policies would displace Americans from their homes, reduce wealth across the country, and wreak havoc on the economy.
Land-use regulations, such as zoning requirements, impact affordability far more than institutional investors. When cities limit multifamily construction, cap density, or require large setbacks and parking minimums, they effectively reduce the number of homes that can be built on valuable land. Basic economics follows: when demand rises but supply is artificially restricted, prices increase. Empirical research across states and major metropolitan areas has consistently found that more heavily regulated housing markets exhibit higher price-to-income ratios and greater rent burdens. In places where development approvals require multiple hearings, environmental reviews, and discretionary sign-offs, uncertainty and delay further increase costs.
Beyond outright limits on supply, land use regulations also raise per-unit construction costs. Design rules, environmental mandates, impact fees, inclusionary zoning set-asides, and parking minimums can add tens of thousands of dollars to the cost of each new unit. Large minimum lot sizes prevent smaller, more affordable starter homes; bans on duplexes or accessory dwelling units eliminate naturally lower-cost housing options. Over time, these constraints reduce housing elasticity—the ability of a market to respond to rising demand with new supply—leading to more volatile price spikes during economic growth. The result is not just higher prices, but also greater inequality, longer commutes, and slower regional economic growth, as workers are priced out of productive labor markets.
Whether in Washington, D.C., or states such as Georgia, it’s easy to point to corporate behemoths as the reason why homes seem way more expensive than they ought to be. But until land-use regulations are cut down to size, housing supply will remain artificially constricted, and families will continue to pay the price. The Grand Old Party needs to stop pointing fingers and focus on the real problems holding back homeownership.
