Senate Democrats to Introduce Bill to Limit Private Equity and Big Investor Ownership of Single Family Homes Despite Nearly Zero Impact on Affordabilty

Amusingly, the Democrats are cherry-picking the ideas that Donald Trump tossed out to address the so-called affordability crisis. Senators Elizabeth Warren and Jeff Merkley are introducing the American Homeownership Act which sets out to curb the role of institutional investors in single family housing. We have embedded their fact sheet as well as the January Trump executive order at the end of this post.

However, as we will explain, this bill looks set to have limited practical impact. It is more important in setting a precedent of trying to limit big investor action to gain market power and use that to drive up prices to the detriment of consumers. Among other things, the summary reads as if it is prospective, when the big behemoths that own US residential real estate bought when the market was weak, particularly after the foreclosure crisis, and are not much in acquisition mode now.

We described at some length how Trump proposal, to cap credit card interest rates at 10%, would in the end harm those who were using credit cards as a funding source. Despite the fact that credit card interest rates are at nosebleed levels, as law professor and consumer finance expert Adam Levitin explained in detail, card issuers incur high costs, partly due to loan losses and administration but even more due to marketing. A 10% limit would result in credit card companies severely restricting lending and focusing on low-risk customers. That would drive many consumers into even higher cost borrowing, like payday loans, buy now pay later schemes, and even loan sharks.

Here, by contrast, the effects, even though limited, would be mainly salutary. The fact sheet embedded below gives an outline; I was unable to find a draft on the Congress.gov site. Presumably that is coming pronto.

As I read the fact sheet, it would end depreciation and mortgage interest tax deductions on newly-purchased single family homes for rental, and would not impact existing portfolios. It would restrict tax writeoffs on newly-built homes that a big institutional developer kept as rental property. From the fact sheet:

Any entity that builds new single-family homes will be permitted to keep the tax benefits for five years, at which point the benefits will turn off – encouraging both new construction and sales to real people.

It does preserve tax benefits for the renovation and rental of uninhabitable properties. It does not address the corporate acquisition of multifamily housing, which has also seen landlord abuses. One notorious case was the BlackRock/Tishman Speyer acquisition of Manhattan’s Stuyvesant Town, which ended in bankruptcy. It wan’t just that the deal was done at the top of the pre-crisis market; it was also that its economics depended on forcing rent-regulated tenants out and getting leases up to much higher current market rates. The new owners found out that New York City’s tough housing laws made that very difficult

The fact sheet is less than clear on what size of investor and/or portfolio would be subject to the legislation. It repeatedly mentions “Wall Street landlords” instead. This section suggest the trigger for inclusion is legal structure, as in being a limited partnership acquiring more than 50 houses:

● Private equity, hedge funds, private real estate investment trusts, and big investment managers – the Wall Street landlords most tied to abusive practices – won’t get tax breaks for buying up housing of any kind.

● Other corporate entities that buy up more than 50 single-family homes for rent >won’t get those tax breaks either – making it more likely that real people can buy those homes and achieve the American dream of homeownership.

Keep in mind:

Remember a few days ago….

President Trump banned institutional investors from buying single family homes?

Did you know…..

The NEXT DAY…

The definition of “institutional investors” was changed from owning over 25 million in assets to owning over a BILLION in assets?!?!…

— SickOfWar (@AZMaGHaMaMa) February 23, 2026

The bill also seeks to bar oligopoly practices by making corporate control of more than 30% of a market a presumed anti-trust violation. But how do you define a market? An entire metro area? A municipality?

Before Warren and Merkley proposed their bill, Wolf Richter discussed the Trump idea and found it more gesture than substance. The big defect is that private equity landlords are not that big a factor in the single family home market, even in cities like Atlanta where they have concentrated holdings.¹ And on top of that, due to the same generally high price of housing that triggered this bill in the first place, they are selling much more than buying:

Trump is pushing Congress to pass legislation that would block landlords with 100 or more single-family rental homes from buying additional existing single-family homes. The idea is to prevent a surge of concentrated buying in a handful of markets that would distort prices further. These landlords could still build their own single-family rentals, or buy build-to-rent developments from builders – thereby adding to the housing stock. But they could no longer buy existing homes.

Even if Congress passes legislation to that effect, it won’t have a big impact on the market currently because:

• The very biggest SFR landlords have turned into net-sellers of existing homes they’d bought in 2012 and afterwards, and they’re now building their own, or are buying build-to-rent developments from builders.
• As a group, by far the biggest SFR landlords are mom-and-pop landlords, and always have been, and they would not be impacted by the ban.

Only about 6.3% of the SFRs are owned by landlords with 100 or more SFRs, according to John Burns Research and Consulting. Only those landlords would be affected if the ban becomes law.

Note that Wolf’s write-up shows that the Warren/Merkley is generally consistent with Trump’s ideas but more restrictive in key ways, such as ending tax breaks for newly-built rentals after five years, plus adding reporting and anti-trust restrictions. And this is where the Senate proposal would have more impact than Trump’s. Again from Wolf:

But in 2022, the biggest SFR landlords started selling some of their scattered-site properties at huge profits after prices had spiked. And they’re not buying existing scattered-site homes anymore; they’re too expensive at current prices that don’t pencil out, and they’re too costly to manage.

They’re adding to their SFR portfolios by building entire build-to-rent developments, or by buying purpose-built SFR developments from builders.

Build to rent has been the hottest trend in home construction for the past four years. Most of these developments have common amenities, and often a leasing and maintenance office, and are less costly to operate than thousands of older maintenance-hungry homes scattered all over the place.

Wolf also identified the biggest single family home landlords:

Progress Residential: with “Nearly 100,000” homes

Invitation Homes (now a RETI; spun out of Blackstone) with 97,036 homes

Blackstone: 62,000 homes

American Homes 4 Rent (a REIT): 60,337 homes

The Amherst Group: 59,400 homes

FirstKey Homes: “Over 52,000” homes

Other sources confirm Wolf’s overview. For instance, from the Daily Economy:

Institutional investors, defined as those owning 100 or more homes in their portfolios, own less than one percent of the single-family housing stock nationally and only about three percent of single-family homes for rent. Their purchasing activities have declined since 2022, but even at the peak the largest (1000+ homes) investors accounted for under three percent of single-family house purchases nationally. Institutional investors matter more in some markets than in others, but in no metro area do companies with 100+ home portfolios own more than five percent of the single-family stock. Figure 1 shows the large investor ownership share by state. All the states in blue – the large majority of them – have a large investor share less than one percent of single-family stock.

The state level zoom out is misleading since no one looks across an entire state to decide where to rent. Nevertheless:

And another analysis can be read as proving the opposite of their claim:

If we zoom out to the largest 50 metro areas, the same correlation holds, though a bit more weakly. Places with more large institutional investor ownership of single-family homes saw larger price declines over the most recently available 12-month period.

One could contend instead that the concentrated home buying, with the effect of a mild constriction in local supply, was feeding into bigger price declines as the big landlords were engaged enough in “sell high” to produce some pressure on overall prices.

Critics contend that this bill would work against the housing market in a crisis, in that it would prevent institutional investors from setting a floor in a downdraft. Yours truly is not terribly convinced. First, before the 2008 crisis, there had never been a national bear market in housing. And even when Fannie and Freddie decided to unload properties, there was so much institutional investor demand that they did not do bulk sales as planned, but “mini-bulks”. If we were ever have that level of event again, it is not hard to imagine that Congress would amend the single family home legislation to allow the two giant mortgage guarantors to again unload foreclosed homes at scale.

The bigger risk is that enforcement will be weak even if Warren and Merkley get their tougher reporting and anti-trust provisions passed and signed into law. Pam Bondi thumbing her nose at the Epstein Files Transparency Act shows how little having laws on the books means to the Trump Administration.

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¹ We discussed back when this trend started that managing portfolios of homes acquired mainly from foreclosures would be difficult due to their diversity (think of all the different toilets!) and physical dispersion. Small landlords, by contrast, typically manage a few properties in close proximity to each other.

00 FACT SHEET_ The American Homeownership Act
00 Trump executive order single fmaily homes