The Ban on Investors Is Stuck on One Key Question: What Is ‘Large’?

Washington finally has a definition of the large "institutional investors" it wants to push out of the housing market. Actually, make that a few.

Lawmakers have started to define those large property owners in several new bills. These follow a January executive order signed by President Donald Trump for the federal government to begin crafting policies that prevent large companies from buying up single-family homes.

That order didn't create a definition of a large investor. But it ordered the Treasury Department to start formulating one.

The National Association of Realtors® has supported the push, saying it shared a goal of unlocking housing supply.

"We share the goal of ensuring there are enough places for people to live and  of expanding access to homeownership—especially for first-time buyers—and ensuring that housing policy strengthens communities rather than limiting opportunity," said Shannon McGahn, executive vice president and chief advocacy officer at NAR.

Institutional investors own a relatively small share of the overall housing market, but they're concentrated in certain cities, leaving some communities more affected than others.

"The central issue in all of these proposals comes down to definitions," says Hannah Jones, senior economic research analyst at Realtor.com®. "How policymakers define 'large investor' will determine who is actually affected and whether the policy meaningfully changes housing market outcomes."

What size is large

None of the bills is now law, which means the definitions might change. But two early metrics are common in bills: Targeting investors by number of homes, and targeting investors by assets under management.

The Wall Street Journal reports that Trump circulated guidance that set the large investors at 100 homes. He's wanted to see that codified into the bipartisan housing package working through Congress, without success.

A new bipartisan effort in Congress to codify a ban defines large investors by assets under management. One bill targets companies with $150 million in assets under management, or connected to such an entity. Another imposes extra taxes on entities starting at $50 million in assets under management, to encourage divestment.

Democrats proposed a bill to reduce tax breaks for large real estate owners. The language of their bill is aimed at those with 50 or more single-family homes.

A few states have also moved to codify similar rules. Georgia lawmakers, for instance, put forth a bipartisan bill targeting investors who have 100 homes and $375 million in assets under management, and also manage pooled investor funds. Other lawmakers also pitched caps on owning 500 or 2,000 homes in the state.

Using assets under management is straightforward and a clear financial metric, but it risks pulling in diversified regional operators or family officers that aren't really the kind of big landlords considered in the housing debate, Jones says.

"The challenge is that [assets under management] does not necessarily reflect exposure to the single-family housing market," Jones says. "A firm could manage $150 million across apartments, commercial properties, or mixed portfolios and have only a small single-family footprint."

Meantime, basing the metric on the number of homes has risks at all levels. It's not all that unusual for some small and midsized landlords to assemble a portfolio of over 50 homes, Jones says.

On the other end, a 500-home threshold might skip some institutional players, especially if ownership is structured across multiple LLCs, Jones says.

The 'ripple effect'

Brookings Institution said in its own analysis that Trump's pitch oversimplifies the role of institutional investors in rental markets. Though they're a small part of the market, they create operational efficiencies that can translate to lower rent, wrote Joe Gyourko, a nonresident fellow.

Also, a blanket ban risks a larger "ripple effect" on the market. Gyourko pointed to how private equity was allowed into the market after the subprime mortgage crisis because it put a floor on housing price declines in the Great Recession.

"Banning purchases of single-family units by large rental companies will lead to a very small net increase in the number of homes available for purchase, and some families will benefit from living in them," Gyourko said. "However, other families that would have benefited from renting that same house no longer can do so."

The American Enterprise Institute said the smaller investors—mom-and-pop shops who own only a few properties—own about 11% of the single-family housing stock. It's these entities that compete with the homebuyers, AEI said. And they have the advantage of subsidized mortgage credits from Fannie Mae and Freddie Mac.

"Small investors using GSE financing can borrow at interest rates roughly 90 to 100 basis points lower than comparable private-market investor loans," AEI said. "On a $250,000 home, that advantage translates into about $170 per month—more than enough to consistently outbid a first-time buyer without paying a dollar more upfront."

Institutional investors look at options

Understanding the realities of the investor market takes some nuance. Take Atlanta, for instance. Based on Cotality data, it's the capital of major investors, who hold an 11.4% share of the single-family market.

A Realtor.com analysis of deeds information shows investors with more than 100 homes made 4.1% of all single-family purchases since 2023.

Mom-and-pop investors with 10 homes accounted for about the same number of purchases there, says Realtor.com economist Jake Krimmel.

Quinn Residences owns about 5,100 units in build-for-rent communities, including a half-dozen in the Atlanta suburbs.

Richard Ross, CEO of Quinn Residences, is looking for clarity and upping their appeals to the government, worried about the implications for their companies.

Build-for-rent units are constructed differently, featuring more hard-surface floors, appliances, and other features expecting added wear-and-tear from renters.

While Trump's executive order exempts build-for-rent, the pending bills largely do not. Ross says regulating investors in the space discourages them from building and operating communities, and this contributes to the supply-side problems the market faces.

"There's going to be unintended consequences to housing supply," Ross says. "And supply-side risks stifle upward mobility."

Jones agrees.

"Unlike investors purchasing existing homes, build-for-rent developers are adding net new supply," Jones says. "Absent a carve-out, there is a risk that policies aimed at curbing competition for existing homes could also dampen new single-family construction, which would work against longer-term affordability goals."

The dynamic in Atlanta plays out in other cities, according to Krimmel's information. Over the past three years, institutional investors made 5.1% of single-family purchases in Charlotte, NC, and 3.8% in Jacksonville, FL. Mom-and-pop investors still accounted for a higher share of purchases in both cities.

"These proposals may shift behavior at the margin in certain metros, but they are unlikely on their own to materially change affordability nationwide," Jones says.

McGahn, with the NAR, said that unlocking existing inventory, streamlining regulatory barriers, incentivizing new construction, and supporting responsible development are "all essential components of addressing housing affordability.

"That includes reforming outdated capital gains thresholds that have not been updated in decades and now discourage longtime homeowners from selling, reducing mobility and limiting the number of homes available for new buyers," she noted.