Two indicators for lowering the rent

Following the 2008 Great Recession, institutional investors saw an opportunity to buy foreclosed homes at bargain prices. These investors discovered that collecting regular rent payments was more profitable than flipping houses, leading to the creation of real estate investment trusts (REITs) that allowed investors to profit from real estate without directly managing properties. This investment boom generated enormous amounts of capital flowing into the rental housing market, but also sparked a political backlash across the spectrum.

• During the 2008 Great Recession, investors bought foreclosed homes at deeply discounted prices
• Investors realized regular rent payments were more lucrative than flipping properties
• Finance companies packaged properties with regular cash flows and sold them as investment products called REITs
• This investment structure brought massive amounts of money into the industry

Despite widespread political concern from figures like Elizabeth Warren and J.D. Vance, institutional investors make up less than 1% of home purchases nationally. While they do drive up housing prices slightly, the much bigger factors affecting affordability are low construction rates and interest rates. Surprisingly, corporate landlords actually tend to reduce rental prices by bringing more rental homes into the market, which matters significantly since about a third of American families rent rather than own.

• Politicians from Elizabeth Warren to J.D. Vance have blamed institutional investors for rising housing costs
• Institutional investors drive up housing prices only slightly, representing less than 1% of home purchases nationally
• The much bigger drivers of housing prices are low construction and low interest rates
• Corporate landlords actually tend to reduce rental prices by bringing more rental homes into the market
• About a third of American families rent their homes