Are Institutional Investors Taking a Chunk Out of the For-Sale Housing Market?
This post has been updated.
Housing values have never been higher; over the past few years, as demand for housing has risen and inventory has continued to fall short of demand, housing prices have risen dramatically. Some homes are now earning more for their owners than their jobs: for the first time, the nationwide growth for the average American home value exceeded the inflation-adjusted median pretax income.
Homeownership and housing affordability have long been concerns for Americans, but the undersupplied market, COVID-19 pandemic, inflation and land use policy has caused the cost of housing to rise at a rate that makes entering homeownership exceedingly difficult.
Rental costs have increased as well; Redfin reported recently that the average monthly rent in the United States increased 15% year over year to a record high of $1,901 in February 2022.
Although the causes of the affordability crisis vary, purchases by institutional investors or private firms of for-sale and for-rent units to rent or flip to sell for higher prices are potentially making first-time homeownership more challenging, which limits the ability to build wealth.
Examples include:
- In early February 2020, private equity firm Blackstone announced that it acquired Preferred Apartment Communities, a real estate investment trust that owns 44 multifamily communities and about 12,000 housing units in the Southeastern United States, for approximately $6 billion.
- According to a Bloomberg News analysis, tech-based housing companies “ are selling thousands of homes to institutional landlords backed by KKR & Co., Cerberus Capital Management, Blackstone Inc., and other large institutions.” Transactions are leading to unlisted properties that are snapped up before they even hit the market and are occurring at greater rates in communities of color.
One of the main causes of housing unaffordability and the reason that yield-chasing investors have entered the real estate market is because of the pre-existing housing shortage created by local governments and certain home owners seeking to block new homes from being built. In a June 2021 report, the National Association of REALTORS estimated the U.S. housing inventory gap totaled more than 5.5 million housing units in the last 20 years. In order to fill this gap over the next decade, building would need to increase more than 700,000 units per year, or approximately 60% relative to the pace of housing construction in 2020 of less than 1.3 million units.
In contrast, the National Rental Home Council (NRHC) states that “large companies own approximately 300,000 single-family rental homes, less than 1.5% of the market, and only about 0.2% of the country’s total housing stock.” According to executive director David Howard, single-family rentals also offer more housing opportunities to those who may not be able to afford to purchase a home.
&ldquoWhy should it be the case that the only people who can live in those neighborhoods are the people who can afford to buy, who have the wealth and the circumstances to come up with a 20% down payment and to purchase a home in those neighborhoods?” Howard told the Charlotte Observer.
A recent NRHC blog post also points to a transition toward single-family built-for-rent properties to help provide more diverse housing options in neighborhoods and communities across the country, which is part of the solution toward creating housing for all.
To help allow more housing to be built, cities and states around the country are looking at their land use policies and zoning codes, and retooling them to promote housing development. It is becoming increasingly important that local community decision makers tackle housing insecurity and unaffordability, and protect attainable homeownership for all.
Learn more about this topic and other land development resources in NAHB’s Land Use 101 section, which also includes NAHB’s Creating Housing for All Toolkit.
Latest from NAHBNow
Oct 15, 2025
Refinancing Activity Surges in SeptemberRefinancing activity surged in September, marking the largest monthly increase since the COVID-era of ultra-low interest rates. This increase followed mortgage rates dropping below 6.5% for the first time since October 2024 in anticipation of the Federal Reserve's eventual September rate cuts.
Oct 14, 2025
Stucco No Longer Most-Used Exterior Wall MaterialFor the first time since 2018, vinyl siding surpassed stucco as the most used principal exterior wall material. According to the latest annual release of the U.S. Census Bureau’s Survey of Construction (SOC), 26% of homes started in 2024 had vinyl or vinyl-covered aluminum siding as their main exterior wall material.
Latest Economic News
Oct 14, 2025
Custom Home Building Share Declines in 2024In 2024, 17.5% of all new single-family homes started were custom homes. This share decreased from 18.8% in 2023 and from 20.4% in 2022, according to data tabulated from the Census Bureau’s Survey of Construction (SOC).
Oct 13, 2025
Hispanics Comprise Nearly One-Third of the Construction Labor ForceDiversifying the construction labor force remains a key priority amid persistent skilled labor shortages. According to the 2023 American Community Survey, non-Hispanic White workers still account for the majority of the construction industry at 57%. Hispanic workers now represent nearly one-third of the labor force at 32%, followed by non-Hispanic Black workers at 5% and non-Hispanic Asian workers at 1.8%.
Oct 10, 2025
Vinyl Surpasses Stucco as Most Used Principal Exterior Wall MaterialIn 2024, vinyl siding was the most used principal exterior wall material for homes started. It holds just over a quarter share of homes, slightly surpassing stucco for the first time since 2018.