Burnishing her progressive credentials in advance of the 2026 Democratic primary, New York governor Kathy Hochul has proposed restricting institutional investors’ ability to purchase single- and two-family homes. While such a policy, she argues, “would put potential homeowners first, making sure Wall Street doesn’t take over Main Street,” it would in fact do little for buyers, while deterring private investment in housing-stock upgrades.
Hochul intends to “disincentivize large investment entities from buying single-and two-family homes en masse.” To achieve that goal, she proposed a mandatory waiting period for institutional investors to bid on houses, giving individual buyers a leg up. She would also deny institutional buyers tax deductions for business expenses related to rental-home operations. The governor’s proposal, whatever its specifics, raises a question: Is there really a problem with investors owning homes?
Let’s look at the numbers. The real-estate data provider Redfin publishes quarterly updates on investor activity in the home-purchase market. In its 2024 third quarter report, the latest available, Redfin noted that investors nationally bought 49,380 homes, or 16 percent of sales. Eighty-four percent of U.S. homes, then, were sold to non-investors—most often, to households intending to occupy the home. In the New York metro area, investors similarly accounted for 16.7 percent of all 2024 third-quarter home sales. In other words, nothing in the data portends Wall Street’s imminent domination of the housing market, either nationally or locally.
Hochul’s press release, however, asserts that “according to some estimates, private equity firms are expected to own up to 40 percent of the single-family rental market by 2030.” If that’s true, they had better get going. According to a 2024 U.S. Government Accountability Office report, in 2022 investors with more than 1,000 properties collectively owned 450,000 single-family homes, about 3 percent of the national stock. GAO found that institutional-investor ownership was concentrated in large Sunbelt metros, such as Atlanta, Dallas, Houston and Charlotte—not in New York.
For argument’s sake, let’s imagine that institutional investors suddenly took a large and disproportionate interest in buying up New York homes. What repercussions would ensue? One possibility, raised by economist Hal Singer, is that market concentration could enable institutional investors to raise rents above levels possible in a competitive market. That might become an issue in the comparatively unregulated Sunbelt region, though the size of those markets makes consolidation unlikely. In the New York metro area, however, the rental market is already distorted by price controls, which shift the upward rent pressure created by the growing work force onto the unregulated housing stock. That, combined with strict land-use controls, all but guarantees perpetual housing scarcity and a sellers’ market. Institutional ownership hardly changes New York landlords’ already outsize pricing power.
Other critics focus on institutional buyers’ ability to purchase homes in bulk, to pay cash, and their willingness to accept homes as-is, without an inspection. These factors, they claim, squeeze household buyers out of the market. But it’s equally possible that institutional investors are benefiting the market. The Cato Institute’s Vanessa Brown Calder, for example, notes that institutional investors upgrade homes in need of repair, while also expanding the rental housing stock, creating opportunities for less-affluent households to move into more desirable neighborhoods. David Youngberg of the American Institute for Economic Research points out that cash buyers are considered more desirable by sellers and typically purchase homes at a discount, not a premium. Selling to a cash buyer compresses the time to closing and avoids the risk that a house might fail an inspection, or that a buyer might fail to obtain a mortgage.
In short, Hochul is proposing a solution to a problem whose existence is not supported by data and is at best theoretical. Should the legislature enact her scheme, New York’s housing stock would be deprived of needed investment, while sellers would see the state deter desirable purchasers. Lower-income households lacking the resources to buy homes, but who could still rent, would see fewer opportunities to live in desirable areas.
Both Brown Calder and Youngberg emphasize that institutional investors’ critics obscure prospective first-time homeowners’ real obstacle: government regulations, particularly those that constrain the housing supply and inflate prices. Hochul knows this problem well, having fought and lost a battle with the legislature over suburban land use in 2023. Now, she’s left with symbolic populism to boost her electoral chances. Voters should demand better.
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