Banning institutional investors from buying homes will backfire for many Americans, experts say

Core Viewpoint - The U.S. Senate has passed a bill to ban institutional investors from purchasing single-family rentals, but experts argue this will not effectively address the housing affordability crisis [1][2][3] Group 1: Legislative Actions - The Senate voted 89-10 to pass a bill that includes measures to make housing more affordable, specifically targeting investors owning at least 350 homes [2] - President Trump proposed capping institutional ownership to 100 single-family homes during his State of the Union address [1] Group 2: Housing Market Context - The U.S. housing market is facing a shortage of 4.7 million units, the highest on record according to Zillow [2] - The median age of first-time homebuyers in the U.S. has increased to 40 years old [2] Group 3: Economic Perspectives - Economists suggest that targeting large institutional investors, who own only about 3% of the single-family rental market, is unlikely to improve affordability for low-income Americans [3][12] - Many renters are unable to qualify for traditional mortgages due to lower incomes and credit scores, not solely because of institutional ownership [4][10] Group 4: Demographics and Trends - The average single-family renter has a FICO score of 650 and a household income of $88,000, significantly lower than the average homeowner's FICO score of 730 and income of over $150,000 [9] - A significant portion of renters from institutional investors would not qualify for a mortgage under current standards, with 71% of residents from The Amherst Group unable to secure a mortgage [8] Group 5: Implications of Proposed Bans - Banning institutional investors could reduce rental housing supply, slow new unit development, and potentially displace over a million people [11] - Experts argue that such bans would not address the fundamental issues of housing affordability, which are largely driven by zoning laws and high costs of land, labor, and materials [12][13]