Homeownership is and always has been the centerpiece of the American Dream. Unfortunately, thanks to the failures of the Biden administration, homeownership became unrealistic for more families because of elevated mortgage rates and inflated living costs. Liberal Democrats created this mess, and yet, they continue to push false narratives suggesting that government intervention and housing subsidies are the only solution to fix the affordability crisis. Policymakers should ignore these narratives and consider commonsense reforms to encourage building more homes and making homeownership more attainable.
The solution is clear: promote policies encouraging private sector investment in housing rather than wasteful spending and unnecessary regulations. American taxpayers suffered due to Biden’s wasteful spending efforts, including when his administration greenlit Fannie Mae and Freddie Mac to back $1 million mortgage loans. This subsidized even greater demand for homes without increasing the supply. Taxpayers need relief rather than another tax increase that doesn’t solve the problem.
The root cause of the nation’s housing crisis comes down to supply. According to the Mercatus Center, “[T]he only market segment capable of filling the gap of supply at scale is large institutional landlords.” Enabling the private sector to build more offers families many housing options that will lower housing costs for all Americans and provide a bridge to homeownership for young individuals looking to grow their families.
Single-family rentals are a critical part of this solution. In Austin, Texas, rent prices have dropped by 22% because the city cut regulations to allow the development of new single-family homes. Austin’s reforms have “focused on boosting the supply of single-family homes by allowing developers to build as many as three units on lots that were previously restricted to one home.”
Instead of following Austin’s lead, elected officials in states such as California, Georgia, Indiana, and Nevada have introduced bills that apply government-mandated caps on the number of single-family rental homes an institution can own. There is no clear rationale or reasoning behind the number of homes these bills cap and which institutions they target. Some groups define a “mega investor” as an entity owning 1,000 or more homes in an area. Some groups claim the number to be 500. The subjective nature of this legislation leaves the door open for policymakers to become stricter and stricter on these regulations with no push-back.
These bills were proposed because lawmakers were led to believe that large institutions own a significant swath of single-family homes in the U.S. In 2024, the Government Accountability Office found that the five largest investors owned only about 2 percent of all single-family rental homes in the U.S.—not even 2 percent of all single-family homes. This is a minuscule number.
Additionally, these bills are based on the misconception that institutional investors crowd out family homebuyers by buying up the housing supply and driving up housing prices. Data shows these assertions are patently false. After Austin implemented its reforms, the median rent declined by $400 in less than three years. In January, the Texas Conservative Coalition Research Institute (TCCRI) released a report debunking the notion that professionally owned homes are elevating housing prices. They found that the primary drivers of housing costs that bar families from owning homes are mortgage rates, property taxes, insurance, and burdensome local regulations.
Republican proponents of these bills, such as Georgia Rep. Chuck Efstration and Fishers, Indiana Mayor Scott Fadness, should think twice before codifying government mandates that will distort the housing market.
Instead of restricting providers of housing options, they should condemn big-government mandates and pass legislation encouraging the development of homes that serve as a bridge to permanent homeownership for young and lower-income families. They should also focus on more meaningful solutions to the housing affordability crisis – zoning and permitting reform, property tax relief, opening federal land for more housing, and creating more supply.
It is simple economics – as supply rises, prices will fall. Policymakers should not impede private sector efforts that allow families to live in safe neighborhoods and put their kids in good schools. Now is the time to reverse the Biden administration’s failed policies and make the American Dream more attainable by creating more housing options for Americans.
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