The Housing Ban Bill Targets Large Investors. Here’s Who Would Actually Be Covered.

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Hawley and Merkley agree on almost nothing. In late February 2026, they agreed on this: Senator Josh Hawley, a Missouri Republican, and Senator Jeff Merkley, an Oregon Democrat, introduced the Homes for American Families Act together. The bill would ban large institutional investors from buying single-family homes. The bipartisan pairing is itself a striking political fact, but it obscures a more basic problem the sponsors haven’t resolved.

Who, precisely, would be covered?

The bill text does not specify a precise asset threshold, a specific portfolio-size requirement, or a clear list of entity types that would be captured or excluded. The phrase “large institutional investor” appears in the legislation without a legal definition in the bill’s text.

This isn’t unusual for early-stage legislation, but it means the bill’s entire practical reach — which firms fall into a legal gray zone — remains unresolved.

The difference between a 50-home threshold and a 1,000-home threshold isn’t a rounding error. It’s the difference between a policy that touches roughly 32 companies and one that reshapes how thousands of mid-sized landlords operate nationwide.

Who Actually Owns Single-Family Rentals

Before getting to who would be covered, it helps to understand who currently owns single-family rental homes in America.

Large institutional investors, typically defined as entities owning 100 or more single-family homes, own approximately 3.8 percent of all single-family rental homes nationwide. In the total universe of single-family housing (owner-occupied plus rented), institutional investors own roughly one percent. The Urban Institute estimated in 2023 that large institutional investors own about 574,000 single-family homes out of 15.1 million single-family rental properties.

Small-scale “mom and pop” investors make up most of the increase in investor-owned single-family rentals, according to available reports.

An American Enterprise Institute analysis found that large institutional investors, those owning 100 or more properties, held roughly 1 percent of the nation’s single-family housing stock. Smaller investors with two to nine properties held about 11 percent.

The six largest institutional single-family landlords give a sense of the industry’s scale. Invitation Homes is a publicly traded real estate investment trust (REIT, a company that owns income-producing properties and trades on the stock market like a stock). It owned 97,036 single-family homes as of the fourth quarter of 2025. American Homes 4 Rent, another publicly traded real estate investment trust, owned roughly 60,337. Blackstone holds approximately 62,000 single-family rentals through companies it owns, including Home Partners of America and Tricon Residential.

Progress Residential, owned by private equity firm Pretium Partners, manages nearly 100,000. The Amherst Group, privately held, owns approximately 45,000+ homes. FirstKey Homes owns over 52,000.

Those six firms together own roughly 430,000 single-family homes. That is about three-quarters of all institutional ownership nationwide, yet still less than three percent of the total single-family rental stock. A ban targeting only these players would leave untouched the vast majority of corporate-owned single-family rentals.

Institutional investors are not spread evenly across America. Markets like Atlanta, Phoenix, Charlotte, and Tampa saw institutional investors concentrate in specific zip codes, particularly suburban areas where they could acquire homes at volume. In Atlanta, large institutional investors own an estimated 30 percent of single-family rental homes. In Charlotte, the share is around 18 to 20 percent of single-family rentals — roughly 4 percent of all single-family homes in the metro, per Federal Reserve Bank of Richmond data. In Jacksonville, Florida, it is 21 percent.

In most of the country, institutional ownership barely registers. The Northeast, West Coast, and most of New England have minimal institutional single-family rental presence.

Four Thresholds, Four Different Policies

Where lawmakers set the defining line determines everything about this bill’s reach. Here’s what different thresholds would capture, using current market data:

Sources: Urban Institute single-family rental profile (2023); Los Angeles Times analysis of California AB 1611. Note: “Large institutional” typically defined as 100+ homes. Figures are estimates based on available market data.

California’s Assembly Bill 1611, introduced by Assemblymember Matt Haney in January 2026, uses a 50-home threshold, but not as a purchase ban. Instead, AB 1611 would eliminate a tax break called a 1031 exchange for companies owning at least 50 single-family homes. A 1031 exchange lets investors defer capital gains taxes when they sell a property — postponing, not eliminating, the tax bill — as long as they reinvest the proceeds in a similar property within 180 days. California estimated this loophole costs the state $1.2 billion annually in lost revenue.

But even California’s 50-home threshold reveals the definition puzzle. Companies with more than 50 properties own roughly 110,000 homes in California. Companies with 10 to 49 properties, which would be exempt, own roughly 235,000 properties. A ban targeting only the largest players would leave untouched the vast majority of corporate-owned single-family rentals in the state.

A separate California bill, Assembly Bill 1240, introduced by Assemblymember Alex Lee of San Jose, would ban investors owning at least 1,000 single-family properties from buying more homes to rent out. Nine companies own more than 1,000 single-family homes in California. AB 1240 passed the state Assembly last year but stalled after fierce opposition from real estate agents and the California Apartment Association. It awaits a Senate committee hearing. The opposition reveals something the industry rarely advertises: real estate agents opposed the bill partly because institutional investors generate large transaction commissions, meaning the industry’s financial interests don’t always align with homebuyer interests.

Entity Types the Bill’s Language Cannot Handle Cleanly

Vague definitions in legislation don’t stay abstract for long. They become litigation. Here are the entity types that existing bill language would struggle to handle cleanly:

Pension funds and their real estate subsidiaries. Teachers’ pension funds in some states have put money into single-family rental portfolios through separate real estate funds. If the bill captures all entities owning 100 or more homes without exception for pension funds, it restricts retirement investing. If pension funds are exempted, wealthy families could theoretically reorganize holdings through pension-like vehicles to escape the ban.

Real estate investment trusts structured through multiple subsidiary companies (called an UPREIT) let investors hold properties through many separate legal entities. A determined investor could theoretically arrange holdings to keep any single entity below the threshold while maintaining unified management across the portfolio. The practice of using technically separate companies on paper to do the work of one investor is not a hypothetical concern — it is a common way companies organize themselves to limit legal exposure.

Build-to-rent communities (housing developments built from the ground up specifically to be rented out, rather than bought). Trump’s January 20, 2026 executive order explicitly exempts build-to-rent properties, defined as housing built from scratch specifically to be rented, not sold. This carve-out recognizes that some institutional capital adds new housing supply rather than competing for existing homes. The Hawley-Merkley bill would need to define whether it includes this same exemption. If it doesn’t, it could inadvertently discourage new construction.

Foreign sovereign wealth funds. Some international investors own U.S. Single-family rentals. Trump’s framing emphasizes “American” families owning homes, suggesting foreign investors might be targeted. However, the Hawley-Merkley bill text doesn’t explicitly address this. The federal committee that reviews foreign purchases of U.S. Assets for national security risks (CFIUS) already reviews certain foreign real estate acquisitions, but its authority covers national security concerns, not housing-market concerns.

Asset-based definitions create their own problems. A firm with $50 million in real estate assets might also manage $200 million in other assets, making its real estate investment division smaller than its apparent size suggests. Conversely, a heavily used real estate fund might control $300 million in homes while holding only $50 million in actual equity. Which number counts?

Trump’s executive order directed Treasury Secretary Scott Bessent to develop definitions of “large institutional investor” and “single-family home” within 30 days of January 20, 2026. As of the bill’s introduction in late February 2026, that definitional work appeared underway but not yet finalized. Whatever Bessent’s Treasury produces will likely shape the eventual statutory language. That makes it one of the more important regulatory definition tasks in recent housing policy history.

Enforcement: What the Bill Requires and What It Lacks

The Hawley-Merkley legislation empowers the Department of Justice with enforcement authority for civil violations, meaning the government could sue the company but not criminally prosecute it. It instructs the Attorney General to review substantial acquisitions by large institutional investors for effects that harm competition, like driving up prices by eliminating rivals, and prioritize enforcement against strategies where companies coordinate to keep homes vacant or raise rents together. That’s an antitrust-based approach. It reuses existing legal tools rather than building new regulatory infrastructure from scratch.

The problem is that antitrust enforcement requires proving that companies agreed to act together, not merely showing that large institutional landlords charge similar rents in the same market. Under established doctrine, companies charging similar prices isn’t illegal on its own. Prosecutors have to prove the companies coordinated. Courts require clear evidence distinguishing companies independently making similar decisions (which is legal) versus companies secretly agreeing to act the same way (which is not).

For the bill’s enforcement framework to work, DOJ and FTC would need to build evidence of actual coordination. That might come through discovery of emails, pricing algorithm data, or coordination meetings, rather than simply showing that Invitation Homes and Progress Residential both raised rents in Atlanta in the same quarter.

This isn’t an impossible standard to meet. In 2024, the DOJ and FTC filed a legal brief supporting a civil lawsuit alleging unlawful pricing coordination in apartment rental markets. The lawsuit alleged that landlords used software algorithms to set rents, tools that can effectively coordinate prices across competing landlords. The agencies expressed concern that shared software or data systems can act as a back-channel for price coordination between competing landlords.

If similar algorithmic coordination exists in single-family rentals, that’s a workable enforcement theory. But it requires investigative resources, market expertise, and case development. The bill doesn’t fund or staff any of that.

What penalties would apply to violations remains unclear. The text doesn’t specify civil penalties, criminal liability, or remedies such as forced sale of illegally acquired properties. Without penalty structures in the statute, enforcement would likely move through civil suits seeking a court order to stop future purchases, rather than financial penalties against past behavior. A company that violates the ban and faces only a court order to stop future purchases has already gotten what it wanted.

What Housing Economists Say About Institutional Investors and Prices

The premise behind the legislation is that institutional investors are a primary driver of home price increases. That claim is more disputed among housing economists than the bipartisan political consensus suggests.

Economist Joshua Coven’s research found that institutional investor entry raised local prices by less than the observed price increases in the markets where they entered. His research also found that institutional investor entry decreased the quantity of homes available for homeownership by 0.23 homes for each home purchased, and that institutional investors caused approximately 21 percent of observed price increases in their most concentrated Georgia markets, with the majority of price increases attributable to other factors. Since institutional investors own less than two percent of the single-family owner-occupied stock nationally, the national price effect of banning all institutional investor purchases would be modest.

In the markets with the highest concentration of institutional investors — places like Atlanta, Phoenix, and Tampa — Coven found that institutional investors caused 21 percent of the observed increase in house prices. That local finding offers real support for a targeted ban in high-concentration metros.

But an American Enterprise Institute analysis of 19 major U.S. metropolitan areas found that large investor ownership in states and metros does not clearly connect with price increases. Places with more large institutional investor ownership of single-family homes saw larger price declines over the most recently available 12-month period. This doesn’t mean institutional investors are good for housing affordability. It means the relationship is complex enough that a simple ban might not produce the simple outcome its sponsors expect.

Joseph Gyourko, an economist at the Wharton School of Business, conducted a broad analysis finding that “even the banning of renting any institutionally owned single-family housing unit would increase the amount of single-family units available for purchase by no more than 1 to 2 percent of the owner-occupied stock.” He further noted that the policy would have minimal impact in the nation’s most expensive housing markets. A Brookings article summarizing his position attributed to him the warning that preventing large institutional investors from supplying the rental market would lead to higher rents, harming existing renters and families that would want to or must rent — though it is unclear whether this language is a verbatim quote from Gyourko or a characterization of his position by the Brookings article authors. Those markets, on the Atlantic and Pacific coasts and throughout New England, have little institutional ownership of single-family rental homes.

Goldman Sachs estimated the U.S. Would need to build between three and four million additional homes beyond normal construction to address the shortage. Edward Pinto, co-director of the American Enterprise Institute’s Housing Center, told CBS News that a more effective proposal would address housing supply directly through reducing land costs, allowing homes on smaller parcels, and lowering construction costs. He added that constraining large investors “is not going to have much of an impact, if any, on making homes more affordable.” The short version: most housing economists, across the ideological spectrum, point to supply constraints as the primary driver of affordability crises, not investor demand.

The 1.4 Million Renters the Bill Doesn’t Address

Approximately 1.4 million renters currently live in institutionally owned single-family homes. Their interests don’t align with potential buyers competing for the same properties. That tension is one the bill’s sponsors haven’t resolved, and the political debate mostly ignores it.

Research comparing rents in institutionally owned versus individually owned single-family rentals found that institutional ownership lowered rents modestly compared to what smaller landlords charged, though at least one study found corporate landlords charged higher rents. The preponderance of recent academic research supports the lower-rents finding, due to the cost savings that come from managing thousands of homes at once, but the evidence is contested. A study of the Netherlands’ legal ban on buying homes specifically to rent them out found that institutional buyer activity decreased and the share of first-time homebuyers rose.

However, the resulting drop in the rental housing stock led to rental price increases. Preventing institutional buyers from acquiring homes might help potential owners competing for purchase while at the same time harming renters if it reduces the supply of rental single-family homes.

Gyourko named this directly: “Preventing large institutional investors from supplying the rental market will lead to higher rents, harming existing renters, as well as some new families that would want to or must rent.” This is a real cost that the bill doesn’t address. Lower-income households are more likely to be renters. A policy that improves purchase affordability for middle-class aspiring homeowners while raising rents for lower-income renters is a trade-off that helps one group at the expense of another, not a neutral housing fix.

If the bill passes and forces institutional investors to sell off homes they already own, what happens to current tenants? The legislation doesn’t say. Would institutions need to sell portfolio holdings to individual owner-occupants, creating owner-occupied homes and displacing renters? Would sales to other investors below the threshold simply shift ownership to smaller landlords while leaving tenants in place? No version of the bill explicitly addresses these outcomes.

National Low Income Housing Coalition president Renee Willis expressed cautious support for the bill’s intent. She emphasized the coalition remained focused on “ensuring that housing serves people, not speculative profit, and that people with the lowest incomes can secure quality, accessible, and affordable homes.” That framing avoids the question of what happens to renters already in institutionally owned homes if those homes are moved to different ownership structures.

The legislation is framed as protecting families. But the households currently renting from Invitation Homes are also families. They don’t appear in the bill’s text.

Constitutional Challenges the Bill Would Face

A purchase ban of this scope would face immediate legal challenge, and the constitutional questions aren’t minor.

The Fifth Amendment’s Takings Clause (the constitutional rule that says the government can’t take private property without paying fair compensation) provides that private property shall not “be taken for public use, without just compensation.” The Hawley-Merkley bill would not seize existing properties or force current sales. It would restrict future purchases. Courts have extended takings doctrine to what courts call a “regulatory taking,” when a government regulation restricts property so severely it’s effectively the same as seizing it. However, a ban on future acquisitions would not directly reduce the value of property already owned. The takings claim might fail on economic impact grounds under a three-part test the Supreme Court established in a 1978 case (Penn Central Transportation Co. V. New York City). That test weighs the economic impact on the owner, whether the regulation interferes with reasonable investment expectations, and the nature of the government action. Yet a firm that had put money into real estate infrastructure and expertise based on an expectation of continued acquisition might argue the company had reasonably expected to keep buying homes and the ban upended that plan.

Legal challenges based on due process — the constitutional requirement that laws be clear enough that people know what’s legal and what isn’t — are perhaps more pressing. If the bill’s definitions are so vague that investors cannot determine their legal obligations with fair notice, courts could strike down enforcement actions even if the underlying policy survives. The definitional gap is a litigation vulnerability as much as a policy one.

The bipartisan nature of the bill, and Trump’s executive order covering similar ground, provides some political cover but not legal protection. Federal law doesn’t violate the dormant Commerce Clause (a constitutional doctrine that prevents states from passing laws that discriminate against out-of-state businesses, though this applies to states, not federal law). Equal protection challenges, constitutional claims that the law treats similar investors differently without a good reason, could arise if definitions unfairly affect investors from certain states more than others or certain corporate structures. Industry groups have resources to litigate, and they will.

What Passage Would Require — and What the Bill Still Leaves Unresolved

The political coalition behind Hawley-Merkley is real but fragile. For Merkley, the critique of institutional investors comes from a view that large investors buy homes in working-class neighborhoods primarily to extract money from residents.

For Hawley, it reflects populist anti-Wall Street sentiment: when “neighborhoods once controlled by middle-class American families are now run by faraway corporate interests,” the outcome corrupts both community life and democratic participation.

But agreeing on a problem is easier than agreeing on a definition.

Passage still requires enough Senate votes. Treasury Secretary Bessent must finalize definitions. DOJ must develop enforcement protocols. Constitutional challenges must be survived. The definitional work must also be precise enough to capture the intended targets without sweeping in pension funds, build-to-rent developers, or small private investment firms that manage money for wealthy families. It must also be tight enough that savvy investors can’t simply restructure around it.

Institutional purchases of single-family homes have already dropped sharply on their own. Large institutional purchases are down over 90 percent since 2022, according to a Blackstone research note. Higher interest rates made the economics of buying and renting single-family homes far less attractive. The bill may be arriving to solve a problem that rising interest rates have already largely solved. It also leaves unresolved the harder question of what happens to the 1.4 million renters currently living in the home portfolios it would eventually force investors to sell off.

The definitional work that Treasury and Congress still need to complete will determine whether this bill is a meaningful limit on the largest institutional players, a symbolic gesture that leaves most corporate landlords untouched, or something that accidentally reshapes the rental market in ways its sponsors didn’t intend. That work is happening now, largely out of public view. It matters more than the bill’s headline.

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