Although the share of sales to institutional investors (pension funds, insurance companies, banks) and iBuyers (large corporate buyers that often remodel and flip) rose from under 2% in 2018 to 4% of home sales since 2021-this is still only a small portion of all rental homes purchased. CoreLogic reports that from 1999-2018, “mom and pop” investors actually accounted for growing portion of the homes purchased relative to private equity investors. The proportion of home sales to investors is actually smaller today than in 2006. Large investors (10+ homes) account for only 6% of all home purchases. According to mortgage giant Freddie Mac, “Overall investor share of home sales stands at 27.6% in December 2021, which is only slightly higher than 26.7% in 2019.”

So what’s to blame for these surging prices? Politicians are scapegoating “institutional owners” and other investors in rental properties. > Manchin-Schumer Taxes Would Hit Both Rich and Poor Americans Since March 2020, numerous cities experienced rent increases well over 30%. Because leases often roll over annually, the Consumer Price Index data from the Bureau of Labor Statistics does not yet fully reflect this surge. Median apartment rental costs, meanwhile, have jumped 12% this past year. The mortgage payment on a median-priced home with a 20% down payment jumped from under $1,300 to more than $2,000 in just the past year as interest rates and home prices surged-a whopping 56% increase. The mortgage-payment-to-income ratio hit 42% in May-tied for the highest level since the creation of the index in 2006. The home-price-to-median-income ratio now stands at more than 8.1, significantly higher than the levels of well under 5.0 experienced from 1980 to 2000. Home prices are increasing far greater than family income growth is. Over the past 12 months, home prices are up 19.7%, while residential property prices in the United States, adjusted for inflation, are now 6.7% above the prior all-time record levels of the 2006 bubble. Spanning the pandemic era from February 2020 through May 2022, home prices soared 43.5%. With so much attention fixed on soaring prices for gasoline and groceries, one can almost overlook the fact that we’re also enduring an affordable housing crisis.

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