The Great Financial Crisis (GFC) and the subsequent collapse of American homeownership created a lucrative financial opportunity for Wall Street investors. Traditionally, institutional investors have not held portfolios of single-family rental (SFR) homes. But federal policy choices meant to aid the recovery of the housing market jump-started this new asset class in the wake of the GFC, initially through mass auctions of foreclosed homes. Institutional investors then began outbidding families for ordinary resale inventory. Between 2012 and 2022, SFR homes owned by institutional investors skyrocketed over 900% from about 40,000 to 415,000.

Although institutional investors own only a small percentage of SFR homes nationwide, there are at least a dozen cities where they command double-digit market shares, including Atlanta, Indianapolis, Raleigh, and Tampa. Institutional investors hike rents and evict tenants more aggressively than mom-and-pop landlords do. And although the slowdown in construction rates (now 20% below 1990s levels) is the primary driver of the single-family home supply shortage, institutional investors exacerbate this problem because they are able to easily outbid families, thereby measurably contributing to lower homeownership rates in some areas. Pandemic-era interest rate hikes, which discouraged resales by owners that locked in low mortgage rates, then put further pressure on single-family home supply.

More recently, a new market trend has emerged to accelerate corporate competition with ordinary homeowners: publicly traded homebuilders are increasingly tailoring entire developments to institutional investors with a new bulk product: Build-To-Rent (BTR) homes.

This Fact Sheet explains the origins of SFR homes, reviews the emerging BTR trend, explores the impact on homeownership and rental markets, and offers policy solutions.