The American Dream of home ownership is quietly being replaced with permanent tenancy. Over the last two decades, Wall Street firms have transformed Phoenix into one of the country’s top markets for corporate-owned single-family rental homes — second only to Atlanta, Georgia. Families who once might have bought a starter home now often pay institutional landlords inflated rents instead of building the home equity that, in previous generations, funded college educations and retirements.

This shift was spurred by several waves of bad federal policy choices over the course of several decades. The first wave of choices impacted how homebuilding is financed and eventually constricted housing supply. Homebuilding rates now lag 1990s rates of residential construction by 20%, even as the country’s population has grown. The next wave, in the wake of the Great Financial Crisis, prompted Wall Street firms to buy up foreclosed homes in bulk for pennies on the dollar, turning neighborhood homes into new types of financial assets backed by rental income. 

Although institutional investors did not create the nation’s chronic mismatch of supply and demand, they took advantage of the supply shortage by converting homes into single-family rentals. After the first burst of single-family rental purchases that peaked in 2013, there was another burst when institutional investors bought thousands of homes from Zillow as it wound down its failed “iBuying” house-flipping program in 2021. The Federal Reserve’s 11 interest rate hikes between 2022 and 2023 then contributed to the single-family rental market’s attractiveness as families faced with high mortgage rates rented longer instead of buying homes.

Corporate single-family rentals have adversely impacted both aspiring homeowners and renters. Research indicates that corporate single-family rentals increase nearby home prices, reducing home ownership. Meanwhile, tenants face skyrocketing rents and more aggressive evictions under corporate landlords.

In more recent years, institutional investors launched a new single-family rental variant called “build-to-rent,” where entire neighborhoods are reserved for corporate rentals from the outset. Build-to-rent developments likewise increase nearby home prices, and build-to-rent tenants have expressed similar concerns about housing fees and quality.   

Together, these trends are transforming Phoenix from a place where ordinary families have a shot at owning a home to one where they are more likely to become permanent corporate tenants. 

This case study analyzes the factors that suppressed Phoenix-area home construction, explains why Wall Street chose Phoenix as a testing ground for new housing-backed asset classes, chronicles the rise of single-family rentals and build-to-rent developments in Phoenix, surveys the current market landscape, examines how institutional investors have reduced affordability and worsened conditions for working families, and, finally, offers policy recommendations to ensure that land, credit, and homebuilding create more affordable homes for individual ownership instead of new asset classes for Wall Street investors.