Treasury Secretary Scott Bessent is calling for new regulations to remove large institutional investors from the single-family housing market, arguing that their presence has distorted home prices, crowded out families, and created an uneven playing field through tax advantages not available to individual homeowners.
Bessent made the remarks while discussing changes in the U.S. housing market following the 2008 financial crisis, pointing to a structural shift that allowed Wall Street firms and large investment funds to move aggressively into single-family homes.
“The ban on institutional investors in single family homes,” Bessent said.
“For those of you who are not American, in the US, pre great financial crisis, we didn’t, institutional investors did not participate in the single family market.”
According to Bessent, that changed dramatically after the collapse of the housing market.
“So post the financial crisis, institutional investors hoovered up single family homes,” he said.
“They continue to do it.”
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Bessent said the problem is not simply ownership concentration but what he described as an unfair tax structure that advantages large investors over everyday Americans trying to buy or maintain a home.
“And there’s a there’s an unfair tax arbitrage there,” Bessent said.
“You and I have a mortgage, we can deduct the mortgage amount. Institutional investors can deduct the borrowing amount, but they can also expense any repairs and depreciation.”
He argued that those tax advantages give institutional investors leverage individual homeowners cannot match, allowing them to outbid families and drive up prices.
“So we think that is a good idea to have them out of the market,” Bessent said.
At the same time, Bessent emphasized that the administration is not seeking to eliminate small-scale real estate investment by individuals or families who rely on rental properties for retirement income.
“We are going to give guidance at some point to see what is a mom and pop,” he said.
“That someone, maybe your parents, for their retirement, have bought 5-10, 12 homes.”
Bessent said the goal is to protect those smaller investors while removing large corporate players.
“So we don’t want to push the mom it pops out,” he said.
“We just want to push everyone else out.”
Addressing claims that institutional investors represent only a small fraction of the overall housing market, Bessent said those figures miss how markets actually function.
“And what’s important here you will hear some misinformation that says, well, institutional investors are one, two, 3% that is true,” he said. “Having been in markets for 35 or 40 years, markets are made on the margin.”
Bessent said institutional ownership is far more concentrated in rapidly growing metropolitan areas, where competition for housing is already intense.
“And institutional investors are much higher in Boomtown markets like Charlotte, like Atlanta, like Huntsville, Alabama,” he said.
He also pointed to the role of federal housing finance institutions in enabling large-scale investor participation.
“So they’ve done that in terms of having Fannie and Freddie buy MBS,” Bessent said, referring to mortgage-backed securities purchased by Fannie Mae and Freddie Mac.
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