Academic Evidence on the Causal Impact of Institutional Landlords on House Prices and Rents

Academic Evidence on the Causal Impact of Institutional Landlords on House Prices and Rents

Establishing a causal link between institutional single-family rental (SFR) purchases and housing costs has been a central challenge in the housing debate, as investors naturally target high-growth areas where prices and rents are already rising. Recent econometric studies have successfully isolated this causal impact, revealing a complex trade-off: institutional investors modestly push up home prices in highly concentrated submarkets, but they also expand the rental supply, leading to lower rents and greater operational efficiencies.

The Price and Rent Trade-Off: Joshua Coven (2025)

A landmark study by Joshua Coven (CUNY Baruch College / NYU Stern) utilizes localized micro-data to isolate the causal impacts of institutional entry. Coven finds that while institutional investors put upward pressure on home prices, they simultaneously lower local rents by expanding the rental pool. For every 1% of the total housing stock purchased by institutional investors, nearby home prices increase by 1.7%. However, this price appreciation is highly concentrated: in the majority of zip codes with investor activity, almost none of the observed price increases are attributable to investors. Only in the most concentrated zip codes do large investors cause home prices to rise significantly (by up to 6.2%).

Crucially, Coven finds a beneficial counter-effect on rents:

"Coven finds that institutional investors buying up existing homes decrease nearby rents by 0.7% for every 1% of the total rental stock that they own, and increase home prices by 1.7% for every 1% of the total housing stock purchased."

This rent reduction is driven by two factors: the physical transfer of units into the rental sector and the scale efficiencies of large institutional operators, some of which are passed on to tenants.¹ Furthermore, Coven's model estimates that institutional entry does not displace potential homebuyers on a 1-to-1 basis. Instead, the entry of institutional investors decreases the number of homes available for purchase by owner-occupiers by only 0.22 units for each home bought by SFR firms, largely due to a positive construction supply response induced by higher prices.

Concentration and Market Power: Barbieri & Dobbels (2026)

Focusing on the highly concentrated Atlanta metropolitan area, Felipe Barbieri and Dobbels (2026) analyze localized zip codes, particularly on the metropolitan periphery, where institutional SFR operators control over 50% of actively listed rental homes. They investigate whether this geographic concentration allows large landlords to exploit monopoly power.

Their findings suggest that while highly concentrated institutional investors do have some ability to raise rents above purely competitive levels, the average effect is modest and is largely offset by broader supply responses:

"There is evidence that more geographically concentrated institutional investors are able to raise rents above what a purely competitive market would generate... [However], the effect on rent is not particularly large on average. Second, it is small enough to be counterbalanced by other changes in the housing market induced by the entry of large institutional SFR investors."

The Brookings Institution Synthesis (2026)

In a comprehensive synthesis of the academic literature, Joe Gyourko of the Brookings Institution argues that the political focus on banning institutional investors is a "red herring" that fails to address the structural root of the housing crisis—namely, a severe undersupply of housing units. Gyourko notes that because large institutional investors own a tiny fraction of the housing stock (just over 3% of the single-family rental stock and under 2% of the total owner-occupied stock nationally), banning their purchases merely reshuffles existing homes between owner-occupiers and renters without adding new supply:

"The country needs a healthy, balanced housing market that expands supply across both the rental and owner-occupied sectors, not policies that mostly reshuffle housing between households... 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."

Ultimately, the academic consensus indicates that claims on both sides of the debate often outrun the evidence. Tenant advocates who claim institutional investors are the primary driver of skyrocketing home prices ignore that investor price impacts are highly localized and modest on average. Conversely, industry assertions that corporate buyers have zero impact on home prices are contradicted by evidence of modest price increases in highly concentrated Sun Belt zip codes.