Academic Evidence on the Causal Impact of Institutional Landlords on House Prices and Rents
A major challenge in the single-family rental (SFR) debate has been establishing a causal link between corporate buyers and housing costs, as investors tend to target high-growth areas where prices and rents are already rising. However, landmark academic papers published in 2025 and 2026 have successfully isolated these causal mechanisms using micro-data, showing that while institutional concentration can modestly raise home purchase prices, it simultaneously increases housing supply, improves operating efficiencies, and lowers rents.
Key Academic Findings (2025–2026)
1. Rent Reductions and Supply Spillovers (Coven, 2025)
Joshua Coven's 2025 research used localized micro-data to isolate the entry of institutional SFR operators in Atlanta, Phoenix, and Tampa. He found that institutional entry caused a modest increase in home values in highly concentrated areas, but this was heavily counterbalanced by a net decline in rents.
- The Construction Offset: For every home purchased by an institutional SFR operator, the net supply of homes available to owner-occupiers decreased by only 0.22 units. This is because the initial price pressure stimulated new single-family construction, offsetting 78% of the inventory removed by investors.
- Rental Efficiencies: Rents in these markets declined on net due to the expanded supply of rental stock and the superior operating efficiencies of large-scale landlords, a portion of which was passed on to tenants.
- Landlord Competition: The study also demonstrated that institutional entry did not systematically crowd out smaller, local "mom-and-pop" landlords.
2. Localized Monopoly Power vs. Aggregate Benefits (Barbieri & Dobbels, 2026)
Felipe Barbieri and Dobbels' 2026 study of the Atlanta metropolitan area examined areas with extreme institutional concentration (where corporate landlords controlled over 50% of actively listed rental homes, typically in peripheral suburban zip codes).
- Pricing Power: The authors found evidence that highly concentrated institutional landlords do possess some localized pricing power, allowing them to raise rents above what a purely competitive market would support.
- The Net Effect: However, this localized monopoly effect was small on average and was statistically offset by the broader rent-lowering effects of increased rental supply and institutional operating efficiencies.
3. Renforcement of Renter Diversity (Chang, 2025)
Konhee Chang's 2025 study highlighted the demographic spillovers of institutional SFR expansion. The research found that when institutional operators entered suburban single-family neighborhoods, the resulting expansion of high-quality rental supply led to increased income and ethnic diversity among neighborhood residents, allowing families to access high-opportunity school districts they otherwise could not afford to buy into.
Verbatim Quotes
From Joe Gyourko's (Brookings / Wharton) synthesis of the academic literature:
"Both Barbieri & Dobbels (2026) and Coven (2025) found that while big institutional investors did lead to higher home prices in their most concentrated geographies, institutional investment also led to lower rents... Coven (2025) estimates that entry into a local market by institutional investors decreased the number of homes available for purchase by owner-occupiers by only 0.22 units for each home bought by the SFR firms. Rents declined modestly on net following institutional entry, reflecting the combined impact of both the transfer of housing units into the rental sector and greater operating efficiencies among larger institutional landlords, some of which were captured by tenants." — Joe Gyourko, Brookings Institution
Gyourko's critique of the institutional ban:
"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... A net reduction in supply that small [0.22 homes lost per 1 purchased] simply cannot be a major contributor to the worsening housing affordability conditions in the single-family housing sector over the past 10-15 years." — Joe Gyourko, Brookings Institution
Interpretation
The latest academic literature provides a rigorous, non-partisan debunking of extreme claims on both sides of the SFR debate.
- Against the Tenant-Advocacy Narrative: The evidence shows that institutional buyers are not the primary drivers of the national housing affordability crisis. Their net impact on owner-occupied inventory is minimal (0.22 homes lost per purchase) due to the supply-elasticity of new construction. Furthermore, their presence actually lowers rents and increases neighborhood diversity.
- Against the Industry Narrative: The evidence confirms that when institutional ownership becomes highly concentrated at the zip-code level (exceeding 50% of active listings), operators do exploit localized market power to extract rent premiums. This suggests that the correct policy response is targeted antitrust enforcement against localized pricing strategies, rather than a blunt national ban on institutional capital.
These findings highlight why the federal compromise in the Federal Legislative and Executive Actions Restricting Institutional SFR Purchases to remove the 7-year forced disposal rule for build-to-rent was economically sound: maintaining institutional capital in new construction is essential to preserving the rent-lowering benefits of expanded supply.