Housing market: Did Wall Street kill the American Dream?

From TikTok videos claiming that institutional investors are bulk-buying homes at inflated prices and forcing people to rent until they die, to a Medium article claiming 44% of all single-family home purchases last year were by private equity firms, Wall Street has emerged as a villain in public discourse. The narrative has persisted, despite economists and analysts pointing out the widespread claims are wildly incorrect. 

Who is right? It’s difficult to blame institutional investors like Blackstone, BlackRock, and Invitation homes for the nationwide housing crisis; most estimates put their ownership at less than 5% of single-family rentals and less than 1% of all single-family homes. But desirable markets like Atlanta, Dallas, and Charlotte tell a different story—Wall Street owns more than 4% of single-family homes in Atlanta, for one, and could be a factor in rising housing costs.

Still, hedge funds, corporations, asset management firms are often blamed for unaffordable housing by everyday Americans; home prices and rents rose substantially during the pandemic-fueled housing boom, mortgage rates more than doubled shortly after, and so many people are house poor. Politicians jumped on the bandwagon blaming Wall Street; Democrats in Congress introduced a bill toward the end of last year, banning hedge funds from owning single-family homes in the country.  

“You have created a situation where ordinary Americans aren’t bidding against other families, they’re bidding against the billionaires of America for these houses,” Senator Jeff Merkley, who introduced the bill alongside Representative Adam Smith, said, according to the New York Times. “And it’s driving up rents and it’s driving up the home prices.”

Wall Street’s share of the multifamily rental market is much higher and traces back much further. But in the aftermath of the Great Financial Crisis, institutional investors entered the single-family rental space, and…