Basic economics tells you that if you lower the demand for a product, the price should fall.<\/p>\n
Limiting financial incentives for housing investors could increase the share of homes owned by the folks who live there.<\/p>\n
Consider a new study from the American Enterprise Institute.<\/a> It notes that favorable financing available to small-scale house investors nationwide may provide 10% more buying power than traditional mortgages offered to the general public.<\/p>\n The study asks \u201cwhether federal mortgage finance policy should subsidize small-scale investors competing for the same starter homes sought by first-time buyers, particularly when government-backed credit lowers investors\u2019 cost of capital and strengthens their ability to outbid first-time borrowers for starter-home stock.\u201d<\/p>\n Yes, it\u2019s not Wall Street giants gobbling up a wannabe homeowner\u2019s shot at the American dream. Investors of all sizes create competition for California house hunters, particularly in the state\u2019s more affordable communities.<\/p>\n That\u2019s what my trusty spreadsheet found<\/a> after reviewing a BatchData report<\/a> from the third quarter of 2025 that calculates investor ownership of houses and townhomes nationwide.<\/p>\n Investors in this study include everything from giant companies controlling thousands of houses to folks with a small collection of rentals to short-term rental operators to people with a second home. Condo ownership was not included.<\/p>\n By this math, investors of all sizes own 1.28 million houses statewide \u2013 17% of California\u2019s supply. But consider when California\u2019s 58 counties were ranked by the average prices investors paid for homes in 2020-25 \u2013 then split into three groups, each equally weighted by the number of houses.<\/p>\n Bargain hunters<\/p>\n Investors are more likely to be a force in the rare, less expensive California counties where budget-strapped homebuyers have a better chance of finding a place of their own.<\/p>\n Note the huge cost differences. The average investor\u2019s purchase price in these cheapest counties was $455,000 \u2013 roughly one-third the $1.38 million spent in the costliest counties.<\/p>\n Next, look at California investment preferences in the state\u2019s lower-cost locales compared with its costliest areas.<\/p>\n Investors owned 498,888 houses in the least-expensive counties as of 2025\u2019s third quarter vs. 383,277 owned in the most expensive counties. That\u2019s 30% more.<\/p>\n This translates to California investors controlling 21% of all houses in the least expensive counties, compared with 13% in the most expensive counties.<\/p>\n Additionally, think about investor purchases.<\/p>\n In 2020-25, investors bought 185,779 houses in California\u2019s low-cost counties versus 133,023 purchases in the most-expensive counties. That\u2019s 40% more.<\/p>\n What\u2019s at stake<\/p>\n Now, investors aren\u2019t bad people \u2013 whether they\u2019re a Wall Street giant or, far more likely, a mom and pop owner. They\u2019re lawfully taking advantage of a financial system that often puts the odds in their favor against a typical house hunter.<\/p>\n Discounted financing isn\u2019t the only lure offered to investors. Other housing investment incentives include tax breaks, such as accelerated depreciation for investment property or the write-off of many rental home operating expenses.<\/p>\n It\u2019s a government initiative designed to provide rental housing to individuals who do not want to, or cannot qualify to be, homeowners. Or these homes are rented out as alternatives to traditional hotels.<\/p>\n However, if society seeks to increase homeownership, reducing investors\u2019 influence by cutting incentives could be one way to support that widely stated American dream economic goal.<\/p>\n Investor clout is growing. Think about data from Attom,<\/a> looking at institutions that acquire 10 or more houses a year. These buyers accounted for an average 7.5% off all U.S. home sales in 2021-25. That share was just 4.7% the previous five years.<\/p>\n