The Impact of Private Equity Investment in the Housing Market on Single-Family Home Prices

President Trump recently suggested barring large institutional investors from purchasing single-family homes. Some believe that these large institutional investors, who are primarily private equity firms, inflate housing prices by bidding up prices. The purpose of the present study is to ascertain the impact of institutional investors on the single-family home market. A two-way fixed effects model was estimated using clustered standard errors and weighted observations. Results of the present study suggest that institutional investors have had no statistically significant effects on single family home prices. Hence, President Trump’s proposal to limit institutional investments in housing would have no statistically significant effect on housing prices.

Keywords: Institutional Investors, Single-Family Homes, Housing Prices.