How's this for irony? Just days before President Trump announced a ban on institutional investors buying homes, a bunch of academics in the American Real Estate & Urban Economics Association awarded its annual prize for best doctoral dissertation. The co-winner? "The Impact of Institutional Investors on Homeownership and Neighborhood Access" by NYU’s Joshua Coven, who is now a professor of real estate at Baruch College in New York City. So, what did Professor Coven conclude from his peer-reviewed and peer-honored study? Three key conclusions, in his own words: 1) "I find that institutional investors increase the quantity of rentals and lower rents on net because their ability to operate large portfolios at scale outweighs the incentive to use market power to decrease the rental supply." In other words: More scale = more supply = lower costs for operators (due to scale) + lower rents for renters (due to increased competition). 2) "Institutional investors decrease the quantity of homes available for homeownership and raised prices, however the homeownership impact is 1/5th of what it would be if there were no supply response and the price impact is far below the observed association between institutional investor purchases and actual price increases." In other words: Yes, every sale impacts prices. But the impact is lower than generally assumed. Additionally: Coven found that if institutional buyers were removed, more than 60% of the homes they bought would have otherwise gone to small investors -- not individual homebuyers. 3) "I find that renters from regions with lower median incomes, worse school test scores, and lower historic economic mobility move into institutional investor rentals." In other words: Single-family rentals help diversify neighborhoods with families who couldn't otherwise afford to buy homes there -- providing kids access to better schools and better upward mobility.

To clear up confusion: "Institutional" investors represent ~3% of single-family RENTALS but closer to 0.5% of ALL single-family homes. And you can't just assume that 0.5% shifts to individual homebuyers b/c small investors (exempt from ban) could take much of that share. Additionally, many of the homes bought by investors (of all sizes) need massive repair work -- which discourages a typical homebuyer who would then need more cash to pay for major repairs. Investors (especially institutional SFR operators) tend to favor those types of deals under-valued by the market b/c they can usually do those repairs much cheaper with their in-house crews. Contrary to perceptions, they're far less likely (especially in modern times, maybe less so in 2010s) to be engaging in bidding wars pushing up market prices. Why? Because unlike individual homebuyers, they're focused on cap rates and yields. Market-topping prices are yield killers. All this -- plus high mortgage rates and related affordability headwinds -- is why a ban on institutional investors would do ~zero for individual homebuyers thinking this ban would magically help them.