BUSINESS

Everyone’s Favorite Slopulist Scapegoat - The Bulwark

The Bulwark 2026-02-20 02:02 Read Original →

Summary Full Article

President Trump and populist Democrats are converging on a bipartisan policy to ban "institutional investors" from owning single-family homes, blaming them for the housing affordability crisis. However, these large investors own only 0.5% of all single-family housing stock and have been net sellers for seven consecutive quarters while pivoting to building new housing instead. This scapegoating threatens to pass ineffective or counterproductive legislation that could worsen housing costs by reducing new construction rather than addressing the real, complex causes of unaffordability.

Second-Order Effects

Near-term consequences — what happens next

**Mom-and-pop landlord market disruption**: If legislation is poorly drafted with vague definitions of "institutional investors," small-scale landlords with multiple properties may face uncertainty or inadvertent regulation, potentially causing them to exit the rental market and reducing rental housing supply in local markets where they're the primary providers.
**Stalled build-to-rent development**: Since institutional investors have shifted capital from buying existing homes to building new rental housing communities, a ban could halt these construction projects mid-pipeline, eliminating thousands of planned rental units and worsening the housing shortage in growing metros like Atlanta and Jacksonville where build-to-rent was actively adding supply.
**Treasury Secretary discretionary power concerns**: The proposed amendment giving the treasury secretary broad authority to define or exempt institutional investors creates regulatory uncertainty and potential for arbitrary enforcement, likely triggering legal challenges while causing real estate investment trusts (REITs) and pension funds with housing portfolios to freeze investment decisions pending regulatory clarity.

Third-Order Effects

Deeper ripple effects — longer-term consequences

**Erosion of evidence-based policymaking**: The bipartisan embrace of a demonstrably ineffective solution despite clear data showing institutional investors' minimal market share (0.5%) signals a broader shift toward performative "slopulist" politics, potentially establishing a precedent where emotional scapegoating trumps empirical analysis in addressing complex economic problems across other policy domains.
**Pension fund and retirement account exposure**: Many institutional investors in housing are actually pension funds and retirement vehicles managing middle-class Americans' savings; forcing divestment of these assets could depress returns for public employee pensions and 401(k)s with real estate exposure, while the precedent of government-mandated asset class bans could spook institutional capital away from other domestic investments deemed politically vulnerable.
**Acceleration of the housing crisis through supply constraints**: By eliminating a capital source that was actively building new housing units while politicians avoid politically difficult solutions like zoning reform and construction labor expansion, this policy could entrench the housing shortage for another decade, making homeownership even less attainable for millennials and Gen Z while widening wealth inequality between property-owning and renting classes.