– Wall Street is not to blame for the rise in housing prices, according to Capital Economics
– Legislation to block hedge funds from buying homes won’t lower home prices
– Investor purchases make up only a small portion of all home sales
According to Capital Economics, Wall Street is not responsible for the continuous rise in housing prices, as legislation targeting hedge funds buying homes is unlikely to lower prices. The research firm noted that investor purchases represent only a small portion of all home sales.
Even though there is growing criticism of institutional investors buying single-family homes and potential legislation to heavily tax them, Capital Economics property economist Thomas Ryan believes it will not impact the record surge in home prices. In June 2022, investors accounted for 12% of home transactions, with most being small investors renting out properties near their primary residence.
Large institutions like Blackstone, which own a small percentage of the overall US housing market, are not significant enough to substantially impact housing prices. The demand for homes from younger generations and the lack of new construction post-housing market crash are key factors in driving up prices, rather than institutional investors.
Capital Economics argues that claims of large institutions inflating housing prices are exaggerated, and lawmakers are looking for a scapegoat for unaffordable housing. Even if legislation passes, it is unlikely to lower house prices significantly due to the small market share of institutional investors.