Picture a young couple at an open house for a modest starter home. They've saved for years, they've got a mortgage pre-approval in hand, and they can just barely make the numbers work. They put in a strong offer. And they lose—to an all-cash bid from an investor who will never live there, who closes in a week, and who is going to rent the place back out. If that scene makes you a little angry, good. It should. And it's happening at a scale that's reshaping the bottom of the housing market.
In 2025, investors bought about 30% of the single-family homes sold in America — and in the third quarter that share hit 34%, the highest in five years. We just updated our housing plan to take this on directly, and it's worth walking through why, because the usual political story about it is half wrong.
It's Not Just Wall Street—and That Matters
The popular villain is the giant private-equity megafund hoovering up whole neighborhoods. Those firms are real, and their impact is concentrated and painful in certain fast-growing markets. But we try to tell you the whole truth even when it's less convenient for a slogan: the data shows most investor-owned homes are held by smaller investors, people with a handful of properties, not just the mega-funds. So a policy aimed only at "Wall Street" would miss most of the problem.
That's why we don't frame this as a war on one boogeyman. The issue isn't the size of the investor. It's that investors as a group are winning far more than their share of starter homes—and the reason they can is that the tax code is quietly refereeing the bidding war in their favor.
The Rigged Bidding War
Think about what a family and an investor each bring to that same open house.
The family is buying shelter, with after-tax dollars, and gets almost nothing back from the IRS for it. The investor is buying a business asset. They can write off the value of the building over time through depreciation, deduct operating losses against their other income, and defer their capital gains more or less indefinitely by rolling the proceeds into the next property through a "like-kind exchange." Stack those advantages up and the investor can justify a higher bid on the exact same house—and still come out ahead—while paying cash to close fast.
That's not a level playing field. It's the government putting its thumb on the investor's side of the scale, and then acting surprised when families keep losing. A house is one of the only things we tax more gently when it's bought as a speculation than when it's bought as a home to live in. That's backwards.
What We'd Do: Flip the Incentives
Our fix is simple to state. When the buyer of a single-family home isn't going to live in it, sharply reduce or remove the federal tax incentives and loopholes that let investors treat family homes as a subsidized asset class—the depreciation write-offs, the loss deductions against unrelated income, the capital-gains deferral. Take the government's thumb off the scale, and a family competing with after-tax savings can actually win again.
And we'd scale it. The heaviest limits should fall on the largest-volume buyers, not on a retiree who owns a single rental to supplement their income. This is about the bidding advantage on scarce starter homes, not about punishing anyone who's ever owned a rental.
The Escape Hatch That Keeps the Market Healthy
Here's the part we think makes this genuinely common-sense rather than just populist. We don't want to freeze the market, and we don't think every landlord is a villain—rental housing is a real and necessary part of a functioning market. Some people need to rent, and someone has to own those rentals.
So the plan keeps a clean release valve: if a home has sat on the market for more than a year without an owner-occupant buyer, an investor can purchase it with the full tax incentives intact. The logic is straightforward. After twelve months with no family buyer, that house isn't being snatched away from anyone—it's genuinely surplus inventory. Letting an investor buy it fills a vacancy, prevents the blight and decay that come from a home nobody will purchase, and adds a buyer exactly where the market needs one. It channels investor money toward the homes that actually need it, and away from the ones a young family is fighting for.
That's the whole idea: protect families where housing is scarce, and welcome investment where it's genuinely surplus. You don't have to choose between a fair shot for first-time buyers and a healthy market. Designed right, you get both.
Part of the Bigger Picture
We'll be honest about the ceiling on this, too, because we always try to be: the single biggest reason housing is unaffordable is that we haven't built enough of it for fifteen years. No tax tweak substitutes for building millions more homes by clearing the local zoning and permitting barriers that make modest housing illegal to build. That remains job one, and it's the heart of our housing plan.
But while we work on supply, we shouldn't keep letting the tax code hand the too-few starter homes we do have to the buyers who already hold every other advantage. Build more homes—and give families a fair shot at the ones that exist. Houses should be homes first, and an asset class a distant second.
Read our full Housing & Cost of Living plan →
Sources
• Investor share of U.S. home purchases ~30% in 2025 (34% in Q3, a five-year high) — HousingWire
• Institutional investors and single-family housing — Congressional Research Service
• The State of the Nation's Housing 2026 — Harvard Joint Center for Housing Studies