The Debate Over Institutional Investors Heats Up

• Today’s multifamily webinar: Demand will be steady in 2026, but margins are thinner and execution matters more than ever. Sign up

• Hand off homes: President Trump has proposed banning institutional investors from buying single-family homes.

• Settled, not settled: Real Brokerage has agreed to settle a lawsuit tied to compensation and recruiting claims.

• Into the fire: California is tightening fire resilience rules and launching grants to help homeowners harden homes and fund retrofits.

Flash Poll

Editor’s Pick

The Debate Over Institutional Investors Heats Up

President Trump announced that he plans to push for a federal ban on large institutional investors purchasing single-family homes shook markets the day it dropped, hitting shares of Invitation Homes, American Homes 4 Rent, and Blackstone as investors weighed the implications. The proposal was framed as part of a broader housing affordability push, with Trump saying homes should be owned by people, not corporations, and urging Congress to codify the measure.

But the raw numbers complicate the narrative. Investors overall, including mom-and-pop landlords and small buyers, did account for roughly a third of U.S. single-family home purchases in 2025’s second quarter, the highest share in several years. Even so, institutional investors that own large portfolios are a tiny slice of the total housing stock. Recent analysis shows so-called “mega” institutional owners with 1,000 or more homes control perhaps around 2 percent of all investor-owned single-family homes and well under one percent of the roughly 86 million single-family units nationwide. The vast majority (roughly 85 percent of investor-owned homes) belong to small landlords owning between one and five properties.

Historically, institutional purchases were more prominent, especially in the years following the Great Recession, when firms bulk-bought foreclosures to build rental portfolios. In the early 2020s, that trend visibly waxed and then waned, with large players increasingly net selling rather than aggressively acquiring existing homes, and shifting some capital to build-to-rent developments instead of competing on the resale market.

Those market dynamics matter because the proposed ban, as currently articulated, targets only future acquisitions by large investors and would not necessarily force existing owners to divest their portfolios. Turning the concept into law would require clear statutory language passed by both houses of Congress and signed by the president. It would also trigger complex questions about definitions: at what portfolio size does a buyer become regulated, and how would exemptions for small or regional investors be drawn? There would almost certainly be legal challenges around takings, equal protection, and interstate commerce. The executive branch cannot unilaterally impose such a ban through regulation without congressional authorization, and crafting legislation that survives judicial review while achieving its policy goals would be a heavy lift.

The most immediate effect of the rhetoric has been reflexive market repricing and renewed scrutiny of the political risk embedded in the single-family rental and build-to-rent sectors. The proposal underscores how housing affordability will remain a political football, influencing policy debates around taxation, zoning reform, mortgage finance, and land use. For single-family home investors themselves, the uncertainty highlights that control of supply plays a far larger role in affordability than the current footprint of institutional capital ever has.

In the end, the proposal, even if it never becomes law, signals the growing political leverage of the narrative that “big investors” are part of the affordability problem. Whatever its legal fate, it will shape how institutions, lenders, and private owners think about risk, strategy, and the political environment surrounding residential real estate for years to come.

Overheard

Real Brokerage Settlement Brings Compensation Claims Back Into Focus

Real Brokerage has agreed to settle a lawsuit brought by former agent Cwynar that challenged how the company marketed and administered its compensation structure. The case focused on allegations that Real’s recruiting and promotional materials created misleading expectations about agent earnings, fees, and revenue sharing. Plaintiffs argued that the reality of payouts, caps, and deductions did not always align with how the model was presented, raising concerns about fairness and disclosure rather than outright commission levels.

The lawsuit emerged during a period when brokerage compensation models were already under scrutiny. Real positioned itself as a tech forward, agent centric platform, emphasizing lower fees, revenue sharing, and equity participation as differentiators. The complaint alleged that these incentives were not always as straightforward as advertised and that changes to terms or interpretations of policies affected agent income. While Real denied wrongdoing, the decision to settle avoids extended litigation and the risk of further discovery into internal compensation practices and communications.

The broader implication is that brokerage innovation is increasingly colliding with legal expectations around clarity and consistency. As firms compete for agents with complex pay structures that mix caps, splits, stock incentives, and revenue sharing, the margin for ambiguous messaging shrinks. Settlements like this one reinforce that growth strategies built on aggressive recruiting narratives must be matched by precise disclosures and durable economics. In a market already reshaped by commission lawsuits and regulatory attention, compensation transparency is becoming less of a marketing choice and more of a legal requirement.

California Pushes Fire-Ready Homes With New Rules, Grants and Building Standards

In the wake of devastating wildfires, California is accelerating policies and programs that make fire resilience a central part of housing and real estate strategy. State leaders have fast-tracked permitting for wildfire safety projects, streamlined approvals for vegetation management and home hardening, and poured billions into resilience and rebuilding efforts. California’s online permitting process now aims to cut approval times for critical fire mitigation projects to as little as 30 days, helping communities implement defensible space, fuels reduction and other essential measures that protect homes and neighborhoods.

Beyond permitting, the state has put financial muscle behind resilience. Millions in Wildfire Resilience Block Grants and home hardening programs help retrofit existing homes to meet or approach California’s strict Chapter 7A building code standards, which mandate fire-resistant materials and design in fire-prone zones. These efforts align with long-standing building code frameworks that require Class A fire-rated roofing, ember-resistant vents and non-combustible siding for new builds in high risk areas, a response to climate-driven fire seasons that have repeatedly battered housing stock. Programs also target socially vulnerable households and high risk neighborhoods with financial assistance to retrofit and harden homes.

California’s push reflects a broader recognition that fire resilience is not just a homeowner choice but a systemic housing priority. Lawmakers are advancing bills focused on community hardening standards, and the state’s wildfire mitigation financial assistance framework has been in place for years to help residents and jurisdictions implement resilience measures. At the federal level, proposals such as tax credits for home hardening and bills aimed at improving temporary disaster-resilient housing signal that similar concepts are gaining traction beyond California’s borders.

If California’s approach becomes a template, other wildfire-exposed states like Colorado, Oregon and Texas could adopt similar resilience standards and incentives because rising insurance costs, building code updates and market demand are already pushing retrofit and build-back expectations higher. For real estate markets in high fire-risk regions, these evolving policies could shift the baseline for permitting, insurance underwriting and property valuation. Homes meeting rigorous fire resilience standards may command pricing advantages and broader insurance access, while older properties lacking mitigation could see both carrying costs and capital expenditure requirements rise.

Live Webinar

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.