The American dream has always been characterized by achieving upward mobility and a better life through hard work. However, somewhere between the famous 1930’s aspiration and today, that dream broke. While people point to a multitude of problems that could have caused this, one large culprit remains: housing.
In the early 2000s, many families were able to purchase their first homes with only one full-time worker supporting the family. Today, many buyers cannot afford prices that are more than twice as high, even when adjusted for inflation.
In October 2025, the housing shortage reached approximately 2.8 million units and is expected to take around 10 years to resolve. This housing shortage quickly became an affordability issue, with an overwhelming 77% of Americans unable to afford a median-priced home.
This wasn’t just an accidental market change. Private investors now own approximately 20% of the nation’s single-family homes and purchased nearly a third of the total sold in the second quarter of 2025.
This article will examine 3 main provisions of S. 969.
(1) Aggregation Rules
DISQUALIFIED SINGLE FAMILY PROPERTY OWNER.—For purposes of this subsection—“(A) IN GENERAL.—The term ‘disqualified single family property owner’ means, with respect to any taxable year, any taxpayer who owns (directly or indirectly) 50 or more single family residential rental properties. “(B) AGGREGATION RULES.—All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as one taxpayer for purposes of this section.
(2) The New Construction Exception
(B) EXCEPTION FOR CERTAIN PROPERTIES.—Such term shall not include any residential rental property (as so defined)—“(i) with respect to which a credit is allowed under section 42 for such taxable year or any property, or “(ii) which— “(I) was constructed by the taxpayer, or “(II) acquired by the taxpayer after its construction but before the first date on which any dwelling unit in such property was occupied by a resident.
(3) Sale Exception
EXCEPTION.—“(A) IN GENERAL.—Paragraph (1) shall not apply with respect to depreciation deduction which is allowable— “(i) in connection with a single family residential rental property, and “(ii) in the taxable year in which such single family residential rental property is sold. “(B) EXCEPTION.—Subparagraph (A) shall not apply unless the sale described in clause (ii) thereof is— “(i) a sale to an individual for use as the principle residence of the individual (within the meaning of section 121), or “(ii) a sale to any qualified nonprofit organization (as defined in section 163(n)(2)(C)).
The LLC Loophole Institutional Investors Use to Hide 500 Homes
The most revealing provision of S. 969 is one that is unlikely to make headlines. Buried in Section 2(3)(B) of the bill, it is mandated that “all persons treated as a single employer…shall be treated as one taxpayer for purposes of this section.” The implication is firm and clear: you can’t escape the 50-property threshold by hiding behind corporations.
Corporate restructuring is the primary way landlords appear smaller than they are. In metro Atlanta alone, three major landlord companies controlled over 19,000 rental homes using more than 190 LLCs between them. While on paper, each entity seemed to be a small to medium-sized landlord.
In the United States in 2023, the top ten institutional investors owned over 430,000 single-family rental homes. Without aggregation rules, a firm owning 500 homes through 50 separate LLCs could technically avoid classification as a “disqualified single-family property owner.”
Although it is important to note that simply classifying landlords won’t bring down the price of homeownership, institutional investors tend to cluster their purchases within certain neighborhoods, thereby increasing the price of homeownership. Even in the best-case scenario, where investors are restricted, large institutional landlords tend to have access to cheaper capital and systems that smaller landlords cannot match.
All in all, the effectiveness of S.969 on tackling the aggregation of homes hinges on its enforcement. As it exists currently, the aggregation rule is less about punishing landlords and more about recognizing economic reality.
Why S. 969 Doesn’t Punish Every Investor — And Shouldn’t
Unlike the aggregation rule, the New Construction Exception indicates that this bill isn’t just anti-investment. The bill also makes a distinction between the types of investors who build homes and those who buy existing homes. Under this bill, housing built by taxpayers is considered exempt from any limitation on depreciation created by the bill. This includes housing that is being built through the use of low-income housing tax credits.
To put this into context, the number of single-family built-for-rent units has dramatically increased over the last few years
and currently represents an estimated 8% of total single-family housing starts nationwide, and is even higher in sun-belt cities.
While this exemption creates opportunities for the construction of built-for-rent housing, it also creates uncertainty for the investor community. Many large institutional investors typically invest in built-for-sale housing through a forward purchase agreement; however, due to the lack of completion at the time of purchase, these acquisitions would be excluded from receiving depreciation under this exemption. Therefore, this would reduce the investor’s after-tax return associated with newly constructed rental housing.
While it seems small on paper, this reduction would cause new construction to decrease significantly, as build-for-rent is costly and resource-intensive. It is important to compare reductions in investment to localized benefits of discouraging consolidation, as both have adverse economic effects.
Investors could even redirect funds toward commercial real estate or entirely different asset classes with more stable tax treatment. Here are some examples of the economic impacts of this:
- A $10,000 increase in capital gains taxes reduces the semiannual home sales rate by about 0.1–0.2 percentage points.
- An 8–20% higher rent as costs depending on the severity of reductions on taxes.
- 10–20% shifts in house prices over the medium
The One Rule That Could Finally Put Homes Back in Family Hands
The Sale Exception is designed to help return homes to everyday families. Under this provision, investors can still claim depreciation tax benefits in the year they sell a property, but only if they sell the home to an individual who will live in it or to a nonprofit organization.
This helps create an ‘incentive’ to reverse a decade-long trend of institutional investors frequently selling properties to other investors. In Q2 2025, investors were the buyers in about one‑third of all single‑family home purchases—the highest it has been in 5 years.
In neighborhoods where investors own more than one in five single‑family homes, bulk sales and fast‑cash requirements mean that properties leaving large investors’ portfolios are often sold in ways that are inaccessible to typical homebuyers, reinforcing investor‑to‑investor churn rather than expanding homeownership opportunities.
Trump Just Sided With Main Street: What His Executive Order Actually Does
On January 20, 2026, President Donald Trump passed an executive order titled “Stopping Wall Street from Competing with Main Street Homebuyers.” The executive order aimed to reduce the sale of single-family homes to large investors by reducing subsidized loans and giving a 30-day “first look” window to individual families and nonprofits.
Trump’s executive order massively greenlights S.969, with Section 5 explicitly calling for the codification of policies that de-privatize single-family homes. It has also drastically increased the probability of S.969’s enactment, marking a major rhetorical shift within the Republican Party. Despite most Republicans previously opposing such “antitrust” policies, Trump’s order has made it probable for “the House and Senate to pass bipartisan bills to implement Mr. Trump’s order.”
Considering Trump’s past focus on appealing to corporate incentives, the motives behind his executive order are questionable. With nearly 80% of Americans being in support of changes in the housing situation, and public perceptions of Trump’s management of the economy are declining, the sudden shift toward market interventionism is most likely rooted in populism. Should the sole purpose of the executive order be to improve Trump’s popularity, however, several risks begin to emerge.
The Paradox of Populism
If the motive behind the executive order and support of S.969 is popularity, enforcement will be loud yet shallow, as populist housing policy often ignores the nuances of real estate and economics.
To begin, large institutional investors own fewer than 1 percent of American homes, with 90 percent of real-estate investors owning less than 11 homes. While the impacts will be minimal in reality, the constant push of policies such as S.969 as a “silver bullet” may be an attempt to formulate a scapegoat while the real causes of the housing crisis, such as the administration’s manipulation of interest and pricing rates, are swept under the rug.
The most glaring issue, however, is that both the executive order and S.969 focus almost entirely on who owns homes rather than how many homes there are to own. Framing the housing crisis as a “battle against Wall Street investors” completely ignores the fundamental deficit of more than 2 million housing units.
As mentioned before, many institutional investors increase housing supply through supporting Build-to-Rent communities, efforts that are directly deterred by the EO. Removing tax incentives potentially halts the construction of thousands of rental homes, tightening the housing market even further.
S.969 demonstrates a growing concern about the lack of affordable housing and how institutional investors have contributed to this crisis. Provisions like the aggregation rule and Sale Exception are intended to help return homes to everyday families, while the New Construction Exception is intended to maintain incentives for developing new housing. Through these provisions, the legislation intends to create a new direction for how homes are owned and distributed, not just limit investor participation.
However, the legislation also points to a larger reality: the housing crisis is not simply about who owns homes, but also about the supply of homes. Limiting the number of homes owned by investors may allow some families greater opportunity to purchase existing homes, but it may also negatively affect housing supply by decreasing investments in construction.
Housing markets function based on incentives. If new legislation changes the profitability of housing investment (for instance, by capping investor ownership at a certain percentage), many investors would likely divert their investments into other asset classes as opposed to continuing to invest in residential property. In some cases, limiting investor ownership may lead to more homes being owned by individuals; in other cases, it may reduce housing development, leave fewer homes available, and make homes less affordable for both renters and potential homebuyers.
Overall, S.969 and other housing bills alike are not a simple solution to the housing crisis, but rather a trade-off. Continuing to limit investor ownership (and improve the opportunity for more families to own homes) will depend upon whether or not the new legislation produces greater incentives for investment in residential properties to create new housing.
Leave a Reply