The L.A. City Council voted Wednesday to study how large property buyers might be adding risk and limiting opportunities for tenants and prospective homeowners. The move comes after an October study found that large landlords owned a growing share of L.A. properties. City officials want to understand whether corporate consolidation of housing stock is actually "monopolizing" the market and making it harder for regular buyers to compete.

The market share of institutional investors is less than 1% nationally, according to a January 2026 report from the American Enterprise Institute. That research—which defines institutional investors as those owning over 100 properties—found that in 36 of 50 states, institutional investors hold less than 0.5% of single-family housing stock, and even in Georgia, which has the highest share, they account for just 2.6%.

The report argues that institutional investors' emergence was not a cause but a reaction to government regulatory failures, including restrictions on home building that created a multi-million housing shortage and Federal Reserve policies during COVID-19 that incentivized investors to ramp up home purchases. Politicians across 22 states have introduced bills targeting these investors, but the data suggests they're chasing the wrong culprit.

If you're at a party and there aren't enough chairs, blaming the two people standing in the corner won't solve your problem. The AEI research shows that California faces a housing shortfall equal to 15% of its housing stock while institutional investors own just 0.2%, and in New York the shortage is 11.2% while institutional investors own a mere 0.1%. Even in metros like Atlanta that get attention for investor activity, half of ZIP codes have institutional investor shares under 1.5%.

The real issue? Decades of restrictive zoning laws and building regulations that make it expensive and slow to construct new homes. When cities make it nearly impossible to build, prices shoot up whether Wall Street is involved or not. In San Jose, California, home prices have soared nearly 200% since 2012 while institutional investor ownership share is virtually zero.

L.A.'s study might reveal what the data already shows: the enemy isn't corporate landlords but the policies that starve cities of housing supply. The solution is not to ban institutional investors but to allow more housing to be built, the AEI researchers argue. When regular families compete for homes in a market where building is strangled by red tape, everyone loses—whether they're bidding against a hedge fund or their neighbor. If L.A. really wants to help prospective homeowners, the answer isn't complicated: make it easier and faster to build homes where people want to live.