Economic Insights — Are investors bad for the housing market? The answer to that question depends on which investors we're talking about, and how they are managing their investments.
Houses are intended to shelter people, but some people worry that physically absent, financially motivated housing market investors (HMIs) harm the homes' occupants and neighbors, by either extracting excessive rents or destabilizing markets. So, should policymakers restrict housing market investors? Although there are legitimate concerns about certain investors speculating on homes, exacerbating cycles and driving out owner-occupants, there are also many ways HMIs can improve welfare. That’s why proposed policies target types of investors by policing their behavior. We need to understand and document this behavior, rather than lumping together all investors.
This article appeared in the Second Quarter 2023 issue of Economic Insights. Download and read the full issue.
