Institutional investors started buying up single-family homes in foreclosure across the Sun Belt during the Great Recession, and analysts predict investors could control 40 percent of U.S. single-family rental homes by 2030.

Driven by skyrocketing home prices and rising mortgage rates, the U.S. could be on its way to becoming a nation of renters. New U.S. Census data shows the rate of U.S. homeownership is down to 63.1 percent — a 53-year low.

Despite predictions of a housing crash, housing prices are still rising in many parts of the U.S. The median sale price has increased by more than 9.38 percent since January, according to data from Redfin.

Just before home prices began to inflate in 2021, Amazon founder Jeff Bezos made a bet on a Seattle-based startup with a mission to make real estate investments more accessible to retail investors. Arrived Homes became the first company to sell shares of individual rental properties legally to nonaccredited investors.

In November 2022, JPMorgan Chase & Co. announced a joint venture to buy and develop $1 billion worth of single-family rental communities. 

MetLife Investment Management analysts estimated in their 2022 forecast that institutional investors owned 700,000 single-family rentals. By 2030, they predict that 40 percent of single-family rentals, or about 7.6 million homes, could be owned by institutions.

MetLife Investment Management is the asset management arm of financial services company MetLife, and its clients are institutional investors.

Since the early 2010s, Tricon Residential, Progress Residential, American Homes 4 Rent and Invitation Homes each bought thousands of homes and also added housing with built-for-rent communities. Some of these companies are financed by private equity firms such as Blackstone and investment managers such as Pretium Partners, CNBC reported.

“It’s almost a captive market,” said Jordan Ash, director of labor jobs and housing at the Private Equity Stakeholder Project. “They’ve been very explicit about how people are shut out of the homebuying market and are going to be perpetual renters.”

Prices for detached homes have risen faster in Sun Belt states such as Florida, Georgia, and Texas than the national average and some Congress members want Wall Street to back away from the housing market.

From January 2020 to January 2023, rents for two-bed detached homes increased about 44 percent in Tampa, Florida, 43 percent in Phoenix, and 35 percent near Atlanta, compared with a 24 percent increase nationwide, according to research compiled by Zumper for CNBC.

Rep. Ro Khanna, who represents California’s 17th District — the heart of Silicon Valley — is the lead author of the Stop Wall Street Landlords Act of 2022.

“What we’re saying is don’t have private equity buying up single-family homes,” Khanna said in a CNBC interview. “What’s outrageous is your tax dollars are helping Wall Street buy up single-family homes.”

Introduced in the House of Representatives, Stop Wall Street Landlords Act prohibits large investors from getting certain federal mortgage assistance. It also denies certain tax and other benefits to large investors with assets exceeding $100 million a year for investment in single-family housing. It denies such investors a tax deduction for interest paid on a single-family home mortgage, for insuring such homes, and for depreciation.