An examination of property rights, market dynamics, and the unintended consequences of well-intentioned housing restrictions
When Issues & Insights published “Investors Should Not Be Barred From Buying Homes” on January 13, 2026, the editorial board aimed to propose legislation in Minnesota and Maryland that would restrict investor purchases of single-family homes. Their argument was straightforward: such bans represent government overreach that will backfire by reducing housing supply and harming the very homebuyers lawmakers claim to protect. The piece frames investor restrictions as economically illiterate attempts to scapegoat a modest 3% of the market for broader housing affordability challenges. But this national policy debate took an intriguing turn, where this author reveals that his HOA—not government—had already implemented exactly the kind of restriction the editorial condemns. With rental properties comprising 33% of their subdivision, this private community association banned sales to non-resident purchasers to prevent further erosion of owner-occupancy and home values. This creates a fascinating collision: a libertarian-leaning publication arguing against investor restrictions meets a property-rights-based HOA covenant implementing those very restrictions. The resulting tension exposes complexities that neither free-market purists nor protective homeowners fully acknowledge—and reveals why the “should investors be banned?” question misses the deeper transformation reshaping American housing.
Issues & Insights Editorial Board: Investors Should Not Be Barred From Buying Homes
If we had an audience with the president, we’d first remind him that the government in a free country has no authority to determine who is allowed to buy homes and who isn’t. Of course the principle of limited government has been violated for much of our republic’s history, but that doesn’t make state intervention in private affairs right.
If the Trump administration can block institutional investors from participating in the free market, imagine what a Democratic administration would do using it as a precedent. Would a Democratic president balk for even one moment at issuing an executive order limiting the economic freedom of a political opponent, say white Christian conservatives?
The Setup
This author’s homeowner’s association has implemented what seems like a straightforward solution to neighborhood stability: ban non-resident buyers to cap rental properties at their current 33% level, and preserve home values. Issues & Insights’ editorial board argues the government’s plan to ban investors from purchase homes is an overreach. But both positions deserve deeper examination than either side typically provides.
What the Editorial Gets Right (And Wrong)
The Strong Points:
The I&I editorial correctly identifies that institutional investors represent a relatively small portion of total housing purchases—approximately 3% nationally, according to recent data. Their framing of property rights and free market principles has legitimate constitutional and economic foundations. The concern about government intervention creating market distortions is a historically well-documented issue.
The Blind Spots:
However, the editorial’s analysis suffers from three critical omissions:
- Scale blindness: While 3% nationally sounds negligible, concentration matters. In Sun Belt markets like Phoenix, Atlanta, and parts of Florida, institutional investors comprised 15-30% of single-family home purchases in recent years. That’s not a rounding error—it’s market-moving volume.
- Aggregation effects: The editorial treats “investors” as a monolith. There’s a vast difference between:
- A local teacher buying a second property for retirement income
- A regional LLC managing 50 properties
- Invitation Homes (owned by Blackstone) with 80,000+ properties nationwide
- Pretium Partners managing entire subdivisions as rental portfolios
- Externality dismissal: The piece handwaves away neighborhood stability concerns as mere aesthetics, ignoring documented impacts on:
- School enrollment volatility
- Local government service costs
- Community maintenance standards
- Social capital formation
The HOA Response: Reasonable or Reckless?
The HOA’s position has surprising technical merit:
At 33% rental saturation, our community sits at a critical threshold. Fannie Mae and Freddie Mac—the government-sponsored enterprises that guarantee most mortgages—limit purchases in communities where rentals exceed 50%. Many conventional lenders impose even stricter limits (30-40%). Our HOA may be preventing a death spiral where:
- Rising rental percentages make conventional financing difficult
- Only cash buyers (often investors) can purchase
- This accelerates rental conversion
- Property values decline because buyers can’t get mortgages
- More owners sell to investors, perpetuating the cycle
But the implementation raises red flags:
- Legal vulnerability: HOA covenants restricting property sales face complex legal challenges varying by state. Arizona (your location) has particularly strong property rights protections that could invalidate such restrictions.
- Definitional challenges: What constitutes a “non-resident purchaser”?
- Someone who owns but doesn’t occupy?
- Out-of-state buyers who plan to relocate?
- A local family buying for an elderly parent?
- A military family maintaining a home during deployment?
- Enforcement nightmare: How does the HOA verify purchaser intent? What prevents buyers from claiming residency initially, then converting to rentals later?
The Data Both Sides Ignore
Market dynamics in high-investor-concentration areas show:
Research from the Federal Reserve and academic studies reveal:
- Neighborhoods with investor concentration above 30% experience increased price volatility (not just decline—rentals can inflate prices during boom cycles, then crash harder)
- Maintenance quality correlates inversely with absentee ownership rates, though professional property managers often outperform neglectful owner-occupants
- Community engagement measurably declines, but correlation doesn’t equal causation (are renters less engaged, or does high turnover prevent relationship formation?)
The corporate landlord difference:
Institutional investors operate fundamentally differently from individual landlords:
- Algorithmic pricing that responds to market-wide data, not local conditions
- Professional management that enforces lease terms but lacks neighborhood knowledge
- Financial engineering that prioritizes yield optimization over long-term community stability
- A scale that allows them to influence local rental markets, not just respond to them
The Questions Nobody’s Asking
For the HOA:
- Have you examined graduated alternatives rather than absolute bans?
- Requiring investor buyers to meet higher standards (landscaping bonds, property management requirements)
- Creating rental licensing systems with revocable permits
- Implementing owner-occupancy incentives rather than investor penalties
- What’s your succession planning for aging homeowners who need to move but can’t find buyer-occupants in a restricted market?
- Have you consulted with real estate attorneys about the legal defensibility of your restrictions under Arizona law?
For the free-market absolutists:
- If property rights are paramount, why do we accept zoning laws, building codes, and HOA covenants that restrict property use? Where’s the principled distinction?
- How do you address market failures where individual rational decisions (selling to the highest bidder) create collective negative outcomes (neighborhood destabilization)?
- What’s the limiting principle? If a hedge fund wanted to buy your entire subdivision and convert it to short-term rentals, should the government have zero role in preventing that?
The Honest Conclusion
The HOA’s concern is legitimate. The I&I editorial’s skepticism is also legitimate. Both are incomplete.
The real story: We’re watching a massive experiment in housing financialization play out in real-time, and neither free-market ideology nor HOA restrictions adequately address the complexity.
What actually matters:
- Context: A 33% rental rate in a stable, owner-occupied subdivision represents a different challenge than 3% national investor purchases
- Scale: Individual landlords and institutional investors aren’t interchangeable actors
- Alternatives: Binary bans (whether by HOA or government) are usually worse solutions than graduated interventions
The uncomfortable truth: The HOA is likely exceeding its legal authority while addressing a real problem. The I&I editorial is defending property rights while ignoring market concentration effects. And the housing market is undergoing structural changes that our policy frameworks—both public and private—weren’t designed to handle.
Rather than asking “Should investors be banned from buying homes?”, the better question is: “What ownership structures best balance property rights, market efficiency, community stability, and housing accessibility?”
Neither the HOA nor the editorial board has answered that question. But at 33% rental saturation, you’re living in the laboratory where the answer will eventually emerge—whether through legal challenges, market evolution, or community adaptation.
The journalist’s takeaway: When both sides are partially right and talking past each other, the real story is what neither wants to examine—the fundamental tension between housing as a commodity and housing as the foundation of stable communities. The HOA’s heavy-handed solution and the editorial’s ideological response both avoid that harder conversation.