Solving the Housing Puzzle
This Comment analyzes the entrance of institutional investors into the single-family rental market after the Great Recession of 2008. The collapse of the housing market during the Great Recession fundamentally changed the ownership structure of U.S. single-family homes in two distinct ways. First, the number of families renting single-family homes soared. And second, institutional investors entered the single-family home market, buying many homes and converting them into rental properties. This postrecession reality has introduced a housing puzzle: the pricing trends of single-family rentals in the decade after the Great Recession suggest that institutional investors have captured monopolistic power over the single-family rental market despite owning a relatively small market share. Thus, this Comment evaluates the housing puzzle through the lens of antitrust law.
While a potential antitrust case appears to suffer from the critical weaknesses of low entry barriers and market shares, analyzing institutional entrance into the single-family rental market under antitrust merger doctrine reveals that the case is stronger than it may initially seem. Although it is hard to envision a successful antitrust lawsuit against institutional investors today, there are reasons to believe these weaknesses will disappear if these market trends continue tomorrow. Furthermore, scrutinizing the entrance under alternative merger theories, such as the unilateral or coordinated effects theories, illustrates that a Clayton Act case would be more impactful than originally thought.
After evaluating the antitrust case, this Comment considers how the housing market can instruct antitrust doctrine’s further evolution, since commentators across academia, the media, and politics all criticize institutional entrance. By highlighting how unique market facts in housing obfuscate market power, this Comment suggests expanding the merger analysis to include not just levels and changes in concentration, but also orders of magnitude.