The housing boom of the mid 2000s ended with the Great Recession, culminating in a housing bust. Both house prices and the homeownership rate started a steep and continuous decline. While house prices bottomed out in 2011, the homeownership rate kept falling until 2016. The shift from owning to renting was accompanied by a rise in investor purchases. Hence, institutional investors entered the market for houses, while historically they had primarily bought and rented out apartments. In his article “Institutional Housing Investors and the Great Recession,” Consultant Dick Oosthuizen examines the extent to which a drop in house operating costs for institutional investors increased their house purchases, driving the post-Great Recession shift from homeownership to renting while partially muting the decline in house prices.

Rental survey data show the annual house operating-cost premium of institutional investors relative to homeowners fell by nearly half from 2001 to 2015. House transaction data show institutional investors grew larger post-crisis, enabling economies of scale that could explain their decline in operating costs. To measure how these reduced costs affected the housing bust of 2007–2011, Dr. Oosthuizen built a heterogeneous agent model of the housing market featuring corporate investors and two types of dwellings: condos and houses. Through this transition experiment intended to replicate the Great Recession, Dr. Oosthuizen concludes the reduction in corporate operating costs led to a rise in institutional ownership and a decline in rental rates, which stimulated rental demand and mitigated the fall in house prices, and contributed to a decline in the homeownership rate.