By Eric Eisenhammer

Much of California’s housing debate has focused on who is buying homes, particularly large investors, and whether their activity should be limited. That’s a fair question for lawmakers to ask. But it’s worth stepping back and asking a broader one first: what would actually make housing more affordable for more Californians?

By most measures, the state has struggled for a long time simply to build enough homes. California has averaged fewer than 80,000 new units a year over the past decade, compared with the roughly 180,000 a year needed to support population and job growth. The median home price now tops $900,000. Whatever else is going on in the market, that gap between the number of homes California adds and the number it needs is a significant part of the story.

One effect of that gap is that renting, rather than owning, is the reality for a growing share of Californians. Within the rental market, the type of housing available matters too. Apartments meet the needs of many households, but not everyone. Some families prefer the space of a single-family home or want to stay near a particular job or school while they save toward eventually buying. Single-family rentals serve that segment. They’re a modest piece of a much larger housing system, not a fix for the affordability crisis on their own.

Some recent proposals have focused specifically on restricting institutional investors. It’s a reasonable thing to examine, and there are legitimate questions about the role large landlords play in local housing markets. At the same time, it’s worth noting that institutional investors – typically defined as those owning 100 or more homes – make up a small share of the single-family market, commonly cited at around 2%, and have reportedly been net sellers of homes in recent quarters. Most single-family rental housing is owned by smaller landlords.

Larger investors have allocated capital toward building new supply, including build-to-rent developments, and toward renovating older or vacant homes. None of this settles the policy debate over investor restrictions one way or the other – reasonable people can weigh the tradeoffs differently – but it does suggest that this piece of the market may not be where the biggest affordability gains are available.

The changes more consistently associated with lower housing costs tend to be less about any single category of buyer or renter, and more structural: faster permitting, zoning that allows more units per lot, and lower fees or taxes that make new construction financially viable. Austin is a commonly cited example; the city eased lot-size and density rules in recent years and has since seen rents decline. It’s one data point, not a guarantee of results elsewhere, but it’s consistent with the general pattern that supply tends to respond when barriers to building come down.

None of this is to say investor-focused policies are without merit, or that concerns about large corporate landlords aren’t worth taking seriously. But if the underlying goal is more housing that more Californians can afford, it’s worth keeping the primary question – how we build more, of all kinds – in view alongside the narrower one about ownership.

California likely benefits from more housing options overall: more homes to buy, more apartments, and more single-family rentals for the households they serve best. Supply isn’t the only issue in this debate, but it needs to stay near the center of it.