This framing feels backwards to me - I thought the reason institutional investors see it as a valuable asset is because of NIMBYs constraining supply for them via local policy and obstruction. The institutional investors are a symptom of that policy, but the NIMBYs (and incentives that exist for existing owners like prop13) are the cause.

Real Estate scaling supply to meet demand is in direct conflict with old properties increasing in value forever. You can't really have both and we're stuck a valley of bad incentives that favor existing owners.

If we let people build housing to meet demand it would fix it, but existing owners are motivated to leverage enormous amounts of equity (and local political power) to stop any new building in order to keep property scarcity high. Their explanations beyond that are all just motivated reasoning rationalizations. Hopefully stuff like RHNA will force local municipalities to act.

I can empathize somewhat with someone who spent $3M on a crappy house being afraid of being under water from increased supply, but I have no empathy for someone who bought a $300k house 30yrs ago that's now worth millions acting to obstruct new construction.