Maybe Austin is an outlier. They have high property taxes. Or people left because of those taxes Most cities that built a lot of housing saw it bought up by investors.
They invest in housing because it's scarce because we don't build enough of it.
And if you look at the actual numbers, large-scale institutional investors just aren't that big a factor. It's another bogeyman for people desperate to avoid the solution to not having enough housing: building more housing.
Austin is an example of the market balancing out when allowed to do so.
I grant the Austin Texas is its own unique situation.
Also, developers don't want to build build build housing as that, like you said would help to reduce the price.