The vast majority of home purchases aren't from speculators or institutional investors.

Institutional investors only own about 0.5% of homes. If they're forced to stop buying, nothing will really change in a noticeable way. At best, small landlords and investors will scoop attractive properties up for slightly less.

The only way that prices could go waaay down is if the supply of new homes increases or demand decreases (or some combination of both).

Which of those do you think is likely as a result of the proposed action, and why?

Nonsense. Do you think these landlords intentionally overpaid for the properties? They are sophisticated entities who like to pay at or below fair value.