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That perspective is ignoring the impact of quantity buying to a regional market. If I buy 10 or 20 of something rare, it has a far greater market impact than you buying 1 unit in the same market. Again, basic supply and demand economics here.
It's not ignoring the impact, it's just asking why we should ban legitimate economic activity based on the impact that it has (which is actually temporary, because if it was just a one-time surge in demand without persistent demand, eventually it'll be a money losing endeavor for those institutional investors)
And it's not temporary, however. Bank of America and Wells Fargo are both sitting on $20 billion each in foreclosures and delinquency units. That doesn't happen momentarily; it happens over time. However, the banks have been under an industry moratorium to process foreclosures quickly. That's changing because their liability figures on the books are so big. Now, just imagine what happens to housing pricing when those foreclosures are unloaded competitively versus trickled out. And those two banks are not the only ones. They're just the biggest.
Anyone buying anything is going to push up prices for someone else. Consumers are all in competition each other to buy scarce resources, just like sellers are also in competition with each other.
Why should the identity of who you're competing with matter? Why should a seller be prevented from entering into a voluntary contract with an institutional investor?
See also this for a response to some of the claims: https://jayparsons.beehiiv.com/p/top-11-myths-on-institutional-investors-of-single-family-homes