Former President Donald Trump has proposed a ban on large institutional investors purchasing single-family homes in the United States. Announced via social media, the initiative aims to improve housing affordability and make homeownership more accessible for American citizens, an objective he plans to ask Congress to codify into law and discuss further at an upcoming international forum. The proposal has generated varied reactions from market analysts, political figures, and advocacy groups, highlighting an ongoing debate about investor impact on the housing market.
Proposal Details and Rationale
Donald Trump communicated his proposal on a Wednesday through a post on Truth Social, stating his intention to "immediately tak[e] steps to ban large institutional investors from buying more single-family homes." He indicated he would call on Congress to formalize this prohibition through legislation and plans to discuss additional housing and affordability proposals at the Davos World Economic Forum in January.
Trump asserted that homeownership, which he described as a core component of the "American Dream" symbolizing the rewards of diligence, has become increasingly difficult to achieve, especially for younger generations. He cited inflation and housing affordability issues as contributing factors, linking "Record High Inflation" to the Biden administration. His stated rationale included the declaration, "People live in homes, not corporations."
Market Context and Background
The proposal aligns with an ongoing discussion among housing advocates and lawmakers regarding the increasing involvement of institutional investors in the American residential housing market. Following the 2008 financial crisis, which resulted in numerous foreclosures, entities such as Blackstone and other private equity firms acquired many homes for rental purposes, becoming significant landlords in various markets. Lawmakers from both major political parties have scrutinized the role of these firms, attributing them to contributing to rising costs in both rental and home purchase markets. Previous legislative attempts to address this issue have largely not advanced.
Concerns about housing affordability have been a recurring theme in the 2024 presidential election campaign. US house prices reached peak levels during the pandemic period before experiencing a decline, with the median sale price for a home in the US recorded at $410,800 last year, according to data from the US Census Bureau.
Industry and Market Reactions
Following Trump's announcement, shares of several companies involved in real estate investment experienced declines. Blackstone, a major private equity buyer, saw its shares decline by over 5% on Wednesday. Invitation Homes and American Homes 4 Rent, prominent single-family rental (SFR) companies, experienced declines of approximately 7% and 9% respectively. An analyst from KBW suggested the market reaction could be disproportionate and potentially present a buying opportunity.
Some financial analysts and industry figures expressed reservations regarding the potential influence of such a ban on housing prices. Todd Henderson, head of real estate for the Americas at DWS, indicated he was not concerned by the proposal, anticipating that any future policy would likely exempt institutional buyers of newly constructed homes. He argued that new construction contributes to housing supply and projected minimal changes to the SFR industry if such provisions were included, potentially enhancing the value of purpose-built SFR homes.
The SFR industry maintains that its investors hold a relatively small percentage of the total single-family homes in the country. Data from October 2023 by Parcl Labs indicated that investors owning 10 or more residential units held about 3.4% of all single-family homes, with larger investors controlling 0.73% of the inventory. A spokeswoman for the National Rental Home Council affirmed that professional single-family housing providers constitute a small segment of the overall housing market, focusing on supporting renters and facilitating pathways to homeownership. Some analysts also suggested that the business models of institutional SFR companies have shifted towards acquiring properties from homebuilders or through development, rather than competing with individual homebuyers on the open market.
Political and Advocacy Responses
The proposal has drawn varied political responses. Senate Minority Leader Chuck Schumer (Democrat) noted on social media that Senate Democrats had attempted similar legislation last year, which was reportedly blocked by Republicans. On Wednesday, Ohio Republican Senator Bernie Moreno announced his intent to introduce legislation designed to codify Trump's proposed ban, though a Mizuho report noted that its swift progression is not expected.
Sam Garin, a spokesperson for the Private Equity Stakeholder Project, an advocacy organization that has highlighted concerns about private equity ownership's impact on renters, expressed support for Trump's initiative, stating, "We eagerly await the details of what this policy will actually entail, but we urge policymakers not to stop there." Some Democrats also expressed alignment with Trump's concerns about investor impact on housing affordability. Nevada Democratic state Senator Dina Neal, who has proposed a cap on corporate landlords multiple times without success (blocked by Republican Governor Joe Lombardo), suggested that Trump's alignment on the issue could potentially sway more Republicans. California Governor Gavin Newsom has also indicated a desire to take action on this issue.
Economic and Local Perspectives
Housing experts like Laurie Goodman of the Urban Institute suggest that while prices may increase in areas where investors buy, this is often because investors target already growing markets. She noted that large institutional companies own approximately 3% of the national single-family rental market, with higher concentrations in specific regions like the Sunbelt. The institutional buying trend has slowed since 2022 due to higher interest rates. Economists generally identify the primary cause of rising housing prices as a shortage of available homes. Some investors are now contributing to housing supply by building single-family houses specifically for rent.
At the local level, residents like Ashley Maxwell in Indianapolis reported difficulties purchasing a home due to numerous all-cash offers, often from investors. In Fishers, Indiana, Mayor Scott Fadness observed that up to 38% of homes in some neighborhoods were purchased for investment. Fishers implemented a cap last year, limiting rentals to 10% per neighborhood, which took effect on January 1, aiming to protect local homeownership. This measure was opposed by realtor groups, citing private property rights and potential loss of highest bids for sellers. Similar local proposals in other cities and states have largely not advanced.