Trump Moves to Ban Institutional Investors from Buying Single-Family Homes

Former President Donald Trump announced his intention to ban large institutional investors from acquiring more single-family homes. He stated, “People live in homes, not corporations,” emphasizing the need for individuals to have access to housing without corporate interference.

Impact of Institutional Investors

Large firms, such as Blackstone and JPMorgan Chase, have significantly increased their presence in the housing market, particularly during the recovery following the Great Recession of 2008. These investors typically purchase homes to rent them out, capitalizing on rising home prices. Their activity intensified after the foreclosure crisis, especially in states within the Sun Belt region.

Market Reaction

Following Trump’s announcement, shares of Blackstone fell by as much as 9%. This reaction illustrates the market’s sensitivity to regulatory changes regarding housing investments.

Upcoming Housing Proposals

Trump plans to unveil more housing and affordability proposals in the forthcoming weeks. He will discuss these topics in his upcoming speech at the World Economic Forum in Davos, Switzerland, scheduled for later this month.

Current Housing Market Overview

The U.S. housing market is currently facing significant challenges. Home prices have surged nearly 55% from the beginning of 2020 to the third quarter of 2023, largely due to low inventory and interest rates exceeding 6%. Additionally, many homeowners are reluctant to sell their properties due to the ultra-low mortgage rates they secured during the pandemic.

Trends in Institutional Ownership

Significant changes in the ownership of rental homes have been noted over the years:

• No investor owned more than 1,000 single-family rental homes as of 2011.
• By 2015, institutional investors owned approximately 300,000 homes.
• In 2022, major investors held over 15% of the single-family home market in cities like Atlanta, Jacksonville, and Charlotte.

Responses from Lawmakers and Experts

Lawmakers from both political parties have proposed restricting corporate investors from buying homes. They argue that this practice drives home prices up, making it harder for regular Americans to find homes. However, some experts, like Jaret Seiberg from TD Cowen, caution against such bans, suggesting it may not effectively increase housing affordability. They warn that while it might enhance single-family purchases, it could also reduce the availability of single-family rentals.

As the housing market evolves, the implications of Trump’s proposals and the role of institutional investors will continue to shape the American real estate landscape.