President Donald Trump announced Wednesday he is taking immediate steps to ban large institutional investors from purchasing single-family homes in an effort to improve housing affordability for American families.
Trump made the announcement on Truth Social, stating, "I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it."
The president framed the move as essential to restoring the American Dream of homeownership, which he said has become increasingly out of reach due to inflation and rising prices.
"People live in homes, not corporations," Trump wrote, linking corporate ownership of residential properties to the housing affordability crisis affecting younger Americans and first-time buyers, according to the National Mortgage Professional.
Market Reaction and Legislative Push
The announcement triggered sharp declines in housing-related stocks. Invitation Homes, the nation's largest single-family rental company, saw its shares drop more than 7%, while Blackstone fell nearly 6% after initially declining as much as 9%. American Homes 4 Rent also dropped over 6%.
Trump did not provide specific details on how the ban would be implemented or whether it would require congressional approval. He indicated he would discuss the proposal further during a speech at the World Economic Forum in Davos, Switzerland, later this month.
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Shortly after Trump's announcement, Senator Bernie Moreno, a Republican from Ohio, said he would introduce legislation to codify the ban into law. The move represents bipartisan interest in addressing Wall Street's role in the housing market, as Democrats have previously proposed similar restrictions.
Questions Linger Over Effectiveness
However, housing experts question whether such a ban would significantly impact home prices. Institutional investors, defined as firms owning at least 1,000 properties, own approximately 2% to 4% of single-family rental homes nationwide, according to various analyses, CBS News reported. Small investors owning 10 properties or fewer account for more than 90% of investor-owned homes.
"Institutional investors are a tiny share of the market, and a tinier share of the total U.S. housing market," one expert noted. While institutional ownership is higher in certain markets, reaching 25% in Atlanta and 21% in Jacksonville, experts emphasize that the broader housing affordability crisis stems primarily from insufficient construction and inventory shortages.
The proposal reflects growing political pressure on the administration to address cost-of-living concerns ahead of the midterm elections. Trump has been seeking to enhance housing affordability through various measures, including influencing the Federal Reserve to lower interest rates and supporting alternative mortgage products.
Critics caution that banning institutional investors may not address the root causes of the housing crisis. Goldman Sachs analysts estimate the U.S. needs to add 3 million to 4 million homes above normal construction levels to ease prices. More than 75% of homes across the country remain unaffordable for most Americans, according to Bankrate.
Housing advocacy groups have offered cautious support for the proposal while emphasizing the need for comprehensive solutions beyond restricting institutional buyers, as per the BBC.
