Trump targets Wall Street homebuyers, but affordability doubts remain
President Donald Trump on Wednesday renewed his push to restrict large institutional investors from purchasing single-family homes, arguing that Wall Street firms are crowding out homebuyers.
“There are big companies, big companies, that are buying, renting or whatever they’re doing with thousands of homes,” Trump told CNBC’s Joe Kernen in an interview in Davos, Switzerland. “Some people sell them to make a big profit, but that must be a lot. We want people to be able to buy a home.”
Trump’s comments follow the executive order he signed Tuesday directing federal agencies to restrict institutional investor activity in the single-family housing market.
The order gives the Treasury Department 30 days to define “major institutional investor” and “single-family home” and directs federal agencies to issue guidance within 60 days to implement restrictions, including limits on the purchase and sale of single-family homes owned by federal agencies to institutional investors.
But housing analysts remain skeptical, saying the lack of affordability is due to a lack of supply rather than investor demand.
Institutional investors are not ‘market drivers’
Although Trump said Wednesday that institutional investors are “gobbling up entire homes,” they make up only a small portion of the U.S. housing market. Firms that own 100 or more single-family homes control roughly 2% of the nation’s single-family housing stock. According to John Burns Research and Consulting.
In theory, widespread and growing corporate homebuying could raise prices and make it harder for families to enter the competitive housing market. But institutional investors’ share of home purchases has receded from the peak of the pandemic, approaching 1 percent a year later, from about 3 percent in the first quarter of 2023, according to data from John Burns Research and Consulting. High interest rates slowed investor activity.
“The real problem is we added a lot more households than single-family homes,” Jay Parsons, an analyst who tracks rental housing and development trends, told CNBC Make It. “It’s all about supply and demand.”
Limiting investor demand does not add new homes to the market, and many housing economists say affordability will not increase without a significant increase in supply. Analysts Goldman Sachs Research estimate The United States will need millions of additional homes above current construction levels to meaningfully ease price pressures.
Analysts say their impact on prices and rents appears limited in markets where institutional investors are most concentrated. A. 2024 analysis Parsons found that many of the most investor-saturated markets posted rent growth below the U.S. average; a pattern he associates with higher levels of housing construction.
“Institutional investors are not the main market drivers,” says Scott Lincicome, vice president of general economics and business at the Cato Institute. “This is mainly a supply issue.”
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