President Donald Trump announced on Truth Social Wednesday that he wants to ban large institutional investors from buying more single-family homes, arguing that “people live in homes, not corporations.”
The proposal is seemingly meant to improve housing affordability, but large institutional investors represent only a small share of the 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 — raising questions about how much impact such a ban would have.
Trump has not said exactly how the policy would be implemented or how broadly it would apply.
In an interview with CNBC on Thursday, Bill Pulte, Trump’s appointed director of the Federal Housing Finance Agency, criticized institutional investors for “buying a lot of homes” directly from builders, suggesting the proposal could extend beyond resale homes to newly built single-family housing.
Supporters of restrictions argue that institutional investors often outbid would-be homeowners competing for the same homes, particularly in fast-growing markets.
Housing analysts, however, say the influence of institutional investors has been overstated, and that a longstanding shortage of homes is the primary reason why houses have become increasingly unaffordable.
“The real problem is that we’ve added far more homeowners than we’ve built single-family homes,” Jay Parsons, an analyst who tracks rental housing and development trends, tells CNBC Make It. “It’s all about supply and demand.”
What Trump is targeting
The ban would target large institutional investors, including private equity–backed firms as well as publicly traded corporate landlords that own hundreds or thousands of single-family homes. Institutional investors typically buy single-family homes to rent them out, often concentrating in suburban neighborhoods around major metro areas, according to the Federal Reserve Bank of Richmond.
In theory, widespread and growing corporate homebuying could drive up prices and make it tougher for families to elbow their way into a competitive housing market. However, the share of home purchases by institutional investors has declined from its pandemic peak, falling from about 3% to closer to 1% as higher interest rates cooled investor activity, John Burns Research and Consulting’s data shows.
Among firms that own 100 or more single-family homes, institutional ownership is highly concentrated geographically. About 80% of those homes are located in just 5% of U.S. counties, mostly in fast-growing Sun Belt metros, according to an analysis by the American Enterprise Institute.
Critics often argue that institutional investors drive up home prices and rents in the markets where they are most active. But a 2024 analysis by Parsons found that many of the most investor-saturated markets posted rent growth below the U.S. average, a pattern he linked to higher levels of housing construction.
“The idea that institutional investors are hindering homeownership is rooted in a widely held myth,” Parsons says.
Why the ban might not improve affordability
Limiting investor demand does not add new homes to the market, and improving affordability would require at least three million additional homes above current construction levels, according analysts at Goldman Sachs Research, who say that lower mortgage rates, without added supply, would likely push prices higher.
“Institutional investors are just not the main market movers,” says Scott Lincicome, vice president of general economics and trade at the Cato Institute. “It’s mainly a supply issue,” he says, describing the proposal as “populism 101.”
Long-running supply constraints remain the dominant factor shaping housing affordability, according to the National Association of Realtors.
Building conditions also remain difficult, with high construction costs and elevated borrowing rates leading many builders to pull back, rather than break ground on new homes.
Single-family housing starts rose to a seasonally adjusted annual rate of 874,000 units in October, a level that remains below historical norms, according to U.S. Census Bureau data.
“Single-family production continues to operate at reduced levels due to ongoing housing affordability challenges, including persistently high mortgage rates, the skilled labor shortage and excessive regulatory costs,” Buddy Hughes, chairman of the National Association of Home Builders, wrote in a briefing earlier this year.
“If you actually want to bring housing costs down, you have to deal with the barriers that make it harder and more expensive to build,” says Lincicome. “That includes things like tariffs that raise construction costs and immigration restrictions that limit the construction workforce.”
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