Trump’s Proposal to Ban Institutional Investors from Buying Single-Family Homes

Recently, former President Donald Trump proposed restricting institutional investors from purchasing single-family homes, a policy that has garnered unusual bipartisan support in Congress and appears to resonate with the public. His declaration made waves on social media, with Trump emphasizing, “People live in homes, not corporations,” reflecting a growing concern over the affordability crisis in housing markets across the United States.

The Recent Shift in Market Dynamics

Trump’s announcement had an immediate impact on the stock market, notably causing shares of major investment firms like Blackstone, which has built a significant rental home portfolio, to dip. The market response underscores the sensitive nature of the housing sector, where institutional investors—largely private equity firms—have gained prominence over the past decade by snapping up residential properties, renovating them, and converting them into rental units.

The Affordability Crisis and Its Complexity

Despite the seemingly straightforward appeal of banning institutional purchases, experts caution that this policy may not fundamentally tackle the housing affordability crisis. Daryl Fairweather, chief economist at Redfin, pointed out that the root of housing unaffordability lies in a significant shortage of homes. He explained, “The reason housing has gotten so unaffordable is because there is a shortage of homes. It’s the shortage of homes that makes investors want to buy the homes because they see that there’s scarcity.” In essence, merely limiting corporate ownership would not alleviate the greater issue of scarcity in supply.

The Landscape of Home Ownership and Renting

Giant landlords—entities that own over 1,000 homes—have been the focus of criticism since the aftermath of the 2008 financial crisis. They are often accused of exacerbating the housing crisis by inflating both rental and sale prices through their extensive property acquisitions. Critics allege that corporate landlords frequently evict tenants quickly while being slow to address necessary repairs, thereby creating a tenant experience that is less than favorable.

However, it’s important to note that institutional investors constitute only a small fraction of the U.S. housing market. According to research from John Burns Research and Consulting, these entities own about 3.4% of all rental homes. Moreover, landlords controlling 100 or more properties account for less than 1% of all home purchases. This distinction challenges the narrative that banning institutional buyers would revolutionize housing affordability.

The Role of Smaller Investors

Contrary to the dominance of corporate landlords, the rental market is still largely comprised of “mom-and-pop” investors—individuals or families owning fewer than 10 properties. Data from Cotality indicates that these smaller investors purchased approximately 14% of homes as recently as the third quarter of 2025, while larger investors only comprising 2.5% of purchases highlight the diverse nature of the market.

Nevertheless, the geographic distribution of institutional investors does raise concerns. Their concentration in rapidly growing cities in the Southeast—like Atlanta, Jacksonville, and Raleigh—fuels the debate about their influence on local housing markets and affordability.

The Impact on Rental Prices

The interplay between institutional investment and rental prices remains a nuanced topic. Selma Hepp, chief economist at Cotality, noted, “The research has been very inclusive… What happens first is you have a high-demand area where rents go up, and that’s when institutional investors come in.” This implies that rising rents might attract investors rather than being solely driven by their actions.

Joshua Coven, an academic in the real estate sector, highlights a paradox: while larger landlords contribute to increasing rental supply, they simultaneously decrease owner-occupied housing availability. His research suggests that institutional investment could be responsible for about 20% of price increases in markets where they operate most intensively.

He elaborated, stating, “This makes it harder for people to buy homes, because it does raise prices.” Thus, the issue remains complex; while these entities may expand rental options, their impact on the purchase market for aspiring homeowners is detrimental.

Looking Ahead

As the discourse on institutional investment in real estate continues to evolve, the challenge lies in balancing the need for affordable housing against the realities of a fluctuating market. Whether Trump’s suggested ban will gain traction remains an open question; nonetheless, the conversation highlights the urgent need for thoughtful strategies that address the housing crisis comprehensively.

Through targeted investments in housing supply and local market needs, stakeholders can look to create solutions that not only protect consumers but also enhance the overall health of the housing market.