In brief
President Trump announced his desire to block large institutional investors from purchasing homes, claiming it would help young families secure their first homes. Critics argue the proposal doesn't address the broader issues of housing affordability, including a significant shortage of new constructions and rising property prices. While institutional buyers make up only 1% of total home purchases, concerns remain about their impact on communities. Trump is set to outline more details on his housing reform plans at the World Economic Forum.
WASHINGTON (AP) — President Donald Trump said on Wednesday that he wants to block large institutional investors from buying houses, asserting that a ban would make it easier for younger families to purchase their first homes.
Trump — facing growing pressure from voters concerned about housing affordability ahead of the November midterm elections — is tapping into long-standing fears that corporate ownership of homes displaces traditional buyers, thus leading many to rent. However, industry experts warn that his plan overlooks crucial challenges confronting the housing market, chiefly the national shortage of home construction and soaring prices that have outpaced income growth.
“People live in homes, not corporations,” Trump remarked in a social media post while calling upon Congress to formalize his proposed ban.
In recent discussions, Trump pledged in a prime-time address last month to unveil “some of the most aggressive housing reform plans in American history” within the year. He is expected to provide more insights regarding housing issues at the upcoming World Economic Forum in Davos, Switzerland, which attracts influential corporate figures and financiers.
Trump previously proposed extending the 30-year mortgage period to 50 years to reduce monthly payments—a suggestion criticized for potentially undermining homeowners' ability to build equity and wealth.
Despite the push for a ban on institutional purchases, these investors account for only 1% of total single-family housing stock in the U.S. according to a recent analysis from the American Enterprise Institute, defining institutional investors as those owning 100 or more properties. Their market share varies, peaking at 4.2% in Atlanta and lower percentages in other cities like Dallas and Houston, indicating they do not dominate neighborhoods, particularly in lower and middle-income areas.
However, a more pressing issue remains—the significant lack of new home construction. Goldman Sachs estimated in October that the country requires between 3 to 4 million additional homes beyond normal construction levels to ease the cost pressure. As mortgage rates surged due to inflation-induced by the pandemic, monthly mortgage payments soared, creating affordability challenges.
Trump acknowledged that increasing new construction could adversely impact existing home values, potentially affecting current homeowners' net worth. “I don’t want to knock those numbers down because I want them to continue to have a big value for their house,” he stated, highlighting the conflict between creating affordable housing and preserving value for current homeowners.
