President Trump issued an executive order on Tuesday evening that directed federal agencies to stop backing loans and offering incentives that would enable institutional investor purchases of single-family homes.
“A growing share of single-family homes, often concentrated in certain communities, have been purchased by large Wall Street investors, crowding out families seeking to buy homes,” said Trump in his executive order. “Hardworking young families cannot effectively compete for starter homes with Wall Street firms and their vast resources. Neighborhoods and communities once controlled by middle-class American families are now run by faraway corporate interests. People live in homes, not corporations.”
Trump added, “My Administration will take decisive action to stop Wall Street from treating America’s neighborhoods like a trading floor and empower American families to own their homes.”
The executive order called on Treasury Secretary Scott Bessent to develop a definition of “large institutional investor” and “single-family home” while directing the heads of the Departments of Agriculture, Housing and Urban Development (HUD), and Veterans Affairs along with the General Services Administration and Federal Housing Finance Agency to formulate plans to prevent institutional investors from acquiring single-family housing.
Furthermore, the president directed the Attorney General and the Federal Trade Commission to “review substantial acquisitions, including series of acquisitions, by large institutional investors of single-family homes in local single-family housing markets for anti-competitive effects and prioritize enforcement of the antitrust laws, as appropriate, against coordinated vacancy and pricing strategies by large institutional investors in local single-family home rental markets.”
Trump also called on HUD to begin a registry of single-family rental owners that receive federal housing assistance, which would be used to identify large institutional owners in this sector. However, the executive order exempts build-to-rent communities from this new endeavor.
The president does not have the authority to unilaterally ban institutional investors from buying single-family homes. Sen. Bernie Moreno (R-OH) has announced plans to introduce legislation that would codify the executive order into law.
The impact of this initiative on homeownership affordability is unclear. Industry estimates note that institutional investors account for roughly 2% to 3% of all single-family housing ownership.
I would be curious of what the percentage of single family homes under $400,000 institutional investors own, and if this 2-3% number indicated in the article is ALL single family homes in the US. That is a very important distinction.
I do not believe the statistics of 2% to 3% are accurate in the last statement above. Sure, this is likely true as it relates to iBuyer’s hanging on to the properties. They do not do that. What they do, do is they remove up to 40% of the homes that would have been listed for sale in the major metro areas in Texas. Many of these, they pay more than what they are worth and to make up for it, they sell them out the back door at a loss to Institutional Landlords. The big ones have billions invested, what’s a $6 or $7 million per quarter loss? It’s called a drop in the bucket. Like the cow, if you leave the barn door open will eat until they eat enough to die, so will the iBuyer take what they can, just to take it.