President Donald Trump’s announcement that the U.S. would move to bar large institutional investors from purchasing single-family homes is drawing swift reactions from investors, analysts and housing experts, many of whom say the proposal raises serious questions about its effectiveness and implementation.
The president made the announcement Wednesday in a Truth Social post, saying the move is intended to improve housing affordability. The proposal immediately sparked surprise and concern across the housing industry, particularly among companies with significant exposure to the single-family rental market.
“While the legality and ultimate timeline for enforcement remains uncertain, we believe it proposes a clear risk to the [single-family residence] sector’s business model and growth prospects,” investment bank Mizuho Americas said in a Jan. 7 analyst note.
Trump’s proposal comes as housing costs remain a top concern for voters nationwide. Nearly half of surveyed voters say investors using housing for profit is a primary driver of high prices, according to research released last year by the Democratic-aligned Searchlight Institute.
“For a very long time, buying and owning a home was considered the pinnacle of the American Dream,” Trump said in the post. But now, “that American Dream is increasingly out of reach for far too many people, especially younger Americans.
“It is for that reason, and much more, that I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it. People live in homes, not corporations,” he said.
While details of the proposal remain limited, Trump said he plans to further address the issue during appearances at the World Economic Forum in Davos, Switzerland, later this month and potentially during the State of the Union on Jan. 24.
Housing economist Jay Parsons said the move was not unexpected given Vice President J.D. Vance’s long-standing criticism of institutional homeownership, but he questioned whether the proposal would achieve its stated goals.
In a Wednesday LinkedIn post, Parsons said the proposal is “not a huge surprise” but added that it is “disappointing because it’s in no way grounded in reality and will in no way improve housing affordability or availability.”
Market reaction to the announcement was swift. Shares of Invitation Homes, the nation’s largest single-family rental operator, fell 6%, according to CNBC. Shares of Blackstone declined more than 5%, while Apollo Global Management also saw its stock drop more than 5%.
Following the announcement, Mizuho downgraded its outlook for American Homes 4 Rent and Invitation Homes from “outperform” to “neutral.”
“We expect the stocks to remain range-bound near-term and see better relative risk-adjusted opportunities elsewhere within Residential REITs (CPT, MAA) and REITs broadly with Storage REITs (EXR) a likely near-term beneficiary of the uncertainty,” Mizuho said.
In a separate analyst note, JPMorgan pointed out that institutional investors likely own less than 10% of the nation’s 14 million single-family rental homes, which are still largely held by small, individual landlords. However, the bank noted that major multifamily operators such as Camden Property Trust, American Landmark and TruAmerica have entered the single-family rental space in recent years.
Per JPMorgan, “if the president’s ban were to go through and be heavily restrictive, the business plans for SFR operators will be in question, and growing the portfolios would be off the table. This is clearly what the market is reacting to [Wednesday] with the stocks trading off, and it makes sense from a knee-jerk point of view.”
The bank added that even under a worst-case scenario in which institutional investors were forced to sell their single-family rental portfolios, the underlying value of those homes would remain substantial.
Sen. Bernie Moreno, R-Ohio, said Wednesday that he plans to introduce legislation to codify Trump’s proposal, though it remains unclear whether congressional approval would be required and how quickly the policy could be implemented.
“Previous attempts at similar legislation never found enough votes, as recently as a couple years ago,” Parsons said in his LinkedIn post.
Additional uncertainties include how a “large institutional investor” would be defined, how existing portfolios would be treated, the fate of build-to-rent developments already underway and whether institutions could continue managing rental homes on behalf of individual owners.
Even if the proposal advances, Mizuho noted that it would likely face legal challenges in court.
Meanwhile, other bipartisan housing efforts continue to gain traction in Congress. Lawmakers are currently considering the Housing for the 21st Century Act, which aims to reduce development costs and regulatory barriers to encourage increased housing production nationwide.
Originally reported by Julie Strupp, Senior Editor in Construction Dive.
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