President Donald Trump on Wednesday reiterated his call for limits on single-family home purchases by large institutional investors, arguing that Wall Street companies are crowding out prospective home buyers.
“Big corporations are buying up thousands of homes and renting them out and doing whatever,” Trump told CNBC’s Joe Kernen in an interview in Davos, Switzerland. “Some people are buying and selling for huge profits, and that’s too much. We want people to be able to buy homes.”
President Trump’s comments come after he signed an executive order on Tuesday directing federal agencies to curb the activities of institutional investors in the single-family housing market.
The order gives the Treasury Department 30 days to define “large institutional investor” and “single-family home” and directs federal agencies to issue guidance within 60 days to implement restrictions, including limits on the acquisition or sale of federally-owned single-family homes for institutional investors.
But housing analysts remain skeptical, saying the lack of affordability is driven more by a lack of supply than investor demand.
Institutional investors are not “market movers”
President Trump said Wednesday that institutional investors are “gobbling up all the housing,” but they make up only a small portion of the U.S. housing market. Companies that own 100 or more single-family homes control about 2% of the nation’s single-family housing stock, according to John Barnes Research and Consulting.
In theory, widespread corporate buying of homes could increase prices and make it more difficult for families to enter a competitive housing market. But as rising interest rates dampened investor activity, the share of home purchases by institutional investors has fallen from the peak of the pandemic, dropping from about 3% in the first quarter of 2023 to nearly 1% a year later, according to data from John Barnes Research and Consulting.
“The real problem is that we’ve built far more single-family homes than we’ve built,” Jay Parsons, an analyst who tracks rental housing and development trends, told CNBC Make It. “It’s all a matter of supply and demand.”
Restricting investor demand won’t add new homes to the market, and many housing economists say affordability won’t improve unless supply increases significantly. Analysts at Goldman Sachs Research estimate that the U.S. will need millions of additional housing units above current construction levels to significantly ease price pressures.
Analysts say institutional investors are likely to have limited influence on prices and rents in markets with the highest concentration of investors. Parsons’ 2024 analysis found that rent growth in many of the most investor-saturated markets was below the U.S. average, a pattern he linked to high levels of home construction.
“Institutional investors are not the main drivers of markets,” said Scott Linthicome, vice president of general economics and trade at the Cato Institute. “It’s primarily a supply issue.”
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