Would a ban on institutional ownership of single-family homes solve housing and affordability issues?
A social media post on Wednesday by President Donald Trump stated he is “immediately taking steps to ban large institutional investors from buying more single-family homes” — a move that had an immediate reaction from across the spectrum of the housing industry.
The Wall Street response was swift, with shares of Blackstone Inc. and other major real estate investors experiencing steep declines. Bloomberg reported the S&P 1500 Homebuilding Index slid as much as 2.3%, with 15 of 18 members trading lower, after Trump’s announcement.
Linda Hyde, president of the Kansas City-based American Association of Private Lenders (AAPL), told Scotsman Guide the issue needs further examination.
“Any policy discussion about limiting large investors in the single‑family housing market must account for the essential role responsible private capital plays in restoring aging housing stock and increasing supply,” she said. “Private lenders and investors are often the ones who take on distressed properties and return them to livable condition.”
Hyde said the AAPL encourages a “data‑driven approach that expands access to homeownership without unintentionally restricting the investment activity that supports housing availability and community revitalization.”
Buddy Hughes, chairman of the National Association of Home Builders, told Scotsman Guide, “We appreciate President Trump’s efforts to create more opportunities for homeownership and look forward to working with the administration on a broad range of policy ideas to do so.”
He added that the group believes “it is important to ensure that new policies not cut off capital for new construction, including homes built for rent, which provide a critical source of new housing supply. America needs a multipronged approach that addresses regulatory and financial burdens to improve housing supply and affordability.”
National Association of Mortgage Brokers President Kimber White told Scotsman Guide that by focusing the attention on large institutional investors, the national impact on the affordable housing crisis might be negligible.
“This is a start. If it puts 3% of houses on the market, that’s great, because right now we have an affordability crisis and we have no homes on the market,” White said. “It’s not a huge fix. Because when you look at the big picture, it’s not going to all of a sudden magically throw this big group of houses on the market.”
While White said he’s “never for banning if you can find other solutions,” he thinks the affordability crisis has reached a point where “it’s probably the draconian measure that they’ve got to take.”
Shifting institutional focus
Rick Sharga, president and CEO of CJ Patrick Co., applauded the administration’s efforts to find solutions to address housing affordability. But he told Scotsman Guide that “banning institutional investors from buying homes isn’t the answer.”
Sharga noted the largest investors (those owning 1,000 or more homes) collectively hold just over 2% of all investor-owned homes across the country, based on the Investor Pulse Report he put together for BatchData.
“Also, for at least the last seven consecutive quarters, they’ve actually been net sellers — meaning that they’ve sold more properties than they’ve purchased,” he observed. “And many of the properties they’ve bought have been purchased from other investors.”
This isn’t to suggest that large investors aren’t interested in the single-family rental home market, Sharga added.
“Many of these entities have shifted their focus from buying individual homes and aggregating them into large portfolios to building rental communities from the ground up,” he said. “That actually adds more inventory, and means that they’re not competing with traditional homebuyers for existing homes.”
Sharga concluded: “The bottom line is that investors owning properties isn’t the root cause of today’s affordability issues — much less the minimal number of homes owned by the largest institutional investors. So while it may be politically popular to announce that you’re going to slay a Wall Street dragon, this particular crusade unfortunately isn’t going to solve the problems faced by homebuyers today.”
Other housing affordability proposals
The Mortgage Bankers Association said in a statement that it “welcomes the Trump administration’s focus on making housing for owning and renting more affordable and attainable for more Americans.”
“We look forward to learning more about the administration’s forthcoming proposals and have offered targeted recommendations to reduce housing costs,” the association stated.
Those recommendations include a potential reduction in Federal Housing Administration mortgage insurance premiums; reducing loan-level pricing adjustments assessed to middle-income buyers for loans backed by government-sponsored enterprises Fannie Mae and Freddie Mac; and ending the tri-merge credit report requirement for lower-risk borrowers.
Sarah Edelman, executive vice president for policy and programs at the National Community Stabilization Trust, told Scotsman Guide that while the Trump administration’s concerns regarding the homeownership crisis and its urgency to find solutions for Americans is welcome and needed, there are a number of immediate steps the administration can take to immediately level the playing field for families.
She stated the administration could unlock around 100,000 homes over the next several years by reversing changes to a key policy. “First Look,” a program launched by the Department of Housing and Urban Development (HUD) in 2010, provided homebuyers with an exclusive chance to buy a foreclosed HUD home before it was made available to investors. Modified during the Biden administration with expanded homebuyer protections as part of the Housing Supply Action Plan, the program has since been phased out.
“In 2025, HUD sold nearly $1 billion in distressed single-family loans, mostly to institutional investors, without offering families a fair chance at purchasing after the loans are taken through foreclosure,” Edelman said. “It’s through sales like these that institutional investors have built their single-family rental businesses and accessed their inventory over the last decade.”
She continued: “By eliminating the First Look policy that ensured families could compete with investors, homeownership has been put further out of reach. The administration should revise this policy and return to providing a gateway for homeowners and nonprofits in these sales.”
Edelman also promoted expanding the number of nonprofits qualified to purchase distressed, government-owned properties and provide financial support to ensure those homes end up in the hands of homebuyers.
“Nonprofits face persistent barriers, including access to affordable inventory. Providing support for these organizations strengthens the pathways for families to access homeownership in affordable, quality single-family homes,” she said. “These solutions offer a clear path to reducing barriers to homeownership, and we encourage the administration to act on them.”
A spokesperson for the National Rental Home Council (NRHC) told Scotsman Guide that “housing affordability is a critical issue, and we appreciate the administration’s focus on ensuring Americans have access to a diverse mix of housing options.”
The NRHC spokesperson added: “Professional single-family housing providers represent a small segment of the overall housing market, and the single-family rental industry remains focused on supporting renters while also supporting pathways to homeownership.”
