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Dive brief:
- President Donald Trump signed an executive order Tuesday that aims to increase pathways to home ownership by prohibiting institutional investors from buying single-family homes that could otherwise be purchased by families. Trump first announced the move on January 7 in a Truth Social publication, surprising some in the industry.
- “America will not become a nation of rentiers,” the president said Wednesday in a speech at the World Economic Forum in Davos, Switzerland. “That’s why I’ve signed an executive order that prohibits large institutional investors from buying single-family homes. It’s just not fair to the public. They can’t buy a home.”
- REIT analysts had mixed responses to the executive order, investment bank Mizuho Americas said in a Jan. 20 analyst note. Some respondents called the announcement a “nothing burger” and “better than feared,” while others said “policy risk remains.”
Diving knowledge:
In recent years, Wall Street giants and institutional investment firms have driven up housing prices by buying hundreds of thousands of single-family homes, Trump said in his Davos speech, and “it’s been a great investment for them.” In his order, titled “Stopping Wall Street from Competing with Main Street Home Buyers,” he ordered the Treasury secretary to define “large institutional investor” and “single-family home” within 30 days.
“I’m asking Congress to pass this ban into permanent law, and I think they will,” Trump said in his speech. “Houses are built for people, not businesses.”
From 2022, mega-owners only owned about 3% of the SFR housing stock, according to a 2024 analysis by the Government Accountability Office. However, these investors are attracted to high-growth and geographically concentrated areas, so the percentages vary by region. In Atlanta; Jacksonville, Florida; and Charlotte, North Carolina, for example, homes owned by institutional investors made up about 25%, 21%, and 18% of the single-family rental market, respectively.
National Multifamily Housing Council President Sharon Wilson Géno and National Apartment Association President and CEO Bob Pinnegar said in a statement shared with Multifamily Dive that rental housing providers are “key partners” in addressing the nation’s housing affordability challenges.
“Our nation’s housing crisis, arguably one of the defining issues of our time, cannot be solved without the involvement of all corners of the housing ecosystem, from the rental housing to the for-sale market. For millions of Americans across our country, renting offers the flexibility and lifestyle needs that best support them,” Wilson Géno and Pinnegar said in their statement.
a key concern of the housing sector after Trump’s initial announcement was whether institutional investors could still build single-family homes for rent. According to some experts surveyed by Mizuho Americas, the ban on large investors “seems to depend on the interpretation of the phrase ‘homes that could otherwise be purchased by families'” and allows “properties that are planned, authorized, financed and built as rental communities.”
“The entire community has been allowed to build to rent,” but the president’s policy on mixed-use projects is less clear, Ivy Zelman, executive vice president of research and securities at New York City-based financial services firm Zelman, said in a webinar on Trump’s announcement. He noted that despite a possible ban, the nation’s largest tenant of single-family homes, Invitation Homes, acquired SFH rental company ResiBuilt for $89 million last week.
In Davos, Trump also touched on other factors that affect home ownership: “The crazy thing is, you can’t depreciate a house, but when a company buys it, it depreciates,” Trump said. “That’s something we’ll have to think about as well.” Institutional investors can deduct the property’s loss in value over time from their taxes to offset rental income.
Trump also named debt as a key obstacle to homeownership and said he is calling on Congress to pass a one-year cap on credit card interest rates at 10 percent. “This will help millions of Americans save for a home,” Trump said. “They have no idea they’re paying 28%, they’re a little late on their payment and they end up losing their house. It’s terrible.”
The the banking sector has rejected the proposaland that bill is unlikely to have enough support to become law, according to CNBC.
In addition, the president is deploying government-controlled mortgage finance companies Fannie Mae and Freddie Mac to move mortgage rates and moving forward with a new Federal Reserve chairman to replace Jerome Powell.
“Finally, I have instructed government-backed institutions to buy up to $200 billion in mortgage bonds to lower interest rates,” Trump said. “And I will be announcing a new Fed chair in the not-too-distant future,” adding that his choice was “highly respected.”
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