Trump Seeks to Lock Corporate America Out of Local Housing Markets

Wall Street’s invitation to the open house in your neighborhood may soon be revoked.

On Wednesday, President Trump called on Congress to codify a new proposal to ban large institutional investors from buying more single-family homes, saying in a Truth Social post, “People live in homes, not corporations.” For prospective buyers, this could mean not having to go up against, say, Blackstone when you put in a bid for a home. 

Location, Location, Location

Nationally, roughly 20% of the nation’s 86 million single-family homes are investor-owned, according to a report published last year by real estate data provider BatchData. But mom-and-pop operations, or investors owning between just one and five properties, account for 85% of that mix, while large investors, or those with more than 1,000 properties, account for just a 2.2% slice of the investor-owned pie. 

The footprint of large investors is so small that most experts don’t see it as having much of an impact on the overall supply, which is sparse. “I think that the investor problem is kind of a boogeyman for the housing market,” RedFin economist Daryl Fairweather told non-profit news organization CalMatters.

But in a handful of hotspot housing markets, institutional investors are causing a major distortion, typically winning bids with all-cash offers and later turning properties into rentals. One study from The Urban Institute found that 45% of single-family homes owned by institutional investors are in just six markets: Atlanta, Phoenix, Dallas, Charlotte, Houston and Tampa Bay. Properties owned by large-scale investors tend to increase the price of nearby homes, while those owned by smaller investors usually have the opposite effect, according to a recent report from the Federal Reserve Bank of St. Louis.

That said, the White House’s policy proposal (far from the first of its kind) is a small win for Americans and a major loss for a few big investment firms:

• Shares of Blackstone plummeted more than 5% on Wednesday, as did those of Apollo Global Management, while shares of Invitation Homes (the largest renter of single-family homes in the US) fell 6%.
• “This should have a material impact on their business. PE firms are having a tough time monetizing many of their investments,” Matt Maley, chief market strategist at Miller Tabak, told Bloomberg. “But, Blackstone has generated some nice income running the largest single-family rental business in the US.”

Six Is Not the Fix: Buyers still appear to need all the help they can get. Total mortgage application volume fell nearly 10% in the week ending January 2, the Mortgage Bankers Association said Wednesday. That’s despite mortgage rates finally falling near the 6% mark that many believed would juice the market.