In the United States, where many people cannot afford housing, President Donald Trump has stated that he wants to prohibit institutional investors from purchasing single-family houses. According to one analyst, the proposed prohibition “is an indicator of how worried Team Trump is about the impact of housing affordability on the midterm election,”
In an effort to combat the skyrocketing cost of housing, President Donald Trump announced on Wednesday that he intends to prohibit “large institutional investors” from purchasing single-family houses. However, experts argue that such a step might not really make a difference.
Because corporate landlords compete with regular house buyers and raise home prices with all-cash offers, many have blamed corporate landlords for America’s housing affordability crisis.
Proponents claim that excluding institutional investors from purchasing real estate will increase the affordability of housing. However, the data points to a different conclusion.
According to experts who spoke to MarketWatch, banning big investors won’t reduce housing costs or free up current housing supply.
“Populist Policy 101” is what this is. Choose a villain and hold them accountable for a genuine issue, even if they had little to no involvement in its creation. BourseWatch spoke with Scott Lincicome, vice president of the right-wing research organization Cato Institute.
“Institutional investors make up a very small portion of both the market and the entire housing market in the United States. “The evidence that institutional investors raise home prices is insufficient,” he continued.
Data indicates that although investors purchased about one-third of single-family houses in the third quarter of 2025, the majority of these investors were modest, mom-and-pop landlords rather than big institutional ones.
According to Jake Krimmel, senior economist at real estate website Realtor.com, “my gut reaction is that institutional investors or landlords are a red herring for the affordability issues or the housing shortages issues that we’ve seen,” he told BourseWatch.
“It plays really well politically, of course, but the unfortunate reality is that even if we remove these guys from real estate, it would not have a large enough impact to really move the needle on affordability,” he stated.
For Americans, housing costs are a source of misery.
The president stated on social media that he intended to attract big investor acquisitions since the expense of housing continued to irritate many American home purchasers.
Trump wrote, “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,” on Wednesday afternoon.
“Homes, not corporations, are where people live. At my speech in Davos in two weeks, I will talk about this subject, as well as further housing and affordability initiatives, among other things,” he continued.
Big institutional investors include firms like Blackstone that purchase and lease single-family houses.
Prominent Democrats have been advocating for this action for a number of years; senators like Elizabeth Warren of Massachusetts have called on the federal government to prevent institutional investors from purchasing single-family homes.
Warren said he was in favor of limiting corporate investment in retail real estate in reaction to Trump’s Truth Social post.
“Trump should start by getting his own party in the House to support a bipartisan bill to lower housing costs that passed the Senate unanimously,” she stated. “I’ve been advocating for years to limit Wall Street from buying up America’s homes.” Additionally, Congress must to draft legislation to prevent corporate investors from purchasing real estate.
Following Trump’s statement, shares of Invitation Homes (INVH) and Blackstone (BX) dropped almost 6% on Wednesday.
“That could result in [lower] supply as well,” Thom Malone, senior economist at Cotality, told MarketWatch, adding that “construction could slow down in response” to decreased demand from big investors purchasing properties.
Following Trump’s post, shares of major house builders, such as PulteGroup (PHM), Lennar (LEN), and D.R. Horton (DHI), also fell on Wednesday. Lennar and D.R. Horton had declines of over 2% and over 3%, respectively.
Requests for comment were not immediately answered by the companies.
Why the fundamental cause of the housing affordability crisis will not be resolved by prohibiting big institutional investors
Large investors do not own the majority of the housing stock in the United States.
According to data from the real estate company Cotality, investors bought over 30% of single-family homes as of the third quarter, which concluded in September 2025, but these investors were primarily mom-and-pop landlords.
“According to Census Bureau data, there are approximately 16 million rental properties in the United States, and when you look at the percentage of large investors that own single-family rental homes, it’s typically no more than 2% of the stock nationally,” Jay Lybik, senior director of market research at national developer Continental Properties, told MarketWatch.
“You have regional owners who maybe own multiple homes in a particular metro or region, but in terms of publicly-traded or large, private single-family investors, that number is definitely less than 2% of the overall stock,” he stated.
To increase affordability, he said, prohibiting big investors from purchasing homes is “not supported by any type of analysis or data,” adding that the shortage of supply is the true problem.
According to research from Cotality, the majority of investors purchasing single-family homes are actually little players that own fewer than 100 properties.
According to Cotality, almost 14% of all single-family transactions in the third quarter were made by small investors, or those who own fewer than ten houses. Eleven percent of residences sold within the same time period were purchased by medium-sized investors, who held between 10 and 99 properties.
About 3% of investment acquisitions were made by large investors with between 101 and 1,000 properties, whereas just 2.5% of purchases were made by mega investors with more than 1,000 properties.
According to Krimmel of Realtor.com, small investors made up 62.5% of investor purchases in the first half of 2025, followed by medium investors at 18% and large investors at 13.5%.
According to Cotality, investors usually bought real estate in rapidly growing cities including Dallas, Houston, Atlanta, Phoenix, and Chicago.
According to Malone, significant institutional investors, who account for over 10% of acquisitions, were particularly active in Atlanta and are generally more engaged in major cities.
Trump’s proposal to prohibit institutional investors from purchasing real estate at this time “is an indicator of how worried Team Trump is about the impact of housing affordability on the midterm election,” according to a report from TD Securities’ Jaret Seiberg.
“This move permits the president to declare that he has taken a concrete step that will have an immediate impact as institutional investors will no longer be bidding against voters for houses,” he stated.
