HousingWire | Tyler Williams
Builders that utilize bulk sales to institutional investors in for-sale communities may have to pivot, and there are some concerns about the order’s impacts on single-family rental supply
President Donald Trump’s executive order restricting large institutional investors from purchasing single-family homes has broad – even bipartisan – political appeal. Still, most housing experts doubt that it will exert a significant impact on affordability.
The order could also pose risks for builders that have made a practice of selling in bulk to institutional investors in for-sale communities, and raises concerns about its impact on single-family rental supply.
What is clear is that the full impact is yet to be determined. The President’s order didn’t specify the institutional investor threshold that the policy will seek to limit, although the administration will clarify that point within 30 days of yesterday’s announcement.
While the expert consensus is that the order will have a limited impact on affordability, it could marginally improve homeownership in certain Sun Belt markets where institutional investor purchases are more concentrated. Industry stakeholders opposed to the order are concerned that it could reduce single-family rental supply and, as an unintended consequence, increase rental rates in select markets.
The Trump administration has made it clear that its priority is to increase access to homeownership. A policy that bans institutional buyers as local rivals to owner-occupiers commands political popularity despite questions and skepticism about its effectiveness. According to a GrayHouse poll, 59% of the public supports the idea, while 23% oppose it. In an age of polarization, the policy enjoys positive support from Republicans, Democrats, and Independents.
The executive order, along with a host of other federal housing policy proposals, is a signal that the administration is grappling with ways to expand homeownership. However, a federal push to limit institutional ownership of single-family homes could force some homebuilders that sell to those large investment firms to pivot to a different strategy.
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Can this move the needle on homeownership?
In his Davos discussion, Bessent argued that moves to push institutional investors out of the market will have a marginal impact on affordability, especially on a regional level. The large institutional buyers make up a larger share of buyers in many Sun Belt markets, while accounting for few homes in constrained Northeastern markets, for example.
A 2024 report from the Government Accountability Office (GAO) found that, while larger institutional investors owned roughly 2% of the single-family housing stock nationwide, they owned 25% of Atlanta’s single-family homes, 21% in Jacksonville, 18% in Charlotte and 15% in Tampa.
“And what’s important here, you will hear some misinformation that says, well, institutional investors are 1, 2, 3%. That is true, having been in markets for 35 or 40 years. Markets are made on the margin, and institutional investors are much higher in boomtown markets like Charlotte, like Atlanta, like Huntsville, Alabama,” Bessent said.
Brady argued that the order could move the needle a little bit on affordability for buyers in certain markets, but framed it as a single piece of a much larger policy puzzle. “This crisis of affordability, in my mind, is multi-pronged. This could be one of those tentacles that in certain markets will have an impact,” he said.
In provided statements, Jake Krimmel, Senior Economist at Realtor.com, and Thom Malone, Principal Economist at Cotality, both argued that the order would have limited national impacts, with potentially larger regional implications in the Sun Belt. Colin Allen, Executive Director of the American Property Owners Alliance, agreed. “We’ve had events in Atlanta where we see significant amounts of investors coming in and buying homes there. So, yeah, I think this could have some significant local effects, and supplement areas where you’ve seen higher concentrations of investor purchases,” Allen said in an interview.