Trump Moves to Curb Institutional Ownership of Single-Family Rentals
Could a new executive order make homes more affordable?
One day after issuing an executive order aimed at limiting institutional investments in the single-family rental market, President Donald Trump took his pitch to make housing more affordable for American families to Davos, Switzerland, where he amplified his message that “homes are built for people, not corporations.”
“It’s just not fair to the public. They are not able to buy a house,” Trump said during a speech at the World Economic Forum on Wednesday while discussing a plan to ban large institutional investors from buying up single-family homes and turning them into single-family rental properties.
In recent years, the SFR and build-to-rent market has grown with Wall Street giants like Blackstone, American Homes 4 Rent, Invitation Homes and Progress Residential scooping up tens of thousands of single-family rental homes across the U.S., particularly in the Sun Belt. While institutional investors reportedly only own about 2 percent of the market, the percentages are higher in some areas, making it harder for first-time homebuyers to access certain markets.
Trump contends that increased institutional ownership of SFR properties along with high inflation and interest rates—which he blames on the previous administration—has raised prices, making it harder for families to afford to buy homes.
The executive order signed by Trump states, “My administration will take decisive action to stop Wall Street from treating America’s neighborhoods like a trading floor and empower American families to own their homes.” The order notes that under the administration’s new policy “large institutional investors should not buy single-family homes that could otherwise be purchased by families.”
Directives in the executive order
The executive order stipulates that within 60 days, the heads of several federal agencies, including the director of the Federal Housing Finance Agency and secretary of the Department of Housing and Urban Development, must issue guidance to prevent the federal government from supporting these purchases.
Trump also ordered the attorney general and chairman of the Federal Trade Commission to review acquisitions by large institutional investors for potential anti-competitive practices. HUD is directed to require landlords participating in federal housing assistance programs to disclose ownership and management information to identify any involvement of large institutional investors.
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The order would also prevent federal agencies and government-sponsored entities like Freddie Mac and Fannie Mae from “approving, insuring, guaranteeing, securitizing or facilitating sales of single-family homes to institutional investors.”
The order also calls for legislation to codify the policies within the document. However, there would be exceptions for BTR properties that are planned, permitted, financed and constructed as rental communities.
Jay Parsons, a housing rental economist, called the order a “very critical carve-out” that gives much-needed clarity for investors shifting capital into BTR communities. “Barring other actions, it’s probably not enough to offset reductions to total housing supply, as the executive order discourages homebuilders from building larger communities with proceeds from pre-purchase agreements with SFR operators,” Parsons told Multi-Housing News.
SFR’s important role
Parsons was among several multifamily and housing industry experts who stressed the importance of the SFR market for those who are unable to buy a home and how the executive order might impact them.
“It’s a more nuanced issue than it’s been given credit for, but at a high level, the order does nothing to help the large number of single-family renters who do not qualify for mortgages. Any reduction in supply will likely put upward pressure on rents long term for those families,” Parsons predicted.
The first-ever national study of single-family renters issued by the Center for Generational Kinetics found that the majority of renters would face housing instability if they could no longer live in their current SFR home. The study, Building Families in an Era of Housing (Un)Affordability, discovered fewer than one in five would try to buy a home if they did not live in their current rental, highlighting significant market barriers. While 35 percent said they were saving to buy a home, 42 percent stated they rent because it is cheaper than buying and 56 percent said renting a single-family home helped them access better neighborhoods and economic mobility they otherwise could not afford.
Buddy Hughes, chairman of the National Association of Home Builders and a Lexington, N.C.-based home builder and developer, said the organization appreciates the president’s efforts to create more opportunities for homeownership but it’s also important to recognize the role single-family rentals play in the overall housing market.
“Going forward, it is important to ensure that policies not cut off capital for new construction,” Hughes said in a statement provided to MHN.
“With a lack of affordable housing, the major cause of America’s housing affordability challenges, policy solutions must be focused on increasing our nation’s housing supply. NAHB will continue to work with the Trump administration and Congress to eliminate regulatory and financing obstacles that are preventing builders from constructing more attainable, affordable housing,” Hughes added.
Bob Pinnegar, president & CEO of the National Apartment Association, and Sharon Wilson Géno, president of the National Multifamily Housing Council, issued a joint statement following the order noting that the nation’s housing crisis “cannot be solved without the involvement of every corner of the housing ecosystem, from rental housing to the for-sale market.”
Pinnegar and Wilson Géno stated that rental housing providers “are key partners and are an essential part of the solution to relieve Americans’ housing affordability challenges.”
