Trump moves to ban home purchases by institutional investors

US President Donald Trump said he intends to ban large corporate investors from buying single-family homes in an effort to make housing more affordable for Americans.

In a social media post Wednesday, Trump said he would ask Congress to “codify” the plan and would discuss it further at the World Economic Forum in Davos later this month.

The pledge bolstered an idea that has been circulating among housing advocates and lawmakers for years in response to Wall Street's increased role in the U.S. residential housing market. However, some analysts doubt how much the ban will affect prices.

Shares of Blackstone, one of the largest private equity buyers, fell more than 5% on Wednesday.

“This American Dream is becoming increasingly out of reach for too many people, especially young Americans,” Trump said on social media, referring to home ownership.

“People live at home, not in corporations.”

The White House did not immediately respond to a request for comment on details of a possible ban, including whether it would require congressional approval.

Trump's comments on Wednesday come as his administration faces growing public pessimism about his handling of the economy. In recent weeks he has been trying calm voters' concerns about the cost of living in the US, with housing affordability high on Americans' list of concerns.

Sam Garin, a spokeswoman for an advocacy group that has expressed alarm about the impact of private equity on renters, said her group welcomed Trump's move.

“We look forward to the details of what these policies will actually entail,” said Garin of the Private Equity Project, adding: “But we urge policymakers not to stop there.”

Since the 2008 financial crisis led to a wave of foreclosures, Wall Street investors such as Blackstone and other private equity firms have bought tens of thousands of rental homes, becoming major landlords, especially in certain markets.

Their role has drawn scrutiny from lawmakers of both political parties, who have accused the firms of driving up rental and purchasing costs. But previous legislative efforts have met with little success.

“Senate Democrats tried to do this last year. Republicans blocked it,” Senate Minority Leader Chuck Schumer, a Democrat, said on social media.

On Wednesday, Ohio Republican Sen. Bernie Moreno said he would introduce legislation to codify Trump's proposal.

Real estate stocks fell Wednesday following Trump's comments. Shares of Builders FirstSource, a building products supplier, fell more than 5%, while shares of Invitation Homes, which owns single-family homes, fell 6%.

But some housing analysts doubt the ban will have much impact on home prices, given the relatively small role of institutional investors in the overall market.

Laurie Goodman, a fellow at the Urban Institute, said the ban's impact would depend in part on how “large” investors are defined.

Blackstone said institutions own 0.5% of all single-family homes in the United States.

Goodman said her research showed that institutional investors, defined as those who own at least 1,000 units in three or more locations, own about 4% of the single-family home market.

That number, she added, has remained stable over the past few years as purchases have slowed amid high interest rates and high home prices.

Goodman said the proposed ban raises other questions, such as how existing properties owned by institutional investors would be treated.

Instead of a blanket ban, she said, “institutional investors should be required to provide more to their tenants.”

Daryl Fairweather, chief economist at Redfin, warned that if large investors are barred from buying single-family homes, they will likely be replaced by mid-sized or smaller investors rather than first-time homebuyers.