Digging into how an institutional investor ban would play out

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. 

What the executive order would do

Trump’s executive order, Stopping Wall Street From Competing With Main Street Homebuyers, wouldn’t institute an outright ban on large institutional investors from purchasing homes. It would instead bar federal agencies and government-sponsored enterprises from supporting large institutional investor acquisitions of single-family homes that could otherwise be purchased by families. 

The phrase “that could otherwise be purchased by families” is important here, as purpose-built BTR communities received a carve-out. 

Under the order, the affected institutional investors would no longer receive federally backed financing, guarantees, insurance, securitization, and asset-disposition pathways when purchasing a single-family home. It also directs agencies to prioritize homes sales to individual buyers and owner-occupants through disclosure requirements, first-look policies, and anti-circumvention measures.

Rental economist Jay Parsons noted in an analysis that these moves could have a limited impact, as many large institutional buyers already rely on other sources of debt. 

The order also wouldn’t force large landlords to sell existing single-family portfolios.

The order additionally would require the Department of Justice and the Federal Trade Commission to “review substantial acquisitions … for anti-competitive effects” and to “prioritize enforcement of the antitrust laws, as appropriate, against coordinated vacancy and pricing strategies by large institutional investors in local single-family home rental markets.”

While it wouldn’t compel large institutional investors from selling their single-family portfolios, it does order the Treasury Department to “review the rules and guidance that relate to large institutional investors acquiring or holding single-family homes and consider revising them.”

What the Trump administration says

Many industry analysts consider firms with 1,000 or more homes to be large institutional investors, but there is still uncertainty about which corporations would be banned from purchasing single-family homes under the proposal. Despite the ambiguity, Treasury Secretary Scott Bessent hinted at a lower threshold than the 1,000 mark in a discussion in Davos on Tuesday. 

“We are going to give guidance at some point to see what is a mom and pop, that someone, maybe your parents for their retirement, [owns] about 5, 10, 12 homes. So we don’t want to push the mom and pops out. We just want to push everyone else out,” he said. 

Bessent also argued that those large firms have access to capital and certain tax benefits that ordinary Americans don’t, creating an unfair advantage. 

“There’s an unfair tax arbitrage there. You and I have a mortgage. We can deduct the mortgage amount. Institutional investors can deduct the borrowing amount, but they can also expense any repairs and depreciation. So we think that it is a good idea to have them out of the market,” he said. 

During a speech in Davos on Wednesday, President Trump declared that “America will not become a nation of renters.”

“That’s why I have signed an executive order banning large institutional investors from buying single-family homes. It’s just not fair to the public. They’re not able to buy a house,” Trump said. 

The potential impacts on homebuilders

The extent to which the executive order would impact builders depends on what the federal government ultimately categorizes as a large institutional investor. 

Data from John Burns Research & Consulting indicates that the largest institutional investors account for about 0.5% of home purchases in recent periods, with small and mid-sized firms representing 4 to 6%. In recent years, “mom and pop” investors purchased about 12 to 15% of homes. 

The exemption of BTR communities is certainly a positive for the homebuilding industry. However, there are still certain risks for builders that pursue bulk sales to institutional investors in for-sale communities. Those institutional investors can often stabilize demand for builders when not enough retail buyers are able to purchase homes. 

Wade McGuinn, CEO of South Carolina-based McGuinn Homes, told The Builder’s Daily that sales to institutional investors now account for half of his company’s business. Most of those institutional sales are in BTR communities, which are unaffected by the order. However, McGuinn said that if there were a scenario in which he were no longer able to sell to those institutions, he would be forced to shift strategies. 

“We would just shift back 100% of our effort to a retail buyer. I mean, it’s that simple for us,” McGuinn said. 

In McGuinn’s view, any homebuilder that has made it this far in today’s cutthroat environment would be able to pivot if affected. 

However, some industry analysts are concerned that pushing the large institutional investors out of the market could reduce single-family rental supply at a time when an increasing proportion of Americans can only afford to rent. 

In a Bloomberg interview, Sean Dobson, CEO of Amherst, which owns about 43,000 single-family homes, argued that institutional investors such as Amherst are unfairly scapegoated. According to Dobson, about 85% of Amherst’s tenants would not qualify to buy the homes they live in today. 

A report from the Federal Reserve Bank of St. Louis concluded that 71% of single-family renters preferred owning their home in 2025, unchanged from 2019. However, those tenants are increasingly pessimistic about their odds of ever affording homeownership. Almost half say that it would be very difficult to obtain a mortgage, up from about 25% of renters in 2019. And only about 33% of tenants believe they will ever own a home, compared to about 53% in 2019.

The Trump administration avows that its primary goal is to make homeownership more affordable. However, the risk for renters who are unable to buy right now is that rents for single-family rental properties could inch up in certain markets if institutional investors are banned, depending on how wide-reaching the order is. 

“These single-family rental companies are providing inventory and supply, right? It’s the same with the supply and demand of single-family houses for sale. The less supply you have in single-family rentals, the more price pressure is going to be on the demand. The bottom line in this whole calculus is we need more houses, and if you take houses off the rental market, renters are going to have some price pressure,” Ed Brady, President and CEO of the Home Builders Institute, told The Builder’s Daily. 

“There can be a counteractive manipulation of this that I think they just have to be cognizant of,” Brady added. 

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.