Economists react to Trump’s corporate home purchase ban 

Many real estate economists are expressing skepticism about President Donald Trump's plan to prohibit large corporate investors from buying homes, suggesting that finding ways to boost housing supply would be a more effective strategy for improving affordability.

On Jan. 7, Trump announced that he is "immediately taking steps to ban large institutional investors from buying more single-family homes." It's unclear how this would be accomplished and who would fall into the large investor category.

The president, who has promised "aggressive housing reform" in 2026, said that he will divulge more details about the proposal — and will announce additional housing affordability plans — in the coming weeks. He also said that he will be asking Congress to codify his strategy.

Economic impact would be 'modest': Since the large institutional investors who buy single-family homes represent a small share of the overall market, Trump's proposal would likely have a modest economic impact, according to Jake Krimmel, senior economist at Realtor.com.

"The proposed ban might resonate politically, but the numbers suggest it would have limited reach and would not address the core shortage driving today's housing affordability issues," Krimmel said.

A more effective path forward for the federal government, according to Krimmel, would be to create incentives for state and local governments to allow denser housing and streamline the permitting process.

A 'distraction'? Daryl Fairweather, chief economist at Redfin, wrote in a recent online post that it's "disheartening" to watch politicians spend energy on issues that are not at the root of persistent housing affordability challenges.

"Laws supporting the development of more homes, like eliminating single-family zoning and subsidizing new construction of affordable housing, will solve the housing shortage; anything else is a distraction," Fairweather wrote.

A strategy with 'more potential': Banning large investors from buying single-family homes would likely have a modest negative impact on home sales and prices, according to Thom Malone, principal economist at Cotality.

But since these investors represent only a small portion of the overall market, the construction sector could in response pull back and reduce supply. This would lead to fewer investors and higher rent prices, which would blunt the effect of the proposed ban.

"The general consensus is that to really address affordability there's far more potential in boosting supply, rather than reducing demand," Malone said in an email.

Rising tide against institutional investors? Some economists applauded Trump's announcement and urged policymakers to take additional steps to oust institutional investors from the housing market.

Jim Baker, executive director of the Private Equity Stakeholder Project, said that in addition to their single-family home purchases, institutional investors own 10% of the nation's apartments and are snapping up manufactured housing communities.

"The housing affordability crisis facing the United States demands robust, comprehensive action to protect Americans from the unfettered greed of private equity landlords," Baker said in a news release following Trump's Jan. 7 announcement.

"Single-family housing is not the only piece of this puzzle. Every single American deserves to live in dignity in stable, secure housing without fear of exploitation, whether they live in a house, a mobile home, or an apartment," Baker added.

Investors push back: Meanwhile, the institutional investor industry is rejecting the idea that they are the problem. Blaming these investors for housing affordability challenges "is inaccurate and gets both the problem and the solution wrong," Amherst Chairman and CEO Sean Dobson said in an email statement.

"At Amherst, we serve more than 200,000 residents, nearly 85% of whom would not qualify to buy the homes they live in today. Through private, unsubsidized investment, institutional capital restores neglected housing and delivers real solutions at a time when much of the housing finance system no longer works," Dobson said.

"Our industry is not the cause of the housing crisis, it is part of the solution," he added.

NAR's take: Shannon McGahn, chief advocacy officer at the National Association of Realtors, said the organization is encouraged that the administration and Congress are focused on addressing housing affordability. 

At its annual NAR NXT conference in November, the organization adopted a policy aimed at creating incentives for large institutional owners of single-family rental properties to sell those homes back to owner-occupants.

"NAR looks forward to working collaboratively to share our research, policy expertise, and practical solutions that boost supply, improve affordability, and put more families on a sustainable path to homeownership," McGahn said in an email.