President Donald Trump issued a pseudo-ban on institutional investors purchasing single-family homes last week. In an executive order, Trump decreed that “large institutional investors should not buy single-family homes that could otherwise be purchased by families.” The order aims to “combat speculation” and directs the government-owned mortgage enterprises to restrict investor participation in the housing market. Unfortunately, the demagoguery ignores the real problem: Federal mortgage subsidies, interest rate manipulation, central bank MBS purchases, rising construction costs from tariffs, and onerous local land-use restrictions created this crisis.
Banning institutional ownership does not address it.
Despite media hysteria, institutional investors own fewer than 6 of every 1,000 single-family homes. The much-maligned Blackstone owns barely 1 of every 2,000. Institutional investors own only 3% of single-family rentals. Small “mom and pop” investors (those with fewer than 10 properties) continue to dominate the rental home purchase market, accounting for more than 4 in 5 investor home purchases.
In fact, following interest rate hikes beginning in 2022, institutional investors dramatically curtailed acquisitions. An analysis by John Burns Research and Consulting showed a stunning decline in the share of single-family homes purchased by large landlords, from 2.5% to 0.4%.
CoreLogic also reported that large investors dramatically curtailed their share of purchases as interest rates rose. Redfin reported a record 49% decline for investor housing purchases in the first quarter of 2023 on the heels of a 46% decline from the prior quarter. Following this post-COVID plunge, investor purchases have remained relatively flat through the third quarter of 2025. Rising interest rates make it harder for investors to deploy capital profitably, just as this environment makes it difficult for families to acquire a home.
Attributing the run-up in prices since 2012 to institutional investors is a gross misdiagnosis of the underlying causation. The real culprit behind the most expensive housing market in history is easy to identify: Ultra-low mortgage interest rates (bottoming out at 2.65% in January 2021) artificially engineered by the Federal Reserve and supercharged by a gusher of newly created inflationary dollars to the real estate sector as the Fed nearly doubled its portfolio of mortgage-backed securities. The central bank essentially injected $1.3 trillion of newly printed dollars into the real estate market. This massive increase in MBS holdings is equivalent to $300,000 mortgages on 4.3 million homes, a stunning number equal to the entire existing home sales market in some years.
The result was predictable: Existing home sales soared from barely 4 million annually in May 2020 to 6.5 million by October 2020, the most active market since the prior housing bubble 14 years earlier. Easy money courtesy of the Fed enabled a buying spree by families and investors alike. More dollars chasing a constrained housing supply inevitably drove prices skyward.
The real upward price pressure came from millions of households suddenly able to afford much larger mortgages at artificially suppressed rates.
Moreover, focusing on the share of purchases going to investors paints an incomplete picture.
First, nearly half of the purchases by the largest investors come from the housing inventory of other investors. They’re simply changing landlord ownership, not reducing the supply available to homebuyers.
Second, leading institutional investors have been net sellers of homes for six consecutive quarters.
Third, the investor-owned share of the single-family housing market shrank by more than 1.4 percentage points over the past decade even as the percentage of all purchases increased.
Lastly, many large institutional investors have shifted their focus to build-to-rent communities. The pivot further undermines the premise that institutions are driving up prices by snatching homes from families.
Monthly rental prices are easily $1,000 less than homeownership costs on an identical unit. Banning large real estate investors from purchasing single-family homes does nothing to remedy this gap. Instead, it will force more families into apartments at a time of record-high ownership costs, denying them the opportunity to rent a single-family residence in desirable neighborhoods with good schools.
Worse, a ban would likely increase rents by reducing rental supply and forcing the market to rely more heavily on small landlords who face higher capital costs, less efficient property management, and greater difficulty maintaining properties.
TRUMP IS WRONG ABOUT LIBERATION DAY
If Trump truly wants to help families achieve affordable homeownership, he should end the tariffs and call off his crusade for another episode of an “easy money” Fed policy. Congress should act now to wind down taxpayer-guaranteed and subsidized mortgages by privatizing the GSEs, eliminating the power of the Federal Reserve to purchase mortgage-backed securities, and ending the president’s tariffs on construction inputs. States and localities should reform zoning laws to allow greater housing density and streamline permitting processes.
But it’s far easier for politicians to blame investors holding less than 0.6% of the market for a problem largely stemming from well-intentioned but destructive intrusions by Washington into the marketplace.
