Why Trump banning institutional investors like Blackstone from buying homes won't bring down housing costs, according to experts

By Aarthi Swaminathan

'Institutional investors are a tiny share of the market, and a tinier share of the total U.S. housing market,' one expert says

President Donald Trump says he wants to ban institutional investors from buying single-family homes in the U.S., where housing prices are out of reach for many. The proposed ban "is an indicator of how worried Team Trump is about the impact of housing affordability on the midterm election," one analyst said.

President Donald Trump said Wednesday he's planning to ban "large institutional investors" from buying single-family homes in an attempt to address spiraling housing costs. But such a move might not actually make a difference, experts say.

Many have pointed the finger at corporate landlords buying up single-family homes as one of the causes of America's housing-affordability crisis, because these investors compete with everyday home buyers and drive up home prices with all-cash offers.

Proponents of banning institutional investors from buying up homes say such a policy would improve housing affordability. But the data suggests otherwise.

Banning large investors isn't going to free up existing housing stock, or bring down housing costs altogether, experts told MarketWatch.

This is "Populist Policy 101. Pick a villain and blame it for a real problem even though it is a minor, if not totally insignificant, player in causing it," Scott Lincicome, vice president at Cato Institute, a right-leaning think tank, told MarketWatch.

"Institutional investors are a tiny share of the market, and a tinier share of the total U.S. housing market. There is not good enough evidence that institutional investors drive up home prices," he added.

Even though nearly a third of single-family homes in the third quarter of 2025 were bought by investors, most of these investors were small, mom-and-pop landlords and not large institutional ones, data shows.

For that reason, "my gut reaction is that institutional investors or landlords are a red herring for the affordability issues or the housing shortages issues that we've seen," Jake Krimmel, senior economist at Realtor.com, a real-estate platform, told MarketWatch.

"It plays really well politically, of course, but the unfortunate reality is that even if we remove these guys from real estate, it would not have a large enough impact to really move the needle on affordability," he added.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

Housing costs are a pain point for Americans

As the cost of housing continues to frustrate many home buyers across America, the president said on social media that he wanted to reel in large investor purchases.

"I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it," Trump said in a Truth Social post on Wednesday afternoon.

"People live in homes, not corporations. I will discuss this topic, including further Housing and Affordability proposals, and more, at my speech in Davos in two weeks," he added.

Large institutional investors refer to companies such as Blackstone, which buy up single-family homes and rent them out.

Over the past few years, prominent Democrats have been pushing for such a move, with senators including Massachusetts' Elizabeth Warren calling on the federal government to stop institutional investors from buying up single-family homes.

In response to Trump's Truth Social post, Warren expressed support for curbing corporate investment in retail real estate.

"I've been advocating for years to limit Wall Street from buying up America's homes," she said, adding that "Trump should start with getting his own party in the House to support a bipartisan bill to bring down housing costs that passed the Senate unanimously. And Congress should work on legislation to stop corporate investors from buying up homes."

Shares of Blackstone (BX) and Invitation Homes (INVH) fell about 6% on Wednesday following Trump's announcement.

"Construction could slow down in response" to lower demand from large investors buying homes, and "that could result in [lower] supply as well," Thom Malone, principal economist at Cotality, told MarketWatch.

Shares of major home builders, including D.R. Horton (DHI), Lennar (LEN), and PulteGroup (PHM) also declined Wednesday following Trump's post. D.R. Horton and Lennar were down more than 3% and 2%, respectively.

The companies did not immediately respond to requests for comment.

In another effort to help home buyers, the Trump administration also is considering a plan that would let Americans tap their retirement and college savings accounts for down payments, according to a Politico report on Wednesday that cited unnamed sources.

Sen. Josh Hawley, a Missouri Republican, said in a social-media post that he supported letting people use their 401(k) accounts to "buy a home, without penalties or caps or taxes." Some employers' 401(k) plans already allow workers to borrow money from their accounts.

Why banning large institutional investors would not address the core of the housing-affordability crisis

Most of the housing stock in the U.S. is not owned by large investors.

Overall as of the third quarter, which ended in September 2025, about 30% of single-family homes were purchased by investors, but those were mostly mom-and-pop landlords, according to data from real-estate firm Cotality.

"There's about 16 million rental homes in the U.S. [per Census Bureau data], and when you look at the percentage of large investors that own single-family rental homes, it's typically no more than 2% of the stock nationally," Jay Lybik, senior director of market research at Continental Properties, a national developer, told MarketWatch.

"You have regional owners who maybe own multiple homes in a particular metro or region, but in terms of publicly-traded or large, private single-family investors, that number is definitely less than 2% of the overall stock," he added.

For that reason, banning large investors from buying homes as a way to improve affordability is "not supported by any type of analysis or data," he added, noting that the real issue is a lack of supply.

Most investors who are buying single-family homes are in fact those who own less than 100 properties, meaning that they are not large players, according to data from Cotality.

Small investors, who own fewer than 10 properties, made about 14% of all single-family purchases in the third quarter, Cotality found. Medium-sized investors, who owned between 10 and 99 properties, bought 11% of homes sold in the same period.

Large investors who owned between 101 and 1,000 properties made about 3% of investment purchases, and mega investors who owned more than 1,000 properties only bought 2.5% of properties.

Realtor.com's Krimmel also noted that based on their read of investor purchases, in the first half of 2025, small investors accounted for 62.5% of investor purchases, while medium investors represented about 18% and large investors about 13.5%.

Investors typically purchased homes in cities with high population growth, Cotality said, such as Dallas, Houston, Atlanta, Phoenix and Chicago.

Large institutional investors in particular were most active in Atlanta, where they made up more than 10% of purchases, and are also typically more active in large cities, Malone added.

Trump's suggestion to ban institutional investors from buying up homes now "is an indicator of how worried Team Trump is about the impact of housing affordability on the midterm election," Jaret Seiberg at TD Securities wrote in a note.

"This move permits the president to declare that he has taken a concrete step that will have an immediate impact as institutional investors will no longer be bidding against voters for houses," he added.

Victor Reklaitis contributed.

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-Aarthi Swaminathan

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01-08-26 1035ET

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