President Trump recently announced a new initiative in an attempt to relieve the tight housing inventory in the United States. Their idea is to prohibit large investment companies from purchasing single-family homes in the future. So would this rule really turn the tide and make housing more affordable for families? This is what experts believe.
Trump’s Truth Social proposal was a ban on large institutional investors from purchasing more single-family homes. The president believes that removing private equity firms and similar investors from the market will allow more first-time homebuyers to enter the market.
A 2024 report from the Government Accountability Office said institutional investors “may have contributed to rising home prices and rents and helped stabilize neighborhoods after the financial crisis.” However, the impact on “homeownership opportunities” was unclear.
Cotality, a real estate analytics firm, reported in November that investment activity increased from 29% in June 2025 to 30% in September 2025.
“This upward trend continues based on the high market share controlled by investors since the end of 2024 and represents a year-on-year increase of three percentage points,” the analysis found.
However, the impact of Wall Street investors, such as private equity firms, is a topic of debate. Investment groups may not be as threatening to the prospective home buyer as some think.
In an October 2025 analysis, Realtor.com said, “Even in states with the highest investor ownership rates, it’s not institutional buyers driving the trend.”
More than 90% of investor-owned single-family homes were in the hands of small investors who owned fewer than 11 properties, Realtor.com noted, citing data from CJ Patrick Co. and BatchData.
The states with the highest share of investor-owned homes were Maine, Montana, Alaska and Hawaii.
“However, the overwhelming majority of this housing stock is in the hands of individuals and small associations, not mega-investors,” the real estate association reported.
While investment activity may have played a role, the housing shortage has evolved from more than one contributing factor. Higher home prices and high mortgage rates are surely in the mix.
Another – and surprising – pressure point may have a local origin.
Research by Wharton real estate professor Joseph Gyourko and Harvard economics professor Edward Glaeser points to tightening local construction restrictions.
The professors found that while housing construction boomed in the 1950s and 1960s, over the next three decades, construction fell by half. That trend continues today.
Local governments, particularly in the Sunbelt, are hindering housing construction with restrictive zoning and allowing laws to “slow and stop new development,” the investigation concluded.
“I think the most important thing is change at the local level,” Gyourko said. “There needs to be a recognition that these high prices are largely – not entirely – due to restrictive permitting and increased regulation at the local level.”
The issue of regulatory burdens resonated with Ed Brady, president and CEO of the Home Builders Institute.
“This is probably very close to the top of the list of challenges facing communities struggling with affordability: restrictions imposed by cities, states or municipalities,” Brady said. “That’s why 25% of the cost of a single-family home in the United States is regulatory issues: $100,000 of a $400,000 house is a regulatory burden, soft costs that don’t go into the sticks and bricks of construction. That’s a huge burden.”
What would be the impact of lower institutional investment in housing?
“It would likely put downward pressure on prices by reducing demand in the market,” said Cotality chief economist Thom Malone. “However, historically institutional investors represent only a small proportion of total home purchases (around 1% to 2%) so the overall impact on prices would likely be modest.”
Malone also noted that restricting institutional activity would reduce supply in the single-family rental market, which would likely make rent more expensive. “There’s also the question of how builders would respond: With fewer buyers, construction activity could slow, mitigating any downward pressure on home prices,” Malone added.
Realtor.com senior economist Jake Krimmel believes Trump’s proposal is unlikely to boost affordability.
“The affordability crisis is fundamentally a supply issue, and meaningful relief requires adding housing, either through new construction or through inventory increases in chronically tight markets,” Krimmel said. “Big business ownership is a red herring in the broader supply debate.”
While Trump’s initiatives certainly fuel the “someone has to do something” frustration of hopeful homebuyers, no one disputes that the housing shortage will require more than one solution.
“We’re not going to get an overnight solution to the affordability problem,” said HBI’s Brady. “We’ve lost a large segment of the population that has been the traditional first-time homebuyer because they can’t afford it. With regulatory burdens, land use, tariffs, trade, all those things, it’s a perfect storm where the price of housing is just too high.”
Any government or housing industry efforts to expand housing affordability are worth monitoring closely. In the meantime, you can tip the scales in your favor as a homeowner by taking some empowering steps of your own.
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Save more for a down payment. With more money down, you’ll get a lower interest rate and more favorable loan terms.
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Reduce debt. A lower debt-to-income (DTI) ratio will make you a more attractive borrower.
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Shop with multiple mortgage lenders. Apply for pre-approval with three or four lenders to compare not only their interest rates, but also their fees. This strategy helps you find the best deal.
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Know your credit score. While there are many credit scoring models, knowing your score on any of them will help you set your expectations for the interest rate you can earn. You can also track the savings you could make by improving your score.
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Explore loan options. Government home loans, such as FHA, USDA, or VA mortgages, can improve affordability by allowing lower down payments and flexible credit hurdles.
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See if you qualify for home purchase assistance programs. Down payment assistance programs and closing cost grants are available to households in specific areas and within qualified income limits.
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Look for interest rate reductions. Some lenders and new home builders are offering rate discounts for a limited time. You can also calculate purchasing discount points to lower your mortgage rate.