Trump Issues Order To Restrict Large Institutional Investors' Ability To Buy Single-Family Homes

President Donald Trump issued an executive order Tuesday aimed at stopping large institutional investors from buying single-family homes.

"It is the policy of my Administration that large institutional investors should not buy single-family homes that could otherwise be purchased by families," Trump wrote.

The executive order doesn't prevent the purchase of houses by Wall Street investors but rather moves to block them from receiving federal funding and says the government will review large single-family home portfolio acquisitions under antitrust laws. It includes a carve-out for build-to-rent communities. 

The president charged multiple federal departments with issuing guidance within 60 days to prevent federal agencies and government-sponsored enterprises from assisting large institutional investors in homebuying.

The guidance will prevent those agencies from providing, approving, insuring, guaranteeing, securitizing or facilitating large institutional investors acquiring single-family homes that could be purchased by an individual owner-occupant. It will also prohibit disposing of federal assets in a manner that transfers a single-family home to a large institutional investor.

The secretary of the treasury was ordered to develop definitions within 30 days of "large institutional investor" and "single-family homes." 

The Treasury Department was also ordered to review and possibly revise rules about large institutional ownership of housing, and Trump called on the attorney general and the Federal Trade Commission to review large acquisitions and series of acquisitions by those owners for anti-competitive effects.

The president also wants the guidance to promote single-family home sales to individual owner-occupants, including through anti-circumvention provisions, first-look policies and disclosure requirements. 

"People live in homes, not corporations," the president wrote in the executive order. "My Administration will take decisive action to stop Wall Street from treating America’s neighborhoods like a trading floor and empower American families to own their homes."

Guidance will also include a narrow carve-out for build-to-rent properties that are planned, permitted, financed and constructed as rental communities.

The move comes two weeks after Trump said in a social media post that he would take steps to ban large institutional investors from purchasing more single-family homes. The president said he will discuss this plan, as well as additional housing and affordability proposals, at the World Economic Forum in Davos, Switzerland, on Wednesday. 

The median age of first-time homebuyers continues to reach record highs, hitting 40 years old in November, according to the National Association of Realtors. 

Though the share has been growing, institutional investors make up only a small portion of single-family home sales. 

Investors with 1,000 properties or more made up only 0.5% of total single-family home purchases in the third quarter, rental housing economist Jay Parsons said in a post Monday. In comparison, small investors with between one and nine properties made up about 20% of home purchases in Q3. 

Single-family rentals provide stability and space for family formation and a launchpad to homeownership, a spokesperson from the National Rental Home Council, the trade association for the SFR industry, told Bisnow in a statement Tuesday. 

"Our country needs more housing investment, so we look forward to working with the Administration and other policymakers to expand rental options and create real pathways to homeownership," the spokesperson said. "We will continue to do our part by preserving existing homes and building new homes to expand the nation’s housing supply."

Homeownership has always been a symbol of the health and vigor of American society, but that goal fell out of reach for millions of people, Trump said at his speech Wednesday at the World Economic Forum in Davos, Switzerland. Trump said high interest rates over the past few years and institutional investors purchasing housing stock have led to an increase in housing prices.

"Homes are built for people, not for corporations," Trump said, repeating his common refrain on the issue. "America will not become a nation of renters."

Trump also called on Congress to pass the "ban," likely referring to his executive order, into permanent law. He said he was protective of people who already own a home and acknowledged that making houses more affordable to purchase inherently hurts the value of existing houses, which he does not want to do. The president did not clarify how that factored into his executive action.

Jeff Brown, founder and CEO of Wheaton, Illinois-based T2 Capital Management, told Bisnow in a statement that while he appreciates the administration's attempt to address the lack of housing affordability in the country, clamping down on institutions that own single-family homes seems off base.

"It is difficult to see how restricting institutional ownership of single-family homes addresses the problem," Brown said. "With institutions owning approximately 2% of single-family homes in the US while providing a steady source of liquidity throughout the market, this prohibition appears misguided."

UPDATE, JAN. 21, 11:47 A.M. ET: This story has been updated to include notes from President Donald Trump's speech at the World Economic Forum in Davos on Wednesday, as well as an additional statement from Jeff Brown, founder and CEO of Wheaton, Illinois-based T2 Capital Management.