President Donald Trump on Wednesday reiterated his push to restrict large institutional investors from buying single-family homes, arguing that Wall Street firms have crowded out would-be homebuyers.
"You have these big companies, these big corporations, buying up thousands of homes and renting them or doing whatever they do with them," Trump told CNBC's Joe Kernen in an interview in Davos, Switzerland. "Some of them are flipping them for a big profit, but it got to be too much. We want people to be able to buy a home."
Trump's comments followed an executive order he signed Tuesday directing federal agencies to curb institutional investor activity in the single-family housing market.
The order gives the Treasury Department 30 days to define "large institutional investor" and "single-family home," and directs federal agencies to issue guidance within 60 days to implement restrictions, including limits on acquisitions and the sale of federally owned single-family homes to institutional investors.
However, housing analysts remain skeptical, saying a lack of affordability is being driven far more by a lack of supply than by investor demand.
Institutional investors are not 'market movers'
While Trump said Wednesday that institutional investors are "gobbling up all the homes," they make up only a small share of the U.S. housing market. Firms that own 100 or more single-family homes control roughly 2% of the nation's single-family housing stock, according to John Burns Research and Consulting.
In theory, widespread and growing corporate homebuying could drive up prices and make it tougher for families to elbow their way into a competitive housing market. However, the share of home purchases by institutional investors has declined from its pandemic peak, falling from about 3% in the first quarter of 2023 to closer to 1% a year later, as higher interest rates cooled investor activity, John Burns Research and Consulting's data shows.
"The real problem is that we've added far more households than we've built single-family homes," Jay Parsons, an analyst who tracks rental housing and development trends, tells CNBC Make It. "It's all about supply and demand."
Limiting investor demand does not add new homes to the market, and many housing economists say affordability will not improve without a significant increase in supply. Analysts at Goldman Sachs Research estimate the U.S. would need millions of additional homes above current construction levels to meaningfully ease price pressures.
In markets where institutional investors are most concentrated, analysts say their impact on prices and rents appears limited. A 2024 analysis by Parsons found that many of the most investor-saturated markets posted rent growth below the U.S. average, a pattern he linked to higher levels of housing construction.
"Institutional investors are just not the main market movers," says Scott Lincicome, vice president of general economics and trade at the Cato Institute. "It's mainly a supply issue."
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